Startup equipment finance

Startups are the lifeblood of the US economy, often bringing new innovations to market before the big-name business giants have even thought of them.

Chris Godfrey

Page written by Chris Godfrey. Last reviewed on July 19, 2024. Next review due October 1, 2025.

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However, many startups begin life with tight finances and buying new equipment with cash may not be possible. Startup equipment finance can solve this common problem, providing funds to help startups secure the equipment they need to grow and prosper. Read on to learn how startup equipment finance can support your brand new business from the get go.

What is startup equipment finance?

Startup equipment finance is exactly what it sounds like – loans for new businesses to provide them with the equipment they need to get up and running. In the early days of any business it is usually best to preserve liquid cash to cover unexpected problems, capture new opportunities, or simply grow the business faster. Startup equipment finance can protect working capital by providing new businesses with essential equipment for a low, or even zero down-payment loan or lease, and spreading the repayments over months or years.

Lease or finance for startups

Equipment finance for startups can help new businesses to secure the machines and tools they need with either an equipment finance loan – or an equipment lease – without digging deep for cash. What’s the difference between these finance options? See below.

  • Equipment financing

These are loans that allow the borrower to pay for the equipment over time, spreading the cost across months or years. In most cases, the borrower pays the loan back, (plus interest and any fees), in fixed monthly instalments. At the end of the loan, the borrower owns the equipment outright. 

Key benefits: Ease the strain on cashflow as you buy the equipment you need. Interest is usually tax-deductible. 

Why it’s good for startups: It can help the startup to build a positive credit history that will be useful for the business as it grows. 

  • Equipment leasing

Similar to a loan, except the borrower (lessee) is not buying the equipment, they are renting it over an extended period. At the end of the contract, the equipment will either go back to the lessor (equipment provider), or the lessee may have the option to buy it for a pre-agreed sum, (sometimes as little as $1). Depending on the terms of the contract, the lessor may be responsible for maintenance of the equipment.

Key benefits: Usually comes with lower monthly payments than equipment financing. Does not appear on the company balance sheet as a liability. In most cases, the entire payments, (not just the interest), can be written off as tax-deductible.

Why it’s good for startups: When the hire contract ends, the business can take out a new rental to secure the latest equipment – a vital consideration for equipment such as IT and tech.

What are the benefits of startup equipment finance?

  • Get the equipment your startup needs to hit the ground running and making money sooner.
  • Ease the strain on cashflow and protect your invested capital.
  • Instead of buying startup equipment that depreciates, save your working capital for hiring the best people, new location rent, new inventory, marketing, and important supplies.
  • Some startup equipment finance is specially designed for new businesses and may come with flexible terms, payment holidays, interest deferrals, and lower fees.
  • Up to 100% finance may be available.

How to apply for startup equipment finance

It’s usually more difficult for startups to secure lending, and equipment finance and leases are specialist areas with differing rules of application that require deep knowledge of the sector from the lender. For these reasons, startups seeking funding may find themselves forever searching and making applications to lender after lender without success.

The delays this can create could cause them to lose early revenue, increase their risk of failure, or leave their business vulnerable to competition. Instead, working with a broker, who can access equipment financing for startups from a wide range of lenders is a better way to go. No more cold calls and endless demands for information, just tell us what you need and leave the rest to us. 

Get started with Swoop

Give your new business the equipment it needs to get off the ground. Register with Swoop to find the best rates, the best terms and the best equipment finance for US startups today.

Written by

Chris Godfrey

Chris is a freelance copywriter and content creator. He has been active in the marketing, advertising, and publishing industries for more than twenty-five years. Writing for Wells Fargo Bank, Visa, Experian, Ebay, Flywire, insurers and pension funds, his words have appeared online and in print to inform, entertain and explain the complex world of US consumer and business finance.

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At Swoop we want to make it easy for SMEs to understand the sometimes overwhelming world of business finance and insurance. Our goal is simple – to distill complex topics, unravel jargon, offer transparent and impartial information, and empower businesses to make smart financial decisions with confidence.

Find out more about Swoop’s editorial principles by reading our editorial policy.

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