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Smart Business Equipment Financing

Do you need business equipment financing for any kind of machinery or vehicle?

smart business equipment financing

Most businesses require equipment in order to operate and to make money. In fact, about 80 percent of large and small businesses in the United States use this important type of asset based finance to fund their operations. Your challenge is to make the best procurement choice for your company, taking into consideration numerous factors, such as available business credit lines, cash flow, and balance sheet impact.

Business equipment financing is readily available in virtually every sector of industry. Companies that finance equipment range from the largest Fortune 100 corporations to one-person operations across nearly every conceivable endeavor, yet, diverse as these firms are, each has the goal of finding the most efficient means of financing for its required equipment.

Some examples of assets that a business may need to finance include:

  • Manufacturing and mining equipment
  • Computers, software, and other information technology equipment
  • Trucks, transport, vessels and automobiles
  • Construction equipment
  • Agricultural machinery
  • Medical and dental equipment
  • Aircraft

For new or used equipment, from hundreds of dollars to hundreds of millions of dollars, odds are that you can find an equipment financing solution that is right for your company.

What Financing Options Are Available?

Commercial equipment finance includes both equipment loans and equipment lease financing.

Equipment loans are typically secured by the equipment purchased by the borrower. As is the case with any loan, the borrower signs a note committing to repayment of principal and interest to the lender.

An equipment lease generally refers to an arrangement where one party who owns or controls equipment, called the lessor, transfers possession and use of that equipment for a period of time to another party, called the lessee, in exchange for the payment of periodic rent (i.e., monthly, quarterly or semi-annually) by the lessee to lessor.

In recent years, equipment loans and several similar purchase financing hybrids together have grown in popularity and now account for approximately 60 percent of business equipment financing transactions. The remaining 40 percent consists of the traditional equipment lease, in which the lessor usually retains a 15 percent or more of the residual value of the equipment.

Whether you choose to lease equipment, buy with equipment loans, or some combination of the two, commercial equipment finance offers you a very flexible tool to maintain and to expand your company's operations, while managing its capital structure. You can use equipment loans and commercial equipment leasing to both acquire equipment and to raise capital from owned equipment, without sacrificing your balance sheet or cash flow. 

With commercial equipment finance, your firm can:

  • Acquire essential equipment and machinery with little or no initial investment
  • Preserve capital and hedge against inflation
  • Enjoy the most modern equipment available and regular upgrades.
  • Receive expert vendor asset management service, support, and training.
  • Benefit from a variety of available tax advantages.

How To Get The Very Best Business Equipment Financing

You will find numerous equipment leasing companies as well as traditional banks and business financing specialists that offer both equipment loans and commercial equipment leasing options. Finding equipment financing companies is easy; finding the financial solution best suited to your needs with the optimal financial structure for your business is not so simple.

Before contacting equipment leasing companies and lenders, you will be well served by consulting with your key personnel and professional advisors about how your business equipment financing fits into your overall business strategy. Developing answers to the following questions will guide your discussions with prospective commercial equipment finance vendors:

  • What is your monthly budget?
  • How predictable is your cash flow?
  • How fast is the technology of the equipment improving?
  • How long will you need the equipment?
  • Do you want to own the equipment at the end of your lease?
  • How will the acquisition of equipment and its financing affect your taxes?

Every business is unique. Your immediate needs and concerns should be taken into consideration in the context of your long-range goals and objectives for your company. This is true in any financial decision -- but particularly in one as critical to your success as business equipment financing.

The best way to accomplish this?

Discuss your needs with a knowledgeable, independent consultant with access to a broad array of capital solutions. And one who will take the time to assess your short-term capital equipment needs in light of your long-term objectives for your company.

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