Equipment Financing Rates and Terms
In 2026, equipment financing rates typically range from 6% to 18% for bank-grade borrowers, while alternative lenders may charge 10% to 30% depending on credit and equipment type. Terms generally mirror the equipment's useful life, spanning 24 to 72 months, with down payments ranging from 0% to 20%.
Last updated June 8, 2026
Key takeaways
- Prime-credit borrowers (700+) can expect interest rates between 6% and 9% in the current market.
- Standard repayment terms usually align with the IRS depreciation schedule of 3, 5, or 7 years.
- 0% down financing is common for medical, software, and highly liquid construction equipment.
- Soft costs like delivery and installation can often be rolled into the loan up to 20% of the equipment value.
- Used equipment typically requires a 15-20% down payment and carries a 2% rate premium over new equipment.
- A personal guarantee is standard for most equipment finance agreements to secure the best rates.
Who this is for
This financing is purpose-built for established business owners in sectors like construction, manufacturing, and medicine who need to acquire high-value assets without depleting their cash reserves. It is especially beneficial for those who can show at least one year of steady revenue and want to leverage the asset itself as the primary collateral for the loan.
It also serves as a strategic choice for growing companies that need to modernize their fleet or shop floor to remain competitive. Even for owners with less-than-perfect credit, equipment financing offers an accessible path to funding because the equipment's intrinsic value offsets the lender's risk profile.
What you need to qualify
Lenders weigh the equipment's resale value against your financial health to determine your specific rates and terms.
| Requirement | Typical standard |
|---|---|
| Minimum FICO Score | 600+ (680+ for best rates) |
| Time in Business | 12 Months (Startups with 20% down) |
| Annual Revenue | $150,000+ per year |
| Down Payment | 0% to 20% of equipment cost |
| Max Loan Amount | Up to $5 Million per unit |
| Repayment Terms | 24 to 84 Months |
| Interest Type | Fixed Rate (typically) |
| Documentation requirements | Invoice + 3 months bank statements |
Best funding options
Depending on your business needs and credit profile, these complementary funding options might better suit your strategy:
Working Capital
If you need to cover installation and training costs not included in your equipment quote.
Business Term Loans
Best for high-value machinery when you want to preserve your company's cash flow.
Business Line of Credit
Ideal for recurring equipment repairs or small tool replacements throughout the year.
Expansion Funding
For major facility upgrades or long-term investments in heavy infrastructure.
When this makes sense
- When the equipment generates immediate revenue that exceeds the monthly payment.
- When you want to take advantage of Section 179 tax deductions for the current fiscal year.
- When you need to preserve your working capital for inventory or payroll rather than a lump sum purchase.
- When the equipment has a long useful life and high resale value.
When to be careful
- If the technology is likely to become obsolete before the loan term ends.
- If the total cost of capital over a 5-year term makes the equipment unprofitable to operate.
- When financing specialized 'single-use' machinery that lenders view as high-risk collateral.
- If the lender requires a blanket lien on all business assets rather than just the specific equipment.
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