Equipment financing pays for machinery, vehicles or technology with the equipment itself usually serving as collateral, through a loan, a lease or an equipment finance agreement. Bellgrove Lenders, a small-business funding broker in Appleton, Wisconsin, explains the differences and what partners check. Lending partners decide each request and set rates and terms.
| What it is | Funding secured by the equipment |
|---|---|
| Structures | Loan, lease or EFA |
| Common assets | Skid steers, combi ovens, dental chairs |
| Construction employers, Outagamie County | 632 in 2023 (CBP) |
| Calculator | Monthly payment on the amount financed |
| Who decides | Lending partners, not Bellgrove |
Loan, lease or EFA
| Equipment loan | Lease | Equipment finance agreement (EFA) | |
|---|---|---|---|
| Who owns it | The business, with a lien until paid | The lessor, during the lease | The business, with the funder's security interest |
| At the end | Lien released | Return, renew or purchase, depending on the lease's end options | Owned outright |
| Down payment | Often required | Often first and last payment | Varies by funder |
| Suits | Machines you expect to run for many seasons | Gear that dates quickly or that you may upgrade | Owners who want ownership with a simpler contract |
Leases come in two broad types. Under a fair market value lease you may buy the equipment at the end for what it is then worth; under a lease with a nominal buyout, such as one dollar, the lease works much like a purchase. Tax and accounting treatment differs between them, so ask your accountant before choosing.
Equipment loan or a general business loan?
An equipment loan is secured by the item it buys, so the partner's main question is the value and lifespan of that asset. A general term loan may carry broader collateral, such as a blanket lien, but can also pay for installation, training or the build-out around the machine. If the purchase is one piece of equipment, start with equipment financing; if it is a whole project, compare both.
Why a credit line is the wrong tool for a machine
A line of credit is meant for repeated, short-term costs. Using it for a machine that lasts ten years ties up the line and leaves nothing for the bills it was meant to cover. Keep the line for operating costs and finance the equipment on its own schedule.
Used equipment and contractor vehicles
Used equipment can be financed, but partners look closely at age, hours, condition and the seller. Expect to provide a bill of sale or dealer invoice with the serial number, and sometimes photos or an inspection. Buying from a private seller rather than a dealer usually means more paperwork.
Pickups, cargo vans and service trucks used by contractors and trades are commonly financed as equipment. Bellgrove does not take trucking or freight-hauling requests.
What Outagamie County, WI businesses finance
- Construction: 632 employer establishments in 2023, 150 of them building contractors and 454 specialty trade contractors (U.S. Census Bureau, County Business Patterns 2023). Think skid steers, compact excavators, trailers and service vans.
- Food service: 469 employer establishments, including 354 restaurants and other eating places (CBP 2023). Ranges, combi ovens, walk-in coolers and dish machines.
- Medical and dental: 383 ambulatory health care employers, including 139 physician offices and 67 dental offices (CBP 2023). Exam tables, imaging, sterilization and chairs.
These are county figures for Outagamie County, one of three counties that Appleton spans. The Appleton, WI page sets out what the figures cover, and the sector pages look at each trade's equipment cycle. Contractors weighing a machine purchase can read our post on Outagamie County permit numbers and equipment; restaurant owners planning a remodel can read the renovation post; and anyone fitting out a new space can start with the lease-first checklist.
What partners check
- The quote or invoice: make, model, year, price, serial number if used.
- How long the business has operated and its recent bank statements.
- The owner's credit history.
- Any existing liens on business assets.
- Tax returns and financial statements when the amount is larger.
To estimate a monthly payment on the amount you would finance (the price minus your down payment), enter it in the loan payment calculator. It shows the monthly payment, total interest and total repaid; it does not model leases. For a lease, multiply the payment by the number of payments and add any purchase option by hand. Then see how a request moves.
By Bellgrove Lenders · Updated
