The short answer
Last updated: October 13, 2026. SBA facts checked on SBA.gov on October 13, 2026. General information, not legal or tax advice.
In 2026, most small businesses finance equipment through their own bank or credit union, an SBA 7(a) or 504 loan, the dealer, or a lease. The equipment secures the loan, so it is often easier to get than unsecured credit. Get a written quote, compare at least three offers on total cost, and skip an MCA for long-lived gear.
| Option | How it works | Usually best for | Watch out for |
|---|---|---|---|
| Your own bank or credit union | An equipment loan; the equipment secures it, with fixed monthly payments | Established businesses with a banking history | Slower approval and more paperwork |
| SBA 7(a) loan | A bank loan partly guaranteed by the SBA; SBA lists "purchasing and installation of machinery and equipment" as an eligible use | Businesses that can't get the same credit on reasonable terms elsewhere | More paperwork; you apply through a lender (Lender Match) |
| SBA 504 loan | Long-term, fixed-rate financing through a Certified Development Company for major fixed assets, including equipment with at least 10 years of useful life | Big, long-lived machines | Not for working capital or inventory; slower |
| Dealer or manufacturer financing | The seller arranges the loan or lease at checkout | Convenience, sometimes promotional terms | Compare the total cost, not just the monthly payment |
| Equipment lease | You pay to use it; at the end you return, renew or buy it | Gear that goes out of date fast, like tech or some vehicles | You may pay more in total and may not own it |
| Online or specialty equipment lenders | Faster, with lighter paperwork | Newer businesses or thinner credit | Higher cost; read every fee |
How equipment financing works
The equipment is the collateral. The lender holds a lien on it until the loan is paid off, then removes the lien. Payments run over the useful life of the machine instead of a few months. That is why equipment financing is often easier to qualify for than unsecured credit. The lender still decides.
Step by step
Decide what you need and whether it pays for itself.
Get an itemized written quote from a real, verified dealer.
Gather what lenders usually ask for: bank statements, tax returns, business registration and the quote. The lender sets the exact list.
Start with your own bank or credit union, and ask about SBA 7(a) or 504.
Compare at least three offers on total cost in dollars, fees, down payment, term, and what happens at the end.
Read the whole contract before you sign.
Loan or lease?
A loan means you own the machine and build equity. It fits gear you will use for years. A lease means lower upfront cost and easy upgrades. It fits gear that dates fast. With a lease, ask whether the end-of-lease buyout is a fixed price or fair market value. Ask your accountant how each is treated for taxes.
SBA routes in plain words
The 7(a) loan is the SBA's main program. Loans go up to $5 million, and eligible uses include machinery and equipment (SBA 7(a) loans). You apply through a lender, and Lender Match connects you with participating SBA lenders.
The 504 loan comes through a Certified Development Company. It covers major fixed assets, including machinery and equipment with a useful remaining life of at least 10 years. Terms of 10, 20 or 25 years are available, and it can't be used for working capital or inventory (SBA 504 loans).
See how to qualify for an SBA loan. Worried about collateral? Read SBA 7(a) collateral shortfall and home equity.
Why not a merchant cash advance for equipment
An MCA is repaid out of daily sales over a few months. A machine that lasts for years gets paid for at the highest price on the shortest schedule.
Here's a hypothetical. Copperfern Print Shop, a made-up business, needs a new press. A broker offers a $50,000 advance (an example, not a quote), the same amount used in our MCA alternatives example. The owner asks the bank about a 7(a) loan instead, a program that goes up to $5 million, and learns the same $50,000 press can be paid off over the life of the machine.
Read is a merchant cash advance a good idea and business line of credit vs. merchant cash advance. Run any offer through the cost of capital calculator.
Avoid fake equipment dealers
Watch for these red flags:
- A price far below market for the same machine. BBB calls a price significantly below market value a red flag of vehicle and equipment seller scams (BBB study: vehicle and equipment impostor scams).
- Pressure to pay a deposit by wire, gift card or crypto. The FTC says never send money to anyone who says you can only pay by wire transfer, gift card, cryptocurrency or payment app (FTC: Scammers are impersonating farm equipment businesses).
- Contact details that come only from the ad or listing. The FTC says scammers place ads that pretend to be a real business but use their own contact info (FTC).
Look up the real dealer's number yourself, never wire a deposit to a stranger, and report fakes to the FTC and BBB Scam Tracker. Read our fake equipment dealer scam report.
If a broker calls offering "equipment money"
Ask for the total payback in dollars and whether it is really a loan or an advance. Cold calls usually mean a broker. See why brokers call you and how to stop MCA broker calls.
Other options
Compare everything on where to get business funding, cheapest options first. Also see bad credit business loans, startup business funding, how much business funding can I get and business funding without a broker.
Sources
SBA, 7(a) loans: https://www.sba.gov/funding-programs/loans/7a-loans
SBA, 504 loans: https://www.sba.gov/funding-programs/loans/504-loans
SBA, Lender Match: https://www.sba.gov/loans/lender-match/
FTC, Scammers are impersonating farm equipment businesses (Sept. 15, 2026): https://consumer.ftc.gov/consumer-alerts/2026/09/scammers-are-impersonating-farm-equipment-businesses
BBB, Study: watch out for vehicle and equipment impostor scams: https://www.bbb.org/article/news-releases/31436-bbb-study-watch-out-for-vehicle-and-equipment-impostor-scams
FTC, ReportFraud: https://reportfraud.ftc.gov/
BBB Scam Tracker: https://www.bbb.org/scamtracker