Best Equipment Financing in July 2026: Should You Lease, Finance or Rent Equipment?
Equipment loans and leases can help you get essential equipment and machinery for your business. Financing options may be available for startups and businesses with bad credit.
Advertising Disclosures
Loading Disclosures…
Equipment financing allows your business to acquire equipment like machinery and vehicles without spending a large sum of cash upfront.
With a business equipment loan, the equipment acts as collateral until your business repays the loan in full. With a business equipment lease, the lender owns the equipment.
According to applications processed by LendingTree’s Small Business Concierge team in 2025, the average approved amount of a business loan used for equipment was nearly $38,000.
Should you use equipment financing?
Equipment financing can get you the right tools for the right job, especially if you’re looking to expand or are working with old or outdated machinery.
Equipment financing is a good fit for:
- Managing cash flow by avoiding use of liquid capital for large purchases
- Making a quick purchase
- Driving revenue growth by increasing production or operations
It’s not a good fit for:
- Short-term equipment needs, unless you choose an operating lease
- Businesses with unstable revenue and bad credit, which can mean riskier terms
- Equipment that will be obsolete before loan payoff date
How to qualify for equipment financing
Lenders typically consider the following eligibility criteria for equipment financing:
Credit score: Lenders may examine both your business credit score and personal credit score to determine eligibility. Many lenders require a minimum credit score in the 600s, though some may allow a lower credit score for equipment leases or loans with stricter terms.
Time in business: Some lenders have a minimum time in business requirement of two years, but certain online lenders only require six months or less in operation. For example, Taycor Financial has no minimum time in business requirements for equipment financing and leasing.
Annual revenue: Each lender has its own minimum annual revenue requirement. For example, Ameris Bank requires $100,000, whereas Bank of America requires $250,000.
When applying for equipment financing, the lender may require the following:
- Equipment quote
- Recent bank statements
- Personal and business tax returns
- Business plan
- Balance sheets and accounts payable
- Business licenses, permits and registration documents
- Proof of business insurance
- Driver’s license
Types of equipment financing
There are a few types of equipment financing with different qualification requirements. Depending on your business and the equipment you need, one may serve you better than the others.
- Equipment financing: The borrower purchases the equipment with a secured business loan and repays the lender over several years. Once the loan is fully repaid, the borrower owns the equipment outright.
- Equipment leasing: The lessee signs a contract that gives them the right to use the equipment for a specified period of time. With some lease types, the lessee purchases the equipment at the end of the lease term.
- Renting equipment: The renter signs a contract that grants them the right to use the equipment for a period of time, which is usually shorter than with a lease. Some rental companies include training and maintenance.
| Equipment financing | Equipment leasing | Renting equipment | |
|---|---|---|---|
| Best for… | Long-term use | Flexibility | Short-term use |
| What businesses can typically qualify? | Established businesses with strong revenue and a minimum credit score in the 600s. | Startups or established businesses with strong cash flow and fair or better credit. | Businesses with insurance, a license to operate equipment and proof of financial responsibility. |
| Ownership | The borrower owns the equipment. | The lender owns the equipment but may give the lessee the option to buy it at the end of the lease term. | The lender owns the equipment, and the borrower must return it at the end of the rental term. |
| Down payment | May be required. | Not typically required. | Not typically required (but may require a security deposit). |
| Maintenance | The borrower is responsible for any maintenance on the equipment. | The lessee may be responsible for maintenance, or it may be included with the cost of the lease. | The cost of maintenance is typically included in the rental contract. |
| Costs | Costs less in the long term. | Costs more in the long term. | Highest cost of all in the long term. |
- A capital lease allows you to rent equipment with the option to buy at the end of the lease term. On the downside, you can’t cancel a capital lease.
- An operating lease is similar to a conventional rental agreement: You make regular payments, but will never own the equipment. However, as the lessee, you can usually cancel the lease with adequate prior notice.
- Buying with cash or a loan: You can claim depreciation of the asset as annual deductions on your tax returns. With a loan, you can also deduct equipment loan interest.
- Capital lease: You can claim depreciation since the asset is added to your balance sheet and purchased at the end of the term. You can also deduct interest payments.
- Operating lease: Depreciation of equipment isn’t tax deductible, but the payments are still business expenses.
Consult a tax professional if you have questions about how these options affect your tax liability.
How to compare equipment financing options
Shop around for equipment financing to find the best rate and terms for your business needs. Consider these five factors while weighing your options.
Review lending terms
When reviewing loan options, weigh the total borrowing cost against the benefit of the equipment in terms of increased revenue or cost savings.
Monthly payment vs. total cost: A long-term loan with affordable monthly payments can have a steep total borrowing cost, so use a business loan calculator to decide whether the total cost is worth the cash flow flexibility.
Interest rate: Business loan interest rates vary and impact the cost of equipment financing, so comparing rates from a handful of lenders can save you money or help your budget stretch further.
Repayment term: Longer repayment terms come with lower monthly payments while shorter repayment terms cost less in interest charges over time, so aim to strike a balance between managing cash flow and minimizing your total cost.
Additional fees: Some lenders charge extra fees, like origination fees or prepayment penalties, so make sure to read the fine print.
Financing amount: Some equipment lenders offer 100% financing, typically with strict credit requirements, while others only lend up to 80% of the equipment’s value and require the borrower to provide the rest as a down payment.
Consider resale values
While leasing offers the most flexibility should your business no longer need the equipment, you also have the option to resell equipment you own. You can sell business equipment on online marketplaces, at auction, through a broker or on consignment through an equipment dealer. When deciding whether to lease or buy, estimate the resale value by checking used equipment prices for similar models online. Buying may be more appealing than leasing if the equipment will still be valuable after the loan is paid.
Don’t forget about upgrade cycles
If your business needs equipment that requires frequent upgrades, an equipment loan could leave you with monthly payments after the equipment becomes obsolete, making it difficult to finance upgrades. You typically can’t cancel a business loan after the funds are disbursed, but if you choose a loan with no prepayment penalties, you can pay the balance early and resell or trade in the equipment.
Operating leases are preferable for equipment that needs frequent replacement, but early cancellation may result in a penalty, so be sure to choose the right lease term or consider rental equipment for technology that will quickly become obsolete.
Top equipment financing options
| Lender | User rating | Best for | Starting rate | Amount | Term | |
|---|---|---|---|---|---|---|
|
USDA loans | 10.99% | Not specified | Not specified |
Learn more about how we chose our picks.
The best equipment financing lenders based on how you’ll use the funds
Best for: USDA loans – iBusiness Funding
- Starting rate
- 10.99%
- Works with a network of lenders to offer multiple options with one application
- Offers USDA loans with high borrowing limits
- Doesn’t disclose interest rates for term loans or USDA loans
- Doesn’t offer specific equipment loans
Best Egg works with a network of lenders and offers multiple business loan products for financing equipment. Uniquely, the company offers USDA loans up to Not specified for businesses in rural areas to finance machinery and equipment with repayment terms up to Not specified months.
You can also apply for an SBA 7(a) loan from Best Egg to purchase equipment. For faster funding, Best Egg also offers term loans up to Not specified for almost any business-related expense with no upfront costs and low minimum credit score requirements.
Read our full Best Egg review.
In order to qualify, you’ll need to meet Best Egg’s criteria of:
- Minimum credit score:
- Minimum time in business:
- Minimum annual revenue:
How we chose the best equipment financing
We reviewed more than 25 lenders to determine the overall best 10 equipment financing loans. To make our list, lenders must meet the following criteria:
- Minimum time in business requirement of two years or less.
- Rates and terms: We prioritized lenders with more competitive fixed rates, fewer fees and greater options for repayment terms, loan amounts and APR discounts.
- Repayment experience: We considered each lender’s reputation and business practices, favoring lenders that report to all major credit bureaus, offer reliable customer service and provide unique perks to customers, like interest rate discounts and flexible repayment schedules.
Best equipment financing summary
Frequently asked questions
Leasing is a type of equipment financing. Your business pays to use the equipment while the lender retains ownership. Some equipment leases come with the option to purchase the equipment at the end of the lease term.
Yes. Some equipment lenders only require six months in business to qualify for equipment financing and some don’t have any time-in-business requirements. But your business may need to meet other requirements and may face lower borrowing limits than established businesses.
They can, but it depends on what the tariffs are and the cost of foreign equipment and machinery.