Equipment Financing
Equipment financing is a secured loan or lease specifically structured to fund the purchase of business equipment — using the equipment itself as collateral — typically offering longer terms and lower rates than unsecured MCA for capital expenditures with depreciation schedules.
Why This Matters
Equipment financing serves capital-investment needs MCA isn't optimized for. Buying a $100K printing press, $80K commercial truck, or $250K medical imaging equipment fits equipment financing structure: 5-7 year terms, 7-15% APR, equipment serves as collateral. Equipment financing approval considers equipment value (ability to repossess), business cash flow, and personal credit. The product is fundamentally different from MCA — secured collateral changes risk economics, longer terms align with equipment useful life. Many merchants use MCA for working capital needs alongside equipment financing for capex.
Example
Construction company buys $120K skid-steer loader. Equipment financing: $24K down payment, $96K financed at 9% APR, 60-month term, $2,000 monthly payment. Equipment serves as collateral. Business uses MCA separately for $40K working capital advance to bridge to project payment cycles. Different products, different purposes, complementary stack.
Frequently Asked Questions
Frequently Asked Questions
What equipment qualifies for equipment financing?
Most business equipment with retained collateral value: vehicles, machinery, technology equipment, medical equipment, restaurant equipment, manufacturing equipment, agricultural equipment, construction equipment. Soft assets (software licenses, custom-built infrastructure) typically don't qualify.
Equipment financing vs. MCA for equipment purchases?
Equipment financing typically wins on cost (7-15% vs MCA's 30%+ APR-equivalent) and term match (5-7 years vs MCA's 6-12 months). MCA wins on speed and lack of equipment-as-collateral requirement. Match product to need — equipment finance for major capex, MCA for fast working capital.