Equipment financing is a type of loan used to purchase business equipment, such as a vehicle, scanner, or any equipment involved in your business. It is given for periodic payments that include interest and the principal amount for a fixed time. For security, the lender requires a lien on the equipment as collateral against the loan you want. Once the borrower pays the full amount, the equipment is free of any lien.
These days there are several ways available in the market for applying equipment financing. It can be obtained from sources ranging from traditional lenders to small specialized digital lenders. In addition to an equipment loan, small business owners can provide money to purchase specific equipment through credit card, invoice financing, or angel investing. Each has its advantages and disadvantages while obtaining a loan.