Equipment Financing FAQs

Yes. Used equipment is financed every day, from dealer inventory to auction purchases. Lenders typically weigh the unit's age, hours or mileage, condition, and how strong its resale market is. Private-party purchases usually need extra verification: title status, a lien search, and sometimes an inspection.

It depends on the structure and the file. Some approvals fund the full equipment cost, others ask for money down, and leases commonly collect the first (and sometimes last) payment in advance instead of a down payment. Stronger cash flow, credit, and collateral tend to reduce what is asked up front.

There is no single cutoff. Lenders typically weigh personal and business credit together with time in business, bank cash flow, and the equipment itself. A bruised score with steady deposits and strong collateral can still fit a program, though pricing usually reflects the added risk. Ask what a specific lender weighs before you authorize a credit pull.

Practices vary by lender. Some begin with a soft review, and a hard inquiry can occur at some point in underwriting or at funding. Before you authorize anything, ask each lender when it pulls credit, which bureaus it uses, and whether the pull is soft or hard.

Often, within limits. Many lenders allow a portion of soft costs — delivery, rigging, installation, training, extended warranties — to be rolled into the financed amount, and the allowed share varies by program. Itemize soft costs on the vendor quote so underwriting can see exactly what is being financed.

Newer businesses face more scrutiny and fewer programs, not a closed door. Files in the first couple of years typically lean on the owner's personal credit, industry experience, a personal guaranty, and often a larger down payment. A smaller first transaction, paid as agreed, builds the comparable borrowing history that larger requests need later.

A standing arrangement that lets an equipment seller offer customers a financing option at the point of sale. The buyer applies against your quote, and at funding the lender typically pays your invoice directly. You sell the machine; the financing paperwork runs alongside your sale instead of in front of it.

Program terms vary, so read the agreement before signing. Ask three questions up front: whether the program charges the vendor any fees, whether any recourse or repurchase obligation exists if a buyer defaults, and exactly how and when invoices are paid. Get each answer in writing.

Typically at funding — after the buyer signs final documents and any delivery or acceptance condition is satisfied. Titled vehicles and installed equipment can add steps, since some lenders fund only after title work clears or the buyer confirms acceptance. Confirm the funding trigger for each deal type your program covers.

A broker program is a contractual arrangement under which a finance broker submits client transactions through a funding partner and shares in the transaction economics. The program agreement sets submission standards, compensation, disclosure duties, and which deal types are in scope. Read it as carefully as you would read a client's term sheet.

Complete files with identified equipment place best: a written quote or invoice, current bank statements, and a straight account of the credit story, good or bad. Equipment-backed requests from established operators are the core of most programs. Surprises found in underwriting cost more time than disclosures made at submission.

Expect a broker or referral agreement, a W-9 for compensation, and proof of any licensing your state requires. Several states now regulate commercial financing brokering and disclosure, and the rules differ by state. Confirm your own state's requirements before submitting deals.

Smaller requests often run on a short application plus the equipment quote, with recent bank statements commonly requested. Larger requests usually add business tax returns, financial statements, and sometimes a debt schedule or interim numbers. The threshold between the two varies by lender, so ask for the document list before you start gathering.

A personal guaranty is the owner's promise to repay personally if the business does not. It is standard on most small-business equipment transactions, and lenders read it as the owner standing behind the deal. Established companies with strong financials sometimes qualify for corp-only structures that omit it.

An approval based on the business's own credit, without a personal guaranty from the owners. Lenders typically reserve corp-only structures for companies with meaningful time in business, solid financial statements, and comparable borrowing history in the company's name. If you want one, ask early — it changes what underwriting reviews.

The file goes to credit review, and expect questions or requests for missing items — answering fast keeps the file moving. If the request is approved, you receive proposed terms, often as a term sheet on larger transactions. Then come final documents, any funding conditions such as insurance, and payment to the equipment seller.

It depends on the size of the request and the completeness of the file. Small application-only files involve less review than large transactions with full financial packages, so they generally move sooner. The variable you control is completeness: a file with every document present moves; a file with gaps waits.

The usual suspects are missing bank statements, a vague equipment description, unresolved tax liens, title questions on private-party purchases, and slow answers to underwriter questions. Most delays trace to the file, not the lender. Fix what you can before applying and respond the same day when questions come.

On the schedule in your agreement, typically beginning after funding. Leases often collect advance payments at signing, which is different from the first scheduled payment. Some programs offer seasonal or deferred schedules for revenue that arrives unevenly — if that fits your business, ask; no schedule feature is automatic.

You can, but the risk sits with you until documents are signed and funded. A safer sequence is to get approved terms first, then release the order; most lenders can work from a written quote while the vendor holds the unit. For equipment built to order, ask whether the lender supports progress payments.

It depends on the structure and how the agreement is characterized for tax purposes. Ownership structures point toward depreciation deductions on qualifying equipment, while payments under a true lease are generally treated as a business expense. The label on the contract does not settle the question — have a tax professional review the actual terms.

Section 179 is an election that lets a business deduct the cost of qualifying equipment in the year it is placed in service, up to annual limits that change. Financed equipment can qualify even while payments are still being made, because placed-in-service is the trigger, not payoff. Eligibility, limits, and interaction with bonus depreciation are fact-specific — confirm with your tax professional.

A purchase financed with debt shows as an asset and a liability, with depreciation over the asset's life. Under current lease-accounting standards, most leases longer than twelve months also land on the balance sheet, and classification changes how the expense flows. If covenants or bonding depend on your ratios, involve your accountant before choosing the structure.