Need Financing for Machinery or Equipment? Match the Loan to the Asset Before You Buy

Buying machinery, vehicles, production systems or other major equipment with cash can put unnecessary pressure on working capital. Businesses planning significant fixed-asset purchases should evaluate financing before the purchase is finalized.

What Financing Can Be Used to Buy Business Equipment?

Equipment financing is a dedicated business funding category for qualifying asset purchases. For larger long-term fixed assets, SBA 504 financing may also be relevant because the program is designed primarily for commercial real estate, large equipment and other long-term business assets.

Typical SBA 504 considerations include operating as a for-profit business, demonstrating repayment ability and providing an owner contribution. The funding guidance identifies a typical down payment range of approximately 10% to 20%, although actual requirements vary.

What Will a Funding Provider Review?

Owners should be prepared with the equipment purchase price, requested financing amount, available contribution and a clear explanation of how the asset will support the business. Funding providers may also review personal credit, annual revenue, cash flow, time in business and existing business debt.

For established businesses, keeping business financial statements, bank information and debt records organized can make the financing conversation more efficient.

Should Equipment Financing Be Arranged Before Ordering Machinery?

Understanding potential financing before committing to a major purchase can help owners determine whether the required down payment and repayment structure fit available cash flow.

If your business is actively purchasing machinery, vehicles or other major equipment, connect with EIN Business Funding to explore equipment financing and other potential funding options.

FAQs

Can I finance machinery for my business?
Potentially. Equipment financing is designed for qualifying business equipment purchases, while SBA 504 financing may also be relevant for larger long-term fixed assets.

What down payment may SBA 504 financing require?
The funding guidance identifies a typical down payment range of approximately 10% to 20%, although actual requirements vary by transaction.

What information should I prepare for equipment financing?
Prepare the equipment cost, financing amount, owner contribution, business revenue, cash flow, credit profile, existing debt and an explanation of how the equipment will be used.