Equipment Finance vs Business Loans: Which is Right for You?
Compare equipment finance and traditional business loans to find the best option for funding your business equipment needs.
Introduction
When it comes to funding business equipment, you have two main options: equipment finance or a traditional business loan. Each has its advantages and best-use cases. This guide will help you understand which option is right for your business.
Detailed Comparison
Purpose
Equipment Finance
- Specific equipment purchase
- Asset-backed funding
- Direct equipment funding
Business Loan
- General business use
- Flexible funding purpose
- Multiple use options
Interest Rates
Equipment Finance
- Generally lower rates
- Asset security reduces risk
- Fixed rate options
Business Loan
- Variable rates available
- Risk-based pricing
- May be higher rates
Terms
Equipment Finance
- Matched to asset life
- Structured payments
- Clear end date
Business Loan
- Flexible term options
- Various structures
- Early repayment possible
Key Considerations
Equipment Type
- Asset lifespan
- Depreciation rate
- Technology changes
- Resale value
Business Needs
- Cash flow impact
- Tax implications
- Growth plans
- Operating requirements
Real-World Examples
Manufacturing
Equipment: Production machinery
Cost: $500,000
Recommended: Equipment Finance
Long-term asset with clear lifespan and value
Technology
Equipment: IT infrastructure
Cost: $100,000
Recommended: Business Loan
Rapid technology changes and multiple components
Construction
Equipment: Heavy machinery
Cost: $750,000
Recommended: Equipment Finance
High-value assets with strong resale market
Business Loan Calculator
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Need Help Deciding?
Our team can help you evaluate both options and find the best solution for your equipment needs.
Written by Emma Wilson
Equipment Finance Specialist