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Glossary

What is equipment financing?

Equipment financing is a form of commercial credit that enables businesses to acquire equipment — machinery, vehicles, technology, or other capital assets — through a loan or lease rather than a cash purchase. The equipment itself typically serves as collateral. It is a major segment of non-bank commercial finance, often originated by specialty lenders and brokers.

Loan vs lease structures

Equipment loans give the borrower ownership from day one, with the lender holding a security interest in the asset. Equipment leases transfer use but not ownership; the lessee makes periodic payments and may have an option to purchase at lease end. Both structures have tax and accounting implications that vary by business.

From a lender's perspective, the key underwriting inputs are the creditworthiness of the borrower, the value and useful life of the equipment, and the borrower's ability to service the payments.

The broker and funder ecosystem

Equipment finance is heavily intermediated — brokers originate deals and submit to one or more funders or syndicates. Small funders handling dealer-originated or broker-submitted equipment deals benefit from a structured intake process that handles multiple submissions in parallel and tracks each through to a decision.

FAQ

Equipment Financing — common questions

What equipment qualifies for equipment financing?

Almost any tangible business asset — manufacturing machinery, commercial vehicles, restaurant equipment, medical devices, technology hardware. Lenders evaluate the asset's useful life, resale market, and collateral value alongside the borrower's creditworthiness.

How fast can equipment deals close?

Smaller equipment deals at non-bank lenders can close in days with a streamlined process. Larger or more complex transactions may take weeks. Speed depends on document completeness and workflow efficiency.

Related

Loan origination system (LOS) Debt service coverage ratio (DSCR)

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Educational information, not legal advice. Verify current regulatory requirements with qualified counsel.