How Do You Finance a $100,000 to $500,000 Equipment Purchase?
Equipment is one of the few financing requests where the asset itself carries real underwriting weight. That changes the structure, the documentation, and often the cost compared with general working capital.
Short Answer
Finance it against the equipment rather than against general cash flow. Equipment loans and leases are secured by the asset, which usually means longer terms and lower cost than a revenue-based advance of the same size. Below roughly $150,000, approvals are frequently application-only with credit and a vendor quote. Above that, expect full financial review — returns, interim statements, and a debt schedule. New, titled, and widely resalable equipment finances most easily; specialized or older used equipment typically requires more down payment.
Why equipment is underwritten differently
A working capital request is repaid out of future performance. An equipment request is repaid out of future performance and backed by a physical asset that can be recovered and resold. That recovery value lets providers extend the term to match the asset's useful life, which is what makes the payment manageable on a large ticket.
It also means the asset's characteristics matter: how liquid the secondary market is, whether it is titled, how quickly it depreciates, and whether it is installed into a building or remains movable.
Loan versus lease
| Equipment loan | Capital lease ($1 buyout) | Operating / FMV lease | |
|---|---|---|---|
| Ownership | You own at purchase | You own at end for nominal amount | Provider owns; return or buy at fair value |
| Typical fit | Long-life equipment you will keep | Same, with lower upfront cash | Technology or equipment you will replace |
| Upfront cash | Down payment common | Often first and last payment | Often lowest upfront |
| End of term | Asset is yours | Small buyout | Return, renew, or purchase |
Tax treatment differs between these structures and depends on your situation. That conversation belongs with your CPA before you sign, not after — the right answer varies by business.
What changes as the ticket grows
- Around $100,000: frequently application-only with credit, time in business, and a vendor quote. Fastest path.
- Around $250,000: full financial package is typical — returns, interim P&L, debt schedule, sometimes a site visit for installed equipment.
- Around $500,000 and above: expect deeper diligence, possible progress payments to the vendor, and more negotiation on term length and structure.
- At any size, a used or auction purchase adds an appraisal or inspection step.
Practical items that decide the deal
- Get a formal vendor quote with serial or model detail — a verbal price stalls underwriting.
- Clarify soft costs early: freight, rigging, installation, training, and tax are not always financeable in full.
- Confirm delivery timing. Providers fund vendors on a schedule, and a deposit deadline you did not mention is the most common avoidable problem.
- Expect a down payment on used or specialized equipment; plan the cash rather than discovering it at closing.
- Do not commit to a purchase deposit before the financing structure is agreed.
Illustrative only
A hypothetical comparison: the same $250,000 need financed over five years against the equipment produces a very different monthly obligation than the same amount taken as a short-duration advance repaid in months. The point is not a specific rate — it is that matching the term to the asset's working life is what keeps the payment serviceable.
Frequently Asked Questions
- Can I finance used equipment?
- Frequently yes, though age, hours, condition, and the resale market all affect what is available and how much down payment is expected.
- Can installation and freight be included?
- Sometimes, in part. Providers vary in how much soft cost they will finance, so confirm this before committing to a vendor quote.
Key Takeaways
- Equipment is secured by the asset, which supports longer terms than working capital.
- Below roughly $150,000, application-only approvals are common.
- Larger tickets bring full financial review and sometimes inspections.
- Used and specialized equipment usually requires more down payment.
- Soft costs and delivery timing should be settled before underwriting starts.
Programs That May Fit
Not sure which option fits your business?
First Capital Funding is a commercial finance brokerage. We review your financing request and help identify potential options from our network of third-party funding and lending providers. No approval is promised or implied — every credit decision, rate, and term is set by the provider.
Related Questions
Educational information only. This page is general commercial-finance education and is not legal, tax, or financial advice. First Capital Funding is an independent commercial finance brokerage and business consulting firm; it does not issue loans or advances. All financing is subject to approval by independent third-party funding and lending providers, and program availability, pricing, and qualification requirements vary by provider and applicant profile.