Equipment financing pays for a specific asset: a truck, an oven, a lift, an imaging machine. Because the equipment secures the deal, lenders can often approve it with less business history than unsecured credit needs, and terms usually track the equipment's useful life.
There are 2 main structures. An equipment loan makes you the owner from day one, with the lender holding a lien until it is paid. An equipment lease keeps ownership with the lessor, and your options at the end depend on the lease type.
Example: A $60,000 oven financed over 60 months at 10% is $1,274.82 a month. The 60 payments total $76,489.20, so the financing costs $16,489.20.
Ask whether the deal covers soft costs such as delivery and installation, and what you still owe if the equipment fails before it is paid off.