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Equipment Financing
Equipment financing is a loan or lease used to purchase business equipment where the equipment itself serves as collateral.
Last updated Reviewed by ICG Funding
Definition
What it means.
Because the equipment is collateral, equipment loans typically offer lower rates, longer terms (up to the useful life of the asset), and more flexibility with credit requirements than unsecured working capital. Loan-to-value ratios are usually 80–100% of purchase price.
Equipment financing can be structured as a loan (you own the equipment) or a lease (you use and may purchase at maturity). Section 179 of the IRS code lets most small businesses deduct the full purchase price in year one, work with your accountant to capture this.
Now what?
Get an offer that accounts for equipment financing.
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