Yes, you can use a business line of credit to purchase equipment, and for many operators it is the most flexible way to do it — you draw only what you need, when a machine, vehicle, or tech upgrade actually comes up, and you pay interest only on the balance you carry rather than on a full lump sum. A revolving line works best for equipment that is under roughly $50,000, that you want to buy quickly, or that you would rather not tie to a multi-year fixed loan. For a single large, long-life asset, a dedicated equipment loan (where the machine itself is the collateral) is often the lower-cost fit. And when a business cannot qualify for either — thin credit, a young file, or a lender that wants two years of tax returns you do not have — revenue-based funding approved on your bank deposits can bridge the gap in 24 to 48 hours. This guide walks through all three, with a decision framework and a realistic cost comparison.
Key takeaways
- Yes — a business line of credit can buy equipment, and you pay interest only on the balance you draw, not the full limit.
- Lines fit best for smaller or recurring equipment purchases (roughly under $50,000 each) when you have strong business credit.
- For one large, long-life asset, a dedicated equipment loan is often cheaper because the equipment serves as collateral.
- Revenue-based funding is approved on bank deposits and revenue, not credit score — FICO 500+ can qualify, minimums around $10,000.
- Revenue-based funding typically funds in 24 to 48 hours, the fastest of the three paths, and is never guaranteed.
- Revenue-based funding wins on speed and access, not lowest cost — use a line or equipment loan when you qualify and timing allows.
- Match financing structure to the equipment's earning curve and keep a cash buffer for install, downtime, and training.
How a business line of credit works for equipment
A business line of credit is revolving: you are approved for a ceiling — say $75,000 — and you draw against it as needed. Buy a $12,000 refrigeration unit today, and only that $12,000 accrues interest. As you repay, the credit becomes available again, the way a credit card revolves. That structure is the whole point for equipment buyers, because equipment needs rarely arrive in one clean lump. You replace a compressor in March, add a delivery van in July, and upgrade point-of-sale in the fall — a line covers all three without a new application each time.
Two mechanics matter most for equipment purchases. First, draw timing: you control when the money moves, so you can act the day a supplier offers a discount or a used machine hits the market. Second, interest-only exposure: you are not paying to carry capital you have not deployed. Compare that to an equipment loan, where the full principal funds on day one and you pay interest on all of it from the first payment, whether the asset is earning yet or not.
The tradeoff: lines are typically smaller than dedicated equipment loans, may carry variable rates, and usually require stronger credit and time in business to secure a meaningful limit. For a deeper primer, see our business line of credit guide.
Line of credit vs. equipment loan vs. revenue-based funding
These three tools solve overlapping problems in different ways. Choosing wrong means overpaying or moving too slowly.
Business line of credit — Revolving, flexible, interest on the drawn balance only. Best for smaller, recurring, or fast-moving equipment purchases. Requires the strongest profile of the three and can take longer to set up initially, though draws afterward are instant.
Equipment loan — A fixed, term loan where the equipment secures the debt. Because the asset is collateral, rates are often the lowest available and terms can stretch to match the equipment's useful life. Best for a single, large, long-life asset — a $120,000 CNC machine, a commercial truck, a production line. Less flexible: it funds one thing, one time.
Revenue-based funding (MCA marketplace) — Approval rests on your bank deposits and revenue rather than your credit score. Funding lands in 24 to 48 hours, minimums start around $10,000, and FICO of 500+ can qualify. Repayment flexes with your sales through a fixed factor cost rather than an APR. Best when speed matters more than lowest cost, or when credit-based products decline you. Never guaranteed — approval still depends on consistent deposits.
Cost and structure comparison (example figures)
The table below uses illustrative numbers to show how the three paths differ in shape. These are for example only; your actual terms depend on credit, revenue, and the equipment itself.
| Factor | Line of credit | Equipment loan | Revenue-based funding |
|---|---|---|---|
| Typical amount | $10k–$250k (draw as needed) | $25k–$500k+ (one asset) | $10k–$500k |
| How you're approved | Credit + time in business | Credit + the equipment as collateral | Bank deposits + revenue |
| Min FICO (for example) | ~650+ | ~620+ | 500+ |
| Speed to funding | Days to set up, instant draws after | Several days to weeks | 24–48 hours |
| Cost structure | Interest on drawn balance (often variable) | Fixed APR, term matched to asset life | Fixed factor cost, flexes with sales |
| Best for | Smaller/recurring/fast buys | One large, long-life asset | Speed or thin-credit situations |
Notice what the comparison rewards: if you have the credit and time, a line or an equipment loan will almost always cost less. Revenue-based funding wins on access and speed, not price — that is the honest tradeoff.
Decision framework: which path fits your purchase
A line of credit works best when:
- You buy equipment in pieces or on unpredictable timing across the year.
- Individual purchases are modest — roughly under $50,000 each.
- You have solid business credit and at least a year or two of operating history.
- You want reusable capital, not a one-time loan you have to re-apply for.
An equipment loan works best when:
- You are buying one large, durable asset with a long useful life.
- You want the lowest possible cost and can wait days to weeks to close.
- You are comfortable with the equipment itself serving as collateral.
Revenue-based funding works best when:
- You need the equipment now and cannot wait for a bank timeline.
- Your credit is thin or below the threshold a line or loan requires (FICO 500+ can still qualify).
- Your deposits are steady even if your credit file is not strong.
Avoid revenue-based funding when you already qualify for a line or an equipment loan at a lower cost and your purchase is not time-sensitive — use the cheaper tool. Avoid a line of credit when the single purchase is very large and long-lived; an asset-backed equipment loan will typically beat it on cost.
Qualifying: what lenders actually look at
For a line of credit, expect underwriters to weigh personal and business credit, time in business (often 1–2 years), and annual revenue. Limits scale with the strength of that profile. Newer businesses frequently get approved but at modest ceilings.
For an equipment loan, the equipment reduces the lender's risk, so credit requirements loosen slightly, but you will still provide financials and often a down payment. Expect the lender to verify the quote, the vendor, and the asset's resale value.
For revenue-based funding through a marketplace, the review is different by design. Underwriting centers on your business bank statements — typically the last three to six months — to confirm consistent deposits and healthy average daily balances. Credit is checked but is not the gate; FICO 500+ can qualify. Because the file is bank-driven rather than credit-driven, decisions come fast, often the same day, with funding in 24 to 48 hours. It is never guaranteed, and no responsible marketplace promises it is — approval depends on what your deposits show.
How to protect your cash flow when financing equipment
Equipment should pay for itself. Before you fund any purchase, tie the financing shape to how the asset generates cash.
Match the repayment to the earning curve. A machine that starts producing revenue immediately can support a faster paydown; one that ramps slowly should not saddle you with a heavy fixed monthly bill in month one. This is exactly where a line's interest-only-on-drawn-balance structure, or revenue-based funding's sales-linked repayment, can protect your working capital better than a rigid term loan.
Keep a buffer between the purchase and your operating cash. Do not deploy the funding at the ceiling of what you can carry. Equipment brings install costs, downtime, and training that rarely show up in the sticker price.
Think in cash flow, not just cost. The cheapest headline rate is not always the right call if it drains the reserve you need to run payroll during a slow stretch. A slightly higher-cost, more flexible structure that keeps cash in the business can be the smarter operator's choice. For the broader picture, see our small business financing guide.
A realistic scenario
Consider, for example, a growing landscaping company that needs a $28,000 commercial mower and a $9,000 trailer heading into peak season. The owner has a 610 FICO — below what most banks want for a fresh line — but the business clears steady deposits every week from spring through fall.
A traditional line of credit is a stretch given the credit score, and an equipment loan would take longer than the season allows. Revenue-based funding, approved on the deposit history rather than the score, funds both purchases inside two days so the crew is running new equipment during the exact weeks the revenue arrives. Repayment flexes with sales, so the slower shoulder weeks do not crush cash flow. It costs more than a bank line would — but the bank line was not available, and the season would not wait. That is the tradeoff, stated plainly: access and speed over lowest cost.
Frequently asked questions
Can I use a business line of credit to buy equipment?
Yes. A line of credit is one of the most flexible ways to finance equipment because you draw only what each purchase requires and pay interest on the drawn balance rather than a full lump sum. It fits best for smaller or recurring equipment buys, generally under about $50,000 each, when you have solid business credit.
Is a line of credit or an equipment loan better for equipment?
For a single large, long-life asset, an equipment loan is often cheaper because the equipment itself serves as collateral and the term can match the asset's useful life. For smaller, recurring, or fast-moving purchases you want reusable capital for, a line of credit usually wins on flexibility.
What if my credit is too low to qualify for a line of credit?
Revenue-based funding through a marketplace is approved on your business bank deposits and revenue rather than your credit score, so FICO of 500 or above can still qualify. It funds fast — typically 24 to 48 hours — with minimums around $10,000. It is never guaranteed; approval depends on consistent deposits.
How fast can I get funding to buy equipment?
It depends on the tool. A line of credit takes days to set up but allows instant draws afterward. An equipment loan can take days to weeks. Revenue-based funding is the fastest, often approving the same day and funding within 24 to 48 hours because underwriting centers on bank statements rather than credit.
How much revenue-based funding can I get for equipment?
Amounts commonly range from about $10,000 up to $500,000, sized to what your bank deposits and revenue support. Because approval is deposit-driven, businesses with steady sales but imperfect credit can often access more than a credit-based line would offer them.
Does revenue-based funding use an interest rate or APR?
It typically uses a fixed factor cost rather than a traditional APR, and repayment often flexes with your sales. That structure can protect cash flow during slow periods, but it usually costs more than a bank line or equipment loan — the tradeoff is speed and access over lowest price.
What do lenders look at to approve equipment financing?
A line of credit weighs personal and business credit, time in business, and revenue. An equipment loan adds the equipment as collateral and often a down payment. Revenue-based funding centers on three to six months of business bank statements to confirm consistent deposits, with credit checked but not the deciding factor.
Should I finance equipment or pay cash?
Financing preserves working capital and can make sense when the equipment starts earning quickly. Match the repayment shape to the asset's earning curve and keep a cash buffer for install, downtime, and training costs. The cheapest headline rate is not always right if it drains the reserve you need to run the business.
