For a new business, the best equipment financing is usually the kind that uses the equipment itself as security: seller financing, leasing or an equipment loan. If you already have a few months of sales and need the equipment quickly, Merchant Fund Express is our recommended funder because it reviews your sales and deposits, not just your credit. For small amounts with coaching, look at an SBA microloan or a CDFI; for big, long-lived machinery, an SBA 504 usually costs less if you qualify.
Banks often want two years of history, so the challenge for a startup is proving it can repay without that track record. Below we compare six options on speed, minimum time in business, credit, ITIN acceptance, documents, amounts and collateral.
Key takeaways
- Equipment can secure its own financing, which makes it one of the most accessible kinds of credit for new businesses.
- Seller financing and leasing usually ask for less history than a bank.
- According to the SBA, microloans go up to $50,000 and can be used for machinery and equipment, with a maximum term of 7 years.
- The SBA 504 finances machinery with a useful life of at least 10 years, on 10, 20 or 25-year terms, through a CDC.
- Your personal credit weighs heavily when the business has no history; check it before you apply.
- Written quotes with model and serial number speed up any approval.
The 6 best equipment financing options for new businesses
- Merchant Fund Express (recommended funder). Best if your business already has a few months of deposits and needs the equipment soon, without pledging collateral. It reviews your sales and deposits as well as credit, accepts scores from FICO 500, handles $5,000 to $5,000,000, often decides in 2 to 4 hours and doesn't require collateral in most cases. Applying is free with no credit impact, ITIN applicants are accepted (no SSN needed) and Spanish-speaking support is available.
- Seller or manufacturer financing. Best for new equipment from major brands: ovens, compressors, construction machinery, dental chairs. Some manufacturers run promotions for new customers. Always compare against another option, because a promo rate is sometimes offset by a higher price.
- Equipment leasing. Best for gear that loses value or goes obsolete fast, like computers, point-of-sale terminals or diagnostic equipment. The upfront payment is usually lower. At the end you can return it, renew or buy it, depending on the lease type. See the best equipment leasing companies for small businesses.
- SBA microloan or CDFI. Best if you're just starting and the equipment is inexpensive. According to the SBA, microloans go up to $50,000 (the average is around $13,000), can be used for machinery, equipment, furniture and working capital, carry a maximum term of 7 years, and rates generally run 8% to 13%. The organizations that make them usually provide business coaching.
- SBA 504 loan. Best for big machinery you'll use for many years. According to the SBA, the 504 finances machinery with a useful life of at least 10 years, on 10, 20 or 25-year terms, with a rate tied to 10-year Treasury bonds. It's handled by a Certified Development Company (CDC) alongside a bank, and it can't be used for working capital or inventory. It asks for a viable business plan and the ability to repay. Since March 2026, 100% of the owners must be U.S. citizens or nationals.
- Bank or credit union equipment loan. Best if you have good personal credit and some money down. Some credit unions lend to members' new businesses; big banks usually want more history.
How we ranked: no ratings, scores or invented statistics. We compare each option only on criteria you can verify: speed, minimum time in business, minimum credit, ITIN acceptance, documents, amounts and collateral, with extra weight on time in business for startups. The full method is in how we rank business funding options.
Equipment financing comparison table
| Option | Time in business | Speed | Collateral | Best for |
|---|---|---|---|---|
| Merchant Fund Express | A few months of deposits | Decisions often in 2 to 4 hours | Not in most cases | Urgent equipment with proven sales |
| Seller or manufacturer | Can be short | Days | The equipment | New brand-name equipment |
| Leasing | Can be short | Days | The equipment | Tech and gear that ages fast |
| Microloan / CDFI | Even brand-new businesses | Weeks | Set by each organization | Small equipment, up to $50,000 |
| SBA 504 | Viable plan and ability to repay | Weeks or months | Usually required | Machinery with a 10+ year life |
| Bank / credit union | Usually wants history | Weeks | The equipment, sometimes more | Good credit and a down payment |
What funders look at when your business is new
Without two years of tax returns, funders look for other signs you'll repay:
- Your personal credit. It weighs much more in a new business. On-time payments and low card balances help.
- Your experience in the trade. Ten years as a mechanic before opening your own shop counts. Put it in your application.
- The equipment's value. Gear with good resale value is easier to finance than something custom-built.
- Your down payment. Putting part of the price down lowers the funder's risk and often improves the offer.
- Contracts or customers. A signed contract that needs that equipment is strong proof the income is coming.
- Deposits, even a few months' worth. Three to six months of steady sales in a business account open more doors.
Your application folder: a written equipment quote (model, year, serial number and price including installation), photo ID, your SSN or ITIN depending on what each funder accepts, business registration and EIN, whatever business bank statements you have, and a one-page summary of your experience and what the equipment is for. If you already have customers, add a contract or purchase order. A file like that answers questions before they're asked, which usually means a faster answer and better terms. Our equipment financing application checklist has the full list.
Buy, lease or finance: how to decide
- Finance a purchase if the equipment lasts many years and holds its value: commercial ovens, construction machinery, trucks. Once it's paid, it's yours.
- Lease if the equipment ages quickly or you want low upfront payments to protect your cash while you launch.
- Buy used if the budget is tight. Ask for an inspection and maintenance records; some funders finance used equipment on shorter terms.
- Use working capital when the equipment is urgent, cheap or hard to finance on its own, and your business already has deposits.
For a side-by-side of the two approaches, read equipment financing vs. leasing.
Examples by type of new business
These examples are illustrations to help you think, not promises of approval:
- A new auto repair shop: lifts and a diagnostic scanner. The lift lasts years and is worth financing; the scanner gets updated often and may be better leased.
- A new bakery: an oven and an industrial mixer. Ask the manufacturer about promotions and compare with a microloan if the amount is small.
- A cleaning company: a van and floor machines. The van is financed as a vehicle; the machines through the seller.
- A landscaping contractor: a trailer and commercial mowers. Used equipment in good shape can be a smart buy to get started.
Common mistakes when financing equipment early
- Buying more equipment than you'll use. Start with what your first customers need. You can grow later.
- Financing longer than the equipment lasts. You'd end up paying for something that no longer works.
- Forgetting installation, shipping and training. Ask whether they can be rolled into the financing.
- Not reading the end of the lease. Some contracts have a large final payment to keep the equipment.
- Draining the business of cash. If you put every dollar into the down payment, nothing's left for the first months. Keep a cushion.
- Not asking about insurance. Nearly all equipment financing requires coverage. Get a quote before signing so that monthly cost doesn't surprise you.
- Ignoring maintenance. Idle equipment produces nothing, but the payment keeps coming. Budget for upkeep from month one and ask about manufacturer warranties.
When your quotes and bank statements are ready, you can apply with Merchant Fund Express; it's free and doesn't affect your credit. Leer en español.
Frequently asked questions
Can I finance equipment if my business is less than a year old?
Yes. Seller financing, leasing and microloans often accept new businesses, either because the equipment secures the payment or because their mission is to support people starting out. Your personal credit, your experience in the trade and a down payment help a lot. Traditional banks usually want more history.
Can I get an equipment loan with an ITIN?
It depends on the funder. Some sellers, equipment funders, CDFIs and credit unions work with ITIN borrowers, and using the equipment as security makes approval easier. Merchant Fund Express accepts ITIN applicants with no SSN needed. The SBA 504 currently requires every owner to be a U.S. citizen or national.
Is it better for a new business to lease or buy equipment?
If the equipment lasts many years and holds its value, financing a purchase usually comes out ahead over time. If it goes obsolete quickly or you need to protect your cash while you launch, leasing may make more sense. Read what happens at the end of the contract before you sign.
Can a startup use an SBA 504 loan?
It can. According to the SBA, the 504 requires a for-profit U.S. business, a viable business plan, capable management and the ability to repay. It finances machinery with a useful life of at least 10 years, not working capital, and it goes through a Certified Development Company and a bank.
Do I need a down payment to finance equipment?
Not always, but it helps. Many equipment funders ask new businesses to put part of the price down, and a down payment improves the offer. Some options, like Merchant Fund Express, don't require collateral in most cases and base their decision on your sales and deposits.
Can I finance used equipment?
Yes, many funders do, sometimes on shorter terms because the equipment has less life left. Ask for an inspection, maintenance records and an invoice with the serial number. Used equipment in good condition can be the smartest way to start without taking on too much debt.