Equipment financing: what lenders check and how to read the deal

These are each lender's own published terms, checked in October 2026. They're named only as examples, not recommendations, and terms change, so check the lender's page.

"Application-only" means the lender decides from your application and credit, without full financial statements, up to a set amount. Above that, expect to send tax returns and financial statements. The Equipment Leasing and Finance Association's monthly survey of its member lenders put the industry-wide average approval rate at 77.4% in July 2026.

Most of the lenders above want two years, and one says no start-ups. Some lenders say they work with start-ups, so ask each one directly. Typically, a newer business that gets approved puts more money down, pays a higher rate, or both.

SBA microloans are another route. Nonprofit community lenders make them, up to $50,000, and they can pay for equipment. Each lender makes its own credit decisions and sets its own terms, so ask what collateral or personal guarantee it requires.

The cash-first route for a new business: rent, buy used with cash, and let the first two seasons prove the machine earns its keep.

Kansas and Missouri require many non-bank providers to disclose the total of payments, the total dollar cost and any prepayment terms on business financing of $0.5 million or less. Banks are exempt, and so are leases and loans used to buy the equipment that secures them. That leaves out many equipment deals, and the disclosure doesn't have to show an APR anyway. Get every number in writing yourself.

Example (made-up numbers). Ray wants a used crack-sealing machine priced at $40,000. He expects it to keep working about four more years.

Offer A's payment is $420 lower, but it costs $5,195 more and runs five years on a machine Ray expects to last about four. It fails Borrowing Rule 4. Offer B passes rule 4, but four winter payments are $5,000 that has to be saved before December. If that doesn't fit, the answer is a cheaper machine, more cash down, or waiting a season. A longer term is not the fix.

1. It pays for something that earns money: equipment or a vehicle the business uses, property, or the short gap between finishing signed work and collecting for it. Never losses, back taxes or personal spending.
2. Your own numbers show it pays for itself with room to spare. Lenders often look for $1.25 of cash flow for every $1 of payments; treat that as your floor.
3. The payment fits your slowest months, not your best ones.
4. It's paid off before the equipment wears out, and you know how you'd keep paying if work stopped for a season.
5. You know the whole cost before you sign: the APR, every fee, the total of payments, any prepayment penalty, the personal guarantee, and what the lender can take.

Never: merchant cash advances or other daily-debit financing; borrowing to cover a loss; cashing out or borrowing from retirement to start or rescue a business.

Gather these before you apply:

1. Proof of time in business: formation papers and your IRS EIN letter
2. Personal credit reports for each owner who may sign a guarantee, pulled free and checked for errors
3. Recent business bank statements (ask how many months), with a note explaining any overdraft
4. Year-to-date profit and loss and balance sheet, plus two years of tax returns for bigger deals
5. A debt schedule
6. The quote or bill of sale: year, make, model, serial number or VIN, hours, and photos if used
7. Your down payment in cash, kept separate from your winter reserve
8. An insurance quote for the machine
9. Your Borrowing Rules check: the payment against your slowest months, and the term against the machine's working life

• SBA: microloans through nonprofit community lenders.
• Small Business Development Centers: free help comparing offers (find your SBDC).
• SCORE: free mentoring (score.org).