How Equipment Financing works
Equipment financing can take the form of a loan, lease, or other commercial agreement used to acquire vehicles, machinery, technology, or specialized tools. The equipment often serves as collateral or is owned by the lessor during the lease.
Providers consider the asset's cost, age, expected useful life, resale value, and role in the business, along with the applicant's credit and cash flow. Excel Capital Funding can help organize the request and refer it to independent equipment finance providers.
May be a fit for
- Revenue-producing machinery or vehicles
- Replacement of obsolete or unreliable equipment
- Technology upgrades with a defined useful life
- Businesses that want to preserve cash for operations
What providers evaluate
- Business cash flow and credit profile
- Equipment type, condition, age, and valuation
- Vendor, purchase price, and intended use
- Down payment or additional collateral when required
- Insurance and licensing requirements for the asset
Common documents
- Business application and bank statements
- Equipment quote, invoice, or purchase agreement
- Vendor and asset details, including serial number when available
- Tax returns or financial statements when requested
- Owner identification and proof of insurance before closing when applicable
Common business uses
- Construction and manufacturing machinery
- Commercial vehicles
- Medical, restaurant, or office equipment
- Computer systems and production technology
Required documents and permitted uses vary by provider, product, industry, and transaction. Additional information may be requested.
Evaluation process
- Identify the equipment, vendor, total installed cost, and expected useful life.
- Submit business financials and the vendor quote or invoice.
- Review loan and lease proposals for payment, term, upfront cash, end-of-term ownership, fees, liens, insurance, and early payoff or buyout terms.
- The provider verifies the asset and vendor, completes documentation, and pays the vendor or funds the approved purchase after closing conditions are met.
Points to consider
- The financing term should generally not exceed the asset's useful life.
- A lease and a loan may have different ownership, tax, accounting, and end-of-term consequences; consult qualified advisers.
- Installation, training, software, taxes, and delivery may or may not be financeable.
- Default can place the financed equipment and other pledged assets at risk.
Frequently asked questions
Can used equipment be financed?
Some providers finance used equipment, subject to age, condition, valuation, vendor, remaining useful life, and the business profile.
What is the difference between a loan and a lease?
A loan generally finances a purchase and the borrower owns the asset subject to a lien. In a lease, the lessor generally owns the asset and the contract defines use and end-of-term options.
Is a down payment required?
It depends on the asset, provider, credit profile, and transaction. Some proposals require upfront cash, deposits, advance payments, or additional collateral.
Excel Capital Funding LLC acts solely as a commercial financing broker and referral source and is not a direct lender. Products are offered by independent providers and are subject to their underwriting, approval, documentation, and availability. Excel Capital Funding does not offer, broker, or arrange financing for businesses located in California.