Equipment finance vs term loan
Equipment financing vs a term loan for US businesses
Equipment Financing at 6%–25% (annual rate) against Business Term Loans at 7%–45% (annual rate), compared across 40 US providers on cost, term, speed, and eligibility.
For US businesses acquiring equipment and deciding whether to finance the asset specifically or borrow generally.
| Dimension | Equipment Financing | Business Term Loans |
|---|---|---|
| Published cost | 6%–25% | 7%–45% |
| What the cost measures | Annual rate | Annual rate |
| Typical term | 12 months to 7 years | 4 months to 25 years |
| Fastest published funding | 30 minutes | 24 hours |
| Lowest published FICO minimum | 550 | 500 |
| Median published revenue floor | $100,000 | $120,000 |
| Shortest published trading history | 6 months | 3 months |
| Providers compared | 20 | 20 |
| Provider | Product | Published cost | What it measures | Term | Funding speed | Published criteria |
|---|---|---|---|---|---|---|
| Ascentium Capital | Equipment Financing | 6%–14% | Annual rate | 2–7 years | 2–4 hours | Requires $100,000+ in annual revenue and a 640+ FICO score. |
| Crest Capital | Equipment Financing | 6%–15% | Annual rate | 2–7 years | 4 hours | Requires a 650+ FICO score. |
| Beacon Funding | Equipment Financing | 7%–15% | Annual rate | 2–7 years | 24 hours | Requires a 620+ FICO score. |
| Currency Capital | Equipment Financing | 7%–16% | Annual rate | 2–7 years | 4–24 hours | Requires at least 1 year in business, $100,000+ in annual revenue and a 620+ FICO score. |
| Direct Capital (CIT) | Equipment Financing | 7%–18% | Annual rate | 2–7 years | 24–48 hours | Requires at least 2 years in business, $200,000+ in annual revenue and a 640+ FICO score. |
| First Western Equipment | Equipment Financing | 7%–16% | Annual rate | 2–7 years | 24–48 hours | Requires at least 1 year in business. |
| LEAF Commercial | Equipment Financing | 7%–20% | Annual rate | 2–7 years | 4 hours | Requires $75,000+ in annual revenue and a 600+ FICO score. |
| Pacific Western Equipment | Equipment Financing | 7%–14% | Annual rate | 2–7 years | 3–7 business days | Requires $250,000+ in annual revenue. |
| Chase Business Term | Business Term Loans | 7%–12% | Annual rate | 1–7 years | 2–3 weeks | Requires at least 2 years in business, a 680+ FICO score and an existing Chase business banking relationship. |
| Wells Fargo Term | Business Term Loans | 7%–12% | Annual rate | 1–10 years | 2–4 weeks | Requires at least 2 years in business and an existing WF business banking relationship. |
| Bank of America Term | Business Term Loans | 7.5%–12% | Annual rate | 1–5 years | 2–4 weeks | Requires at least 2 years in business and an existing BofA business banking relationship. |
| Live Oak Bank (SBA) | Business Term Loans | 7.5%–10% | Annual rate | 10–25 years | 4–6 weeks | Requires at least 2 years in business and a 680+ FICO score. |
| SmartBiz | Business Term Loans | 7.5%–10.25% | Annual rate | 10–25 years | 30–60 business days | Requires at least 2 years in business and a 680+ FICO score. |
| US Bank Term | Business Term Loans | 7.5%–13% | Annual rate | 1–7 years | 1–3 weeks | Requires at least 2 years in business and an existing US Bank business banking relationship. |
| Celtic Bank (SBA) | Business Term Loans | 7.75% and up | Annual rate | 10–25 years | 3–6 weeks | Requires at least 2 years in business and a 680+ FICO score. |
| Newtek Business Finance | Business Term Loans | 7.75%–10% | Annual rate | 10–25 years | 3–6 weeks | Requires at least 2 years in business and $50,000+ in annual revenue. |
What the cost column measures
- Annual rate
- Quoted as an annual rate on the outstanding balance.
What actually separates them
Equipment financing is secured by the asset it funds, which changes the underwriting. The provider has a defined recovery position, so the credit assessment leans more on the equipment — its resale market, useful life, and how specialised it is — and less on the general strength of the balance sheet. A term loan is usually assessed on the business as a whole.
This is why a business that struggles to obtain unsecured term debt can often still finance equipment, and why the pricing gap between the two narrows as the asset becomes more generic. Standard equipment with a deep secondary market finances well; highly specialised equipment with few buyers behaves closer to unsecured borrowing.
- Equipment Financing: 6%–25% (annual rate)
- Business Term Loans: 7%–45% (annual rate)
- Equipment Financing term: 12 months to 7 years
- Business Term Loans term: 4 months to 25 years
Comparing the published costs
Both products are quoted on the same basis here (annual rate), which makes the published ranges broadly comparable — 6%–25% against 7%–45%. Quoted as an annual rate on the outstanding balance.
Broadly comparable is not the same as decisive. The published range excludes arrangement fees, prepayment terms, covenants, security requirements, and reporting obligations, and any of those can move the effective cost more than the difference between these two ranges.
- Annual rate: Quoted as an annual rate on the outstanding balance.
When each one fits
Equipment financing fits where the asset has a clear useful life and a resale market, and where matching the repayment term to that life is possible. Financing an asset over a period longer than it will productively serve is the failure mode worth avoiding.
A term loan fits where the purpose is mixed, where the asset is too specialised to secure well, or where the business would rather keep the equipment unencumbered. It generally requires more of the balance sheet to carry the credit decision.
Before choosing between them
Compare the total cost over the full period rather than the monthly payment, and check the end-of-term position — ownership, residual, or return obligation — because that clause can change the effective cost materially and is easy to miss.
Caplift's assessment compares structures on a consistent basis using the business's own figures rather than published ranges, and produces a readiness view alongside it. Caplift is not a lender and does not approve, originate, or guarantee financing — the decision remains with the business and its advisors.
Common questions
Questions businesses ask
Is equipment financing cheaper than business term loans?
Published costs run 6%–25% for equipment financing and 7%–45% for business term loans, both quoted as annual rate. Those ranges overlap enough that the specific structure, term, and fees will usually matter more than the product choice.
Which funds faster, equipment financing or business term loans?
The fastest published timeline is 30 minutes for equipment financing and 24 hours for business term loans. Published timelines assume a complete file and exclude the preparation time before submission, which is usually the larger part of the calendar.
Which has easier eligibility requirements?
Across the providers compared here, the lowest published FICO minimum is 550 for equipment financing and 500 for business term loans. Published minimums gate consideration only — approval depends on the whole file, and an easier published threshold usually corresponds to a higher cost or a tighter structure elsewhere.
Does Caplift lend or earn a fee from either product?
No. Caplift Financial Inc. is software and is not a lender. Providers are compared from published information, inclusion is not an endorsement, and appearing here does not indicate a commercial relationship with Caplift.
About this data, and its limits
- Figures are drawn from Caplift's Q1 2026 lender catalogue review and are indicative, not quotes. Curated from named US lenders; confirm individual terms before relying on them.
- Compared across 20 equipment financing providers and 20 business term loans providers that publish indicative pricing. The provider table below shows the lowest-cost eight from each product; the full sets appear on the individual product guides.
- Inclusion is not an endorsement, a recommendation, or an offer, and does not indicate a commercial relationship with Caplift. Pricing and criteria change without notice — confirm current terms directly with the provider before relying on them.
- Caplift compiles this information to the best of its ability from publicly available provider material, but does not guarantee that it is accurate, complete, or current, and accepts no liability for decisions made in reliance on it. Figures may be out of date or incorrect. Verify anything you intend to act on directly with the provider.
- Caplift Financial Inc. is not a lender and does not approve, originate, or guarantee financing. Nothing on this page is legal, financial, tax, accounting, or investment advice, and it should not be treated as a substitute for advice from a qualified professional who knows your circumstances.