Commercial Equipment Loans

Equipment Loan Lengths

The length of an equipment loan, or the loan term, can vary depending on the type of equipment being financed, the overall cost, and the chosen term length. However, most equipment loans can be broken down into short, medium and long-term loans.

Short-Term Loans (12-36 Months): Short-term equipment loans are often used for equipment that requires frequent upgrades, such as computers or software. They may also be used to finance equipment with a lower overall cost. A Commercial Line of Credit is another great option for these types of equipment purchases.

Medium-Term Loans (36-60 Months): Medium-term equipment loans are often used for equipment with a moderate lifespan, such as manufacturing machinery or specialized tools. These loans offer a manageable monthly payment with moderate interest contributions.

Long-Term Loans (60+ Months): Long-term equipment loans are used for expensive equipment with a longer lifespan, such as construction machinery, heavy equipment or special medical devices. Longer-term loans offer the lowest monthly payment option but may have higher overall costs associated with the extended repayment period.

Commercial Equipment Loan FAQs

How does a Commercial Equipment Loan differ from a regular business loan?

• A commercial equipment loan is specifically used for purchasing equipment. It uses the equipment as collateral, often resulting in better terms and lower interest rates. A regular business loan is more general and can be used for various purposes, requiring different forms of collateral and a longer approval process.

How does a Commercial Equipment Loan work?

• With an equipment loan, the equipment is the collateral. If a business owner doesn't meet the terms of the agreement, the financing partner may reclaim the piece of equipment but nothing else.

What is the difference between a Commercial Equipment Loan and a lease?

• For an equipment lease, the lender purchases it and leases it to you at a predetermined monthly amount. At the end of the month, the lender still owns the equipment. With an equipment loan, you, as the business owner, purchase the equipment through a loan and pay it down monthly with interest. At the end of the loan, you fully own the piece of equipment.

What types of equipment can I buy with a Commercial Equipment Loan?

• You can purchase heavy machinery, company vehicles, manufacturing equipment and more with an equipment loan. Commercial equipment loans can be a great solution for purchasing, repairing or replacing large-scale business machinery.

What is Equipment Financing?

• Equipment financing is a loan or lease used to obtain business-related equipment, such as machinery, vehicles or technology. An equipment loan allows businesses to acquire equipment and machinery without paying the full cost upfront. Instead, you borrow the funds from a lender and repay the loan over time, typically with interest.

How Do I Qualify for a Commercial Equipment Loan?

• To qualify for a commercial equipment loan, lenders typically consider several factors:
  • Credit Score: Both your business and personal credit scores are important.
  • Time in Business: An equipment loan from Seacoast requires businesses that have been operating for at least 3 years and be a Florida based business.
  • Revenue: Your business's annual revenue will be assessed.
  • Equipment Value: The value of the equipment you wish to purchase.

Is a Downpayment Required for Equipment Financing?

• Yes, many equipment financing options require a downpayment, typically ranging from 10% to 20% of the equipment's cost. However, some lenders may offer financing with no downpayment, depending on the terms and your creditworthiness.

How Can a Commercial Equipment Loan Improve My Business Operations?

• A commercial equipment loan can significantly enhance your business operations by:
  • Improving Efficiency: Access to modern, high-quality equipment can streamline processes and increase productivity.
  • Preserving Cash Flow: Financing allows you to spread the cost over time, keeping more cash available for other operational needs.
  • Boosting Competitiveness: Up-to-date equipment can help you stay competitive in your industry.
  • Enhancing Growth: With the right equipment, you can expand your services or production capabilities, leading to potential business growth.

Are There Any Tax Benefits Associated with Commercial Equipment Loans?

• Yes, there are several tax benefits associated with commercial equipment loans. We highly recommend consulting with a professional tax advisor for your specific benefits. Some of the more common are:
  • Section 179 Deduction: This allows businesses to deduct the full purchase price of qualifying equipment financed during the tax year.
  • Bonus Depreciation: You can depreciate a large percentage of the equipment's cost in the first year.
  • Interest Expense Deduction: The interest paid on equipment loans is often tax-deductible.

  These benefits can make equipment financing an attractive option for managing your business's financial health and growth. Always consult with a tax advisor first to understand the specific tax implications for your business.