Equipment financing
The right structure depends on how long the equipment earns, whether a vendor quote exists, and how fast you need it running. Here is how each option prices out on the same machine.
| Equipment loan | Equipment lease | Working capital (advance or line) | |
|---|---|---|---|
| What secures it | The equipment itself | The lessor owns the equipment | Nothing specific; based on deposits |
| Typical down payment | Often 0–20% | First and last payment, sometimes less | None |
| Needs a vendor quote | Yes | Yes | No |
| Speed | Days to weeks | Days to weeks | Same-day decision possible |
| Best for | Long-life equipment you will keep | Tech that ages quickly, or keeping cash free | Used equipment, private sales, repairs, or when timing matters most |
Illustrative only. A shop buys a $60,000 machine with 10% down ($6,000), financing $54,000.
As an equipment loan at an illustrative 9% APR over 48 months, the payment is about $1,343.79 a month. Over four years that is $64,502 repaid, or about $10,502 in interest.
As a merchant cash advance for the same $54,000 at a 1.30 factor, the business would repay $70,200, a cost of $16,200, over a much shorter period. If collected over 189 business days (about nine months), that is roughly $371 every business day.
The loan costs less and spreads the payment over the machine’s working life. The advance only wins when speed or flexibility matters more than price: a used machine from an auction, a private seller with no invoice, or a breakdown that is costing more each day than the difference in cost.
Rates, factors and terms are illustrative and not offers. Your pricing depends on the equipment, your credit and your bank activity.
Section 179 of the tax code can let a business deduct the cost of qualifying equipment in the year it is placed in service rather than depreciating it over several years, within annual limits. For example, if a business in a 21% bracket could deduct the full $60,000, the deduction would be worth about $12,600 in reduced tax. Whether and how much applies depends on your situation, so confirm with your tax adviser before counting on it.
More detail: using Section 179 for equipment.
Line up three numbers for every offer: the monthly (or daily) payment, the total repaid, and any balloon or buyout at the end of a lease. A $1 buyout lease behaves like a loan; a fair-market-value lease leaves a decision, and a cost, at the end. Then check the payment against your average monthly deposits, counting any advance already on the account.
Merchant Fund Express can arrange working capital or a line of credit when a vendor-backed loan is too slow or the equipment does not qualify. Credit starts at 500, and better credit gets better offers. Same-day decisions, funding typically the next business day. See industry-specific examples such as construction equipment or a $75,000 equipment purchase.
One Merchant Fund Express application is matched with multiple funders, so you can compare net cash, total payback and payment schedule before you choose. Credit from 500, better credit gets better offers; same-day decisions; funding typically the next business day after signing.
Usually, because the equipment secures the loan. An advance can still make sense when speed or a missing vendor invoice rules a loan out.
Often, though some lenders limit age or require an inspection. Working capital can cover private sales that equipment lenders will not.
Many equipment loans ask for 0 to 20%. Working capital does not require one.
A $1 buyout lease transfers ownership at the end for a nominal amount. A fair-market-value lease lets you buy, return or renew at the end, usually for a larger buyout.
Financed equipment can qualify if it is placed in service during the tax year, within annual limits. Confirm with your tax adviser.
Same-day decision. Applying takes a few minutes and will not affect your credit score.
