Startup businesses often face difficulty obtaining financing, as most traditional lenders require at least two years in business. However, equipment loans and leases are available from some lenders for startup businesses. Qualifying for equipment financing as a startup business may require a downpayment of 20% and a strong credit score to get the best possible rates.
Financing approval comes down to creditworthiness and finding a lender that is knowledgeable of your industry. We reviewed several different lenders, and our recommendations are based on the cost of financing, their underwriting guidelines, and revenue requirements.
Company | Best For |
|---|---|
Overall terms and conditions | |
Flexible options for smaller startup businesses | |
Low down payment requirements | |
Lease options for those with poor credit | |
Competitive rates for qualified startups |
National Business Capital: Best Overall Terms
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Maximum Loan Amount | $100,000 | Payment Frequency | Monthly |
Minimum Credit Score | 650 | Repayment Term | Up to 5 years |
Annual Percentage Rate (APR) Range | 8% | Annual Revenue | Up to 3 days |
Down Payment | 20% | Time in Business | No minimum |
Why We Like National Business Capital: National Business Capital is an online business loan broker that offers a variety of unique financing programs. It emphasizes personalized service and custom-tailored financing. If you have good credit, you could be matched with several potential lenders on equipment loans of up to $100,000, regardless of the length of time your business has been in operation.
Currency Finance: Flexible Options for Smaller Startups
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Maximum Loan Amount | $500,000 | Payment Frequency | Monthly |
Minimum Credit Score | 620 | Repayment Term | Up to 7 years |
APR Range | 6% | Annual Revenue | 1 to 2 days |
Down Payment | None | Time In Business | No minimum |
Why We Like Currency Finance: Startup businesses that have good credit but are tight on cash can benefit from Currency Finance, as they do not require a down payment. However, to compensate, you may contend with a higher interest rate. Loans may be approved and funded in just one day, which makes Currency Finance a viable option if you need financing quickly.
National Funding: Best for Down Payment Requirements
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Maximum Loan Amount | $150,000 | Payment Frequency | Daily |
Minimum Credit Score | 575 | Repayment Term | Up to 5 years |
APR Range | 8% | Annual Revenue | 1 to 2 days |
Down Payment | None | Time in Business | 6 months |
Why We Like National Funding: Like Currency Finance, National Funding offers no-down-payment equipment financing. Its credit score requirements are more favorable―starting at as low as 575―but it has a higher starting APR than other funders in our guide. National Funding can approve your equipment loan needs in a day or two and finance out to 5 years.
eLease: Leasing for Those With Poor Credit
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Maximum Loan Amount | $500,000 | Payment Frequency | Monthly |
Minimum Credit Score | 500 | Repayment Term | Up to 5 years |
APR Range | 6% | Annual Revenue | 1 to 2 days |
Down Payment | 10% | Time in Business | No minimum |
Why We Like eLease: eLease offers equipment leases up to $500,000, with terms of up to 5 years. eLease is a viable option for startups that are tight on cash or have poor credit, given that there is no minimum-time-in-business requirement nor a minimum-revenue requirement. Each application is reviewed on a case-by-case basis.
CIT: Competitive Rates for Qualified Startups
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Maximum Loan Amount | $500,000 | Payment Frequency | Daily, weekly, monthly |
Minimum Credit Score | 620 | Repayment Term | 6 to 72 months |
APR Range | 5.49% | Annual Revenue | 1 to 2 days |
Down Payment | 20%+ | Time in Business | No stated minimum |
Why we like CIT: Borrowers with great credit and financials may be eligible for equipment financing through CIT. Starting rates of 5.49% are among the most competitive in this space. Newer businesses may need to put a significant amount of money down to obtain financing, which makes this option appropriate only for those who have sufficient capital in reserve or prior industry experience.
When Equipment Loans for Startup Businesses Make Sense
Most businesses need equipment when starting out. Manufacturing businesses need specialized plant equipment to fulfill orders, construction businesses require heavy equipment, and doctors’ offices need medical equipment. Many startup business owners prefer to use equipment loans as they provide access to needed equipment without having to pay the entire amount upfront.
Typically, equipment with a long-expected use life is best suited for an equipment loan. Equipment that has a short shelf life, such as computers, copiers, and other types of technology, might be suited better to equipment leases. Additionally, some manufacturers may offer direct financing or lease arrangements that are competitive with the terms, costs, and conditions offered by banks and online lenders.
Bottom Line
Getting approved for an equipment loan as a startup can be difficult. Most lenders want to see operation history as well as minimum annual revenue to finance equipment. In the absence of both, a business will need to rely heavily on the borrower’s credit to obtain financing. Depending on the type of equipment you need, an equipment lease may make more sense for a business.
