Can a startup get equipment financing?

Reviewed by Turan Zeynal, Managing Partner, Outset Funding Partners · Last reviewed July 17, 2026

TL;DR

Yes. Equipment financing is one of the most startup-accessible funding products because the equipment itself is collateral. Expect a higher down payment (10–25%), higher rates (12–30% APR), and a personal guarantee. Vendor-arranged financing is often the easiest path — the equipment vendor already has lending partners set up to underwrite new businesses.

Quick facts

Time in business: 0 – 6 months acceptable (some lenders)
Personal FICO: 620+ typical, 680+ for best rates
Down payment: 10 – 25% for startups
APR range: 12 – 30%
Term length: 24 – 60 months typical for startups
Personal guarantee: Required

The 60-second answer

A startup without revenue history looks unfundable to a traditional bank — but not to an equipment lender. The equipment is real, has a resale value, and can be repossessed. That collateral is what makes startups eligible for equipment financing when other funding is out of reach.

The trade-off: startups pay more. Higher down payment (10–25% vs 0% for established businesses), higher APR (12–30% vs 6–12%), shorter terms (24–60 months vs up to 84), and a personal guarantee is non-negotiable.

How it works, step by step

Ask the vendor first
The equipment vendor often has 2–5 lending partners set up to finance their equipment. Vendor-arranged financing is usually the fastest and easiest startup path.
Have your personal financials ready
For startups, the lender is essentially underwriting you personally: FICO, personal tax returns, personal financial statement, and any personal assets that support the guarantee.
Prepare a business plan for larger amounts
Under ~$50K, most equipment lenders skip the business plan. Over that, expect to submit a plan showing how the equipment produces revenue.
Save for the down payment
Startups should expect 10–25% down. On a $50K piece of equipment, that's $5K–$12.5K in cash at closing.
Compare vendor financing to third-party
Vendor financing is convenient but not always cheapest. Get a second quote from an independent equipment lender to compare APR and terms.

How startups actually get equipment financed

A first-year business with no revenue history and no business credit still finances equipment every day — the lender just underwrites you personally instead of the business. The personal guarantee does more work in startup deals than in any other product, because it gives the lender someone with a real credit file to collect from if the business fails. That means your personal FICO, personal debt-to-income, and any prior business ownership history become the primary underwriting inputs, not tax returns or bank statements the startup doesn't have yet.

Two structures dominate startup equipment deals. The first is a straight EFA (Equipment Finance Agreement) with 15–25% down and personal guarantee at rates 3–5 points above what an established business would pay. The second is a $1 buyout lease that keeps the equipment on the lender's balance sheet during the term, then transfers title to you at the end for a dollar — functionally identical to a loan but often easier to approve because the lender retains legal ownership as security.

A useful playbook: buy used-but-recent equipment (2–4 years old) at 60–70% of new invoice, finance 80% of that lower price with the vendor's captive finance arm, and use the down payment savings to build a cash reserve. New equipment at 100% financing is the slowest path to profitability for a startup.

Pros and cons

Pros

✓Real funding path for pre-revenue and early-stage businesses
✓Equipment is collateral — approval doesn't require years of financials
✓Vendor financing streamlines the process
✓Section 179 deduction available for eligible equipment
✓Building on-time payment history strengthens future funding applications

Cons

×Higher down payment than established businesses
×Higher APR (12–30% typical)
×Personal guarantee required — your personal assets are on the line
×Shorter terms mean higher monthly payments
×Vendor financing may not be the cheapest option — always get a second quote

Who qualifies

•US-based business (LLC, corporation, or sole proprietor with EIN)
•620+ personal FICO
•Ability to fund 10–25% down payment
•Willing to sign a personal guarantee
•Specific equipment quote from a vendor
•No active bankruptcy

Startup funding options

Option	When to use	Watch out for
Vendor-arranged equipment financing	Fastest path for new businesses buying equipment	Not always cheapest — compare with independent lenders
Independent equipment lender	You want to compare rates on a specific equipment purchase	Slightly longer application process
SBA microloan (up to $50K)	You want SBA rates and can wait 4–8 weeks	Not all lenders participate; slower than equipment financing
Business credit card	Equipment costs under ~$25K, want to preserve cash	18–29% APR eats into cash flow fast
Personal savings + business bank loan	You have significant personal savings to invest	Puts more personal capital at risk

Frequently asked questions

Can I get equipment financing before my business has revenue?

Yes — many equipment lenders will underwrite based on personal credit, personal financials, and a strong business plan. Expect a higher down payment (15–25%) and higher rates than a business with 2 years of revenue history.

What down payment should I expect as a startup?

10–25% is typical. Some vendor-arranged financing programs offer 0% down for pre-approved equipment types, but this usually requires stronger personal credit (700+). Used equipment or specialty equipment often requires higher down payments.

Do startups qualify for Section 179?

Yes — Section 179 is based on when the equipment is placed in service, not on how long the business has been operating. A startup can deduct the full purchase price in year one if the business has taxable income to offset. Talk to a CPA before assuming the deduction.

Should I lease or buy as a startup?

For long-life equipment (vehicles, machinery) you'll use 5+ years, buying builds equity and is usually cheaper over the full life. For fast-changing equipment (IT, medical imaging), leasing preserves upgrade flexibility. Cash flow constraints often push startups toward leasing regardless.

What if my startup fails and I can't pay?

The lender repossesses the equipment and applies the sale proceeds to your balance. If there's a shortfall, you owe it personally because you signed a personal guarantee. This can affect personal credit and follow you outside the business.

Are there startup-specific equipment lenders?

Yes — several lenders (like Balboa Capital, Currency, and CIT) actively market to startups. Vendor-arranged financing programs from equipment manufacturers (John Deere Financial, Caterpillar Financial) also have startup-friendly programs.

Sources

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