Equipment financing explained for small businesses

Equipment financing is a way to get the machine, vehicle or tool your business needs now and pay for it over time, instead of paying the full price up front. The equipment goes to work right away and starts earning while you pay it off. For most small businesses, it is the simplest way to add capacity without emptying the bank account.

How equipment financing works

The basic structure is the same across most of the market. You pick the equipment and get a quote from the seller. A funding partner pays for it, and you repay over a set term with scheduled payments.

In many equipment deals, the equipment itself backs the financing. That is a big reason equipment financing is often easier to get than a general loan of the same size: the funder has something real behind the deal. You use the machine every day, and once it is paid off, it is yours.

The details change from deal to deal. The term length, the payment schedule, whether there is a down payment, and what happens at the end of the term all depend on the equipment, your business and the funding partner. At Royal Funding Group, a funding specialist works out that structure with you and shows you the options side by side.

What you can finance

If your business runs on it, it can usually be financed. Common examples:

• Construction machines: excavators, skid steers, loaders, compact track loaders
• Trucks, trailers, vans and other work vehicles
• Kitchen and restaurant equipment
• Manufacturing machines, CNC equipment and production lines
• Medical, dental and lab equipment
• Auto shop lifts, diagnostic tools and alignment machines
• HVAC, plumbing and landscaping gear
• Technology, point-of-sale systems and office equipment

New and used equipment both qualify in most cases. Used equipment can make a lot of sense when the machine has plenty of working life left.

Who equipment financing fits

Equipment financing fits an established business that knows what it needs and can show the revenue to support the payment. At RFG, that means a U.S. business with 12 or more months in business. We fund businesses only, not personal purchases, and we do not fund startups or pre-revenue businesses at this time.

Credit matters, but it is not the whole picture. RFG works across a wide range of credit scores and looks at the whole business, including revenue, time in business and how money moves through your account. Owners in the 550 to 650 range are a good fit for most programs, and 650+ gets the best pricing and highest limits. Below 550, options may be limited, but it is still worth a conversation. Strong, steady deposits often carry more weight than owners expect.

Equipment financing vs. other ways to pay for equipment

Equipment financing is not the only route. Depending on the purchase, a different program can fit better:

• Term loans. For large equipment purchases, a term loan with a 12 to 48 month term spreads the cost over a longer period and handles larger amounts.
• Expansion financing. When the equipment is part of a bigger move, like adding trucks to a fleet or gearing up for a large contract, expansion financing covers the whole plan, up to $5M.
• Working capital. For repairs, parts or smaller purchases, working capital is fast and flexible, with terms of 5 to 12 months.

The right choice depends on the price of the equipment, how long it will earn for you, and what else is happening in your business. A specialist helps you weigh those.

What it costs

Every equipment financing offer has a total cost: the amount you repay over the term compared with the price of the equipment. When you compare offers, look at the total payback, the payment amount and schedule, any fees at the start, and whether there is a discount for paying early. Most RFG programs include early payoff discounts.

The practical test is simple. If the equipment brings in more than the payment costs you each month, through new jobs, more output or lower rental bills, the financing is working for you. The funding calculator helps you run the numbers before you talk to anyone.

How to apply

Applying with RFG takes two minutes. The online application asks five quick questions: the amount you need, your average monthly revenue, time in business, your mobile phone and your email. No documents are needed to start. A funding specialist calls you the same day, then asks for recent business bank statements by secure link. Approvals come in hours, with same-day funding.

One application gives you access to multiple options through our network of funding partners, and your specialist helps you compare them. If you already have a quote from the equipment seller, have it ready for the call.

Get the equipment working for you

Royal Funding Group has helped more than 25,000 businesses get the funding they need since 2012, including the trucks, machines and tools that keep them growing. Tell us what you need to buy and a specialist will structure the financing around your business. Apply in two minutes or call (929) 506-8133.