Equipment Financing and Leasing

Equipment finance is the most collateral-driven product in business lending. The lender takes a security interest in a specific, identifiable, resaleable asset — a machine, a truck fleet, medical imaging, production line, IT infrastructure — and underwrites the equipment's useful life and secondary market value alongside the borrower's cash flow. Because the collateral is strong and easy to value, approval is faster and credit standards are more forgiving than an unsecured term loan, and the payment schedule can be matched to the revenue the equipment produces.

There are three common structures. An equipment loan finances a purchase with the borrower owning the asset outright from day one. A lease conserves cash and may allow the payment to be treated as an operating expense, with a purchase option at the end depending on the structure. A sale-leaseback takes equipment the business already owns free and clear, sells it to the lender for cash and leases it back, converting a depreciating asset into working capital without disrupting operations. That last structure is chronically underused by owners who do not realize the equity is sitting on their shop floor.