Equipment Loan
An equipment loan is a financing product specifically structured for business equipment purchases — typically secured by the equipment itself — offering lower rates than unsecured working capital products due to collateral security and clear use of proceeds.
Why This Matters
Equipment loans serve a specific business need: financing capital expenditure on equipment (vehicles, machinery, technology, fixtures). The product structure differs from MCA: 3-7 year terms typical, fixed monthly payments, equipment serves as collateral securing the loan, rates typically 6-15% APR (much lower than MCA effective cost). Equipment loans don't compete directly with MCA — they serve specific capital expenditure needs while MCA serves general working capital needs. Many businesses use both products in combination: equipment loan for capital purchases, MCA for working capital cycles.
Frequently Asked Questions
Frequently Asked Questions
When should businesses choose equipment loan over MCA?
When capital need is specifically for equipment purchase that can serve as loan collateral. Equipment loans price dramatically lower than MCA for this use case due to collateral security. MCA still appropriate for general working capital, payroll, marketing spend, or any non-equipment capital need.
What businesses qualify for equipment loans?
Established businesses (2+ years typically), reasonable personal credit (typically 620+), and clear documentation of equipment purchase. Equipment loan qualification is generally easier than SBA but tighter than MCA. Equipment loans available from banks, specialty equipment finance companies, and some MCA funders offering equipment-finance programs.