Starting a business often means buying equipment before your first customer walks through the door. A restaurant needs refrigeration. A contractor needs machinery. A salon needs chairs and workstations. Those purchases compete with rent, inventory, insurance, and other startup expenses.
An equipment loan for a startup business can spread the purchase cost over time, helping preserve cash for the other expenses involved in getting your business running.
Qualifying depends on the lender and financing program. Personal credit, equipment value, available financial resources, and the ability to make payments may all influence the decision.
Before applying, it helps to understand which programs accept new businesses, what information to prepare, and how to compare financing offers.
Key Takeaway: Startups may qualify for equipment financing without two years of operating history. Look for a program that accepts your business stage, prepare an equipment quote and realistic budget, and compare the full financing cost before signing.
Can a Startup Business Get an Equipment Loan?
Yes. Some lenders offer equipment financing specifically for startups and newer businesses. You do not always need two years of operating history, but you do need a program that accepts businesses at your stage.
A company preparing to open and a business with 18 months of sales may qualify for different options. Tell the lender whether you are still setting up or already serving customers.
Centra Funding’s Startup & New Business Program serves qualified businesses operating for less than two years.
Centra’s startup program guidelines include:
- Financing up to $75,000 for qualified applicants
- Businesses with less than two years of operating history
- A program generally designed for borrowers with credit scores of 650 or higher
- Eligible new and used equipment purchases
Meeting these guidelines does not guarantee approval. Available financing depends on the applicant, equipment, and overall transaction. For purchases above $75,000, contact Centra to discuss whether additional options may be available.
How Does Startup Equipment Financing Work?
Equipment financing helps a business acquire eligible equipment through scheduled payments rather than paying the full purchase price upfront.
With a traditional equipment loan, the business borrows money to purchase equipment. The equipment may serve as collateral, and the lender may also require a personal guarantee or additional security.
The process generally includes:
- Identifying the equipment your business needs
- Obtaining a quote from the equipment seller
- Submitting a financing application
- Providing any additional information requested during review
- Reviewing the financing offer and signing the agreement if you accept
- Completing funding and coordinating the equipment purchase
- Making payments according to the agreement
Review the ownership structure, collateral requirements, and repayment obligations before signing. Different financing agreements may work differently.
For a broader explanation, read our guide to how business equipment loans work.
What Do You Need to Qualify for Startup Equipment Financing?
Requirements vary by lender and program. Before applying, ask about minimum time in business, credit guidelines, eligible equipment, and documentation.
Personal Credit and Financial History
Without a long business track record, an owner’s personal financial history may play a larger role in the review.
Lenders may evaluate personal credit and request financial information from owners who will guarantee the financing. Credit score is one consideration, but it does not determine every approval on its own.
Check your credit reports before applying so you can address errors and prepare to explain any issues.
A Clear Equipment Purchase
Get a written quote identifying the equipment, seller, and purchase price. For used equipment, include its age, condition, and available specifications.
Separate the equipment price from delivery, installation, taxes, and other charges. Ask which costs can be included in the financing and which you will need to pay separately.
A Realistic Repayment Plan
Prepare a budget showing how the business will cover the proposed payment alongside rent, payroll, supplies, insurance, and other expenses.
If you have not opened yet, explain the assumptions behind your sales projections. Consider a slower opening period as well as your expected results.
A payment that works only when every forecast is met leaves little room for delays or unexpected costs.
Supporting Documents
Ask for a checklist tailored to your business stage and financing request.
Depending on the lender and transaction, requested information may include:
- Business registration and ownership details
- An equipment quote or invoice
- Bank statements
- Personal financial information
- Available business financial statements
- Financial projections or a business plan
Explain upfront if your business has not generated revenue or filed a business tax return. A startup program may evaluate your request using different information than a program designed for established businesses.
What Equipment Can a New Business Finance?
Eligible equipment depends on the lender, industry, and financing program.
Examples of equipment a startup may need include:
- Commercial ovens, refrigeration, and other restaurant equipment
- Construction machinery and jobsite equipment
- Manufacturing machinery and production systems
- Medical and dental equipment
- Commercial vehicles
- Computers and business technology
- Salon, spa, and fitness equipment
- Office furniture and printing equipment
Confirm eligibility before committing to a purchase. Equipment age, condition, intended use, and seller information may affect whether a particular transaction qualifies.
How Much Does a Startup Equipment Loan Cost?
There is no single interest rate or monthly payment that applies to every startup. Rates and terms depend on the financing program and application.
The monthly payment is only one part of the comparison. Upfront costs, fees, the repayment period, and any final obligations also affect what you will pay.
Before accepting an offer, ask:
- How much of the purchase will be financed?
- What down payment or other upfront amount is required?
- What interest or finance charges apply?
- Are there documentation, origination, or other fees?
- How much is each payment, and how often is it due?
- When does the first payment begin?
- What is the total amount payable over the agreement?
- How is an early payoff calculated?
- Is there a final payment, purchase option, or other amount due?
A lower monthly payment does not necessarily mean a lower total cost. Compare both the payment and the full amount you will pay.
Also budget for costs outside the financing agreement, such as equipment insurance, maintenance, training, and repairs.
Should a Startup Choose an Equipment Loan or Lease?
An equipment loan and a lease can both spread costs over time, but ownership and end-of-term obligations differ.
Equipment Loans
A traditional equipment loan generally finances a purchase. The business makes scheduled payments, and the equipment may secure the loan.
This structure may fit a business that plans to own and use the equipment for an extended period.
Equipment Leasing
With a lease, the financing company typically owns the equipment during the lease term. Options to purchase, return, or renew depend on the agreement.
Leasing may be worth exploring when equipment needs change frequently or when specific end-of-term options matter to the business.
Before choosing a loan or lease, consider:
- How long you expect to use the equipment
- Whether you want to own it
- How quickly it could become outdated
- What you would owe at the end of the agreement
- The total cost of each available option
Ask the provider to explain the specific agreement. The words “financing” and “leasing” alone do not tell you everything about the contract.
How to Prepare Before Applying
1. Separate Essential Equipment From Later Purchases
Identify what you need to open or fulfill your first orders. Keep optional upgrades on a separate list so you can evaluate a smaller initial financing request.
For example, a new bakery might need an oven and refrigeration immediately but wait to purchase additional display equipment.
2. Get a Complete Vendor Quote
Confirm equipment specifications, availability, warranty, and delivery timing. Make sure the quote reflects the purchase you intend to make, including any related charges.
3. Build a Budget for a Slower Start
Estimate how much cash will remain after your upfront expenses. Include the equipment payment in a month when sales are below expectations.
For a bakery, that means accounting for ingredients, packaging, labor, utilities, and other expenses when estimating what additional oven capacity could contribute. Sales alone do not show how much cash is available for repayment.
4. Confirm Startup Eligibility
Ask whether the lender accepts businesses at your stage, especially if you have not opened yet. Confirm any credit, industry, equipment, or time-in-business requirements before proceeding.
5. Review the Complete Financing Offer
Check the payment schedule, total cost, personal guarantees, and funding conditions. Coordinate with your vendor so delivery expectations match the financing process.
Avoid making purchase commitments based only on an estimated payment or preliminary conversation.
Frequently Asked Questions About Startup Equipment Loans
Can I get an equipment loan before my business has revenue?
Some programs consider businesses that are not yet generating revenue, but eligibility varies. Ask specifically about pre-revenue financing and what information the lender needs to evaluate your repayment ability.
What credit score does a startup need for equipment financing?
Requirements vary by lender. Centra’s Startup & New Business Program is generally designed for qualified borrowers with credit scores of 650 or higher. Approval also depends on the overall application and transaction.
Can a startup finance used equipment?
Yes, eligible used equipment may qualify. Approval can depend on the equipment type, age, condition, and overall transaction. Ask about the specific equipment before committing to the purchase.
Do startup equipment loans require a down payment?
Not every financing arrangement requires one. Upfront requirements depend on the program and application. Request a complete list of amounts due before funding rather than assuming the entire purchase will be financed.
Does equipment collateral replace a personal guarantee?
Not necessarily. Equipment collateral and a personal guarantee are separate requirements. Ask what security and guarantees the proposed agreement requires and what obligations you would have if the business could not make its payments.
Are there other options for smaller equipment purchases?
An SBA microloan may be worth exploring. The program provides loans up to $50,000 through approved intermediary lenders and permits machinery and equipment purchases. Eligibility and terms are determined by the intermediary.
Learn more about the SBA Microloan Program.
Explore Startup Equipment Financing With Centra Funding
Start with the equipment you need, a vendor quote, and a realistic budget. Those details can help you have a more productive conversation about available financing.
Centra Funding helps qualified new businesses explore financing for eligible equipment purchases. Visit our startup equipment financing page to learn more about the program.
Ready to equip your new business?
Financing is subject to credit approval and program requirements. Available amounts, terms, and eligibility vary by applicant and transaction.
