Vending machine financing

Add a header to begin generating the table of contents

Page written by Chris Godfrey. Last reviewed on October 29, 2024. Next review due October 1, 2025.

Read this article to me

The US vending machine market was worth more than $33billion in 2023 and over 100million people buy from vending machines every single day, making it one of the nation’s top growth industries.

However, with new vending machines costing up to $5,000 per unit, getting started or expanding in this business can be expensive – which is why most business owners turn to vending machine financing to get the equipment they need.

Add a header to begin generating the table of contents

What is vending machine financing?

Vending machine financing is a type of business loan used to purchase new or used vending machines. This type of financing gives business owners an alternative way to pay for their equipment without putting strain on working capital by buying vending machines with cash. Borrow up to $1million with repayment terms up to 5 years.

Vending machine finance at a glance:

Buy or lease one or more machines
Suitable for new or used equipment
Operate the machines as you pay for them
Borrow up to $1million
Pay back over 5 years
Interest rates start at 5%

What is a vending machine business?

Vending machines are standalone cash or card-operated devices that sell a wide range of products to consumers. A vending machine business is an organization that manages one or more of these machines – usually as the equipment owner, but sometimes as a franchisee.

Vending machines can be found in many different locations, from airports and strip malls to colleges and theme parks. Dispensing candy, sodas, snacks, healthy foods, tech equipment, beauty products and more, these machines can provide a low-cost entry point to a lucrative business opportunity.

Vending machine operators are responsible for purchasing or renting the machines, finding the best locations to place the devices, keeping them stocked with fast-selling products and collecting the cash they generate. Depending on the number of machines you run, a vending machine business can be operated as a part-time or full-time operation.

Top tip: If you’re thinking of starting a vending machine business, see Swoop’s All-Inclusive Guide to Starting a Vending Machine Business before you take the plunge.

What are the types of vending machine businesses?

If it will fit in the machine and you can find a market for it, vending machines can sell almost anything. The four main types of vending machine business sectors are:

Food and drinks – candy, snacks, sodas, coffee, etc
Bulk vending – bubble-gum, kids toys, stickers, etc
Specialty vending – gadgets, tech, laundry products, tobacco products, etc
Franchised vending – buy into an established vending chain

How does vending machine financing work?

Although there are several ways to buy vending machines, most vending machine businesses buy their equipment using one of two methods:

Finance (also known as a vending machine loan)

Vending machine finance is a straightforward business loan. You make a down payment on the equipment and then pay off the balance of the purchase price, plus interest, with regular payments over a fixed term contract. The equipment acts as security for the loan. When the agreement comes to an end, the machine is paid for and yours to keep.

Advantages of a vending machine loan:

Own the equipment outright when the contract ends
Add the machinery as an asset to your balance sheet from date of purchase

Disadvantages of vending machine loan:

Higher monthly payments because you’re paying back the total equipment price

Lease

A vending machine lease is really a long-term rental agreement. Because you’re only financing some of the purchase price, leasing typically has lower monthly payments than a finance/loan. With a lease, you make a down payment and then pay a regular sum plus interest each month to use the equipment. At contract end you can either give the machine back to the lender, renew the lease at a different cost per month, or buy the vending machine for the fair market value – commonly known as a ‘balloon payment’.

Advantages of a vending machine lease:

Lower monthly payments
Option to buy the machine or lease a newer unit at contract end can give you better financial flexibility and/or a more modern vending machine

Disadvantages of a vending machine lease:

Balloon payment could be more than the machine is worth at contract end
Becomes a liability on your balance sheet

Other vending machine business loans

As well as buying their vending machines, vending businesses must also buy inventory, pay employees, cover rent payments to location owners, buy insurance, pay for machine repairs and maintenance and cover many other expenses. Many vending machine businesses use business loans to help them meet these demands. Popular loan choices include:

Loans to cover start-up, expansion and operating costs:

Term loan – The most popular type of business loan. Commonly used for one-off investments where you know exactly how much cash you need. You receive a single, lump-sum cash injection and then pay it back in regular instalments over a fixed period of up to 25 years. Collateral may be required.
Business line of credit – A business loan that functions like a high-value credit card but comes with lower interest rates and fees. Businesses can withdraw as much as they want when they want from a loan facility up to the limit of their borrowing. Collateral may be required.
Merchant cash advance – Suitable for vending machine businesses that accept customer payments by credit and debit card. Borrow against the value of your card sales. As your card sales increase, your borrowing limit goes up. Pay the loan back with a fixed percentage of your card sales on a daily, weekly or monthly basis. Your sales act as security for the loan, no added collateral is required.
Revenue-based financing – Functions like a merchant cash advance but with higher borrowing limits. Based on the size and regularity of their total revenues, (credit card sales plus other income), businesses typically receive a lump sum and pay it back over a short-term schedule, sometimes by small deductions from their daily sales. No added collateral is required.
Secured business loans – Also known as asset finance, this type of loan may be easier for start-ups and borrowers with bad credit to obtain. You provide hard assets, such as real estate, plant and machinery, or inventory as security for the loan. The lender holds a lien on the assets until the loan is paid back, then full ownership returns to you.

Do I qualify for vending machine financing?

Qualifying for vending machine financing is determined by three key factors:

Strength of your personal/business credit. Most lenders will want a good credit score along with solid history of paying your bills on time
The length of time your business has been operating. Longer history improves your chances of loan approval
Down payment: It’s possible to get vending machine financing with no deposit, but generally, the more you offer to pay at signing, the better your chances of loan approval

Typically, you’ll need to provide a preliminary bill of sale for each machine you want to buy or lease. The lender may ask to see your business bank statements and other financial records. Note that some lenders may set an age limit on used machines. Additionally, it is unlikely that you’ll be able to get financing if the contract exceeds the estimated useful life of the equipment.

Where can I get vending machine financing?

The terms and conditions of vending machine loans can vary significantly. Shopping around before settling on a deal is essential. You can do this by approaching banks, credit unions and online lenders one by one over days, weeks, or even months, or you can use the services of a loan marketplace that can quickly introduce you to a choice of financing offers from a range of lenders. Some marketplace platforms can also give you advice and help you with the application process. This can be especially useful for borrowers who have never taken out a business loan before.

What do I need to get vending machine financing?

Vending machine details including price and details of seller
Your business details and financial records as required
Preferred type of financing – loan or lease
Contract length request

What credit score is needed for vending machine financing?

Most lenders will want a minimum personal FICO score of +640. However, with some online lenders, it may be possible to get vending machine finance with a score in the mid-500s.

Get started with Swoop

Working with business finance experts can make all the difference when applying for vending machine financing. Contact Swoop to discuss your borrowing needs, get help with your application and to compare top-quality vending machine financing from a choice of lenders. Get the essential equipment you need without putting strain on cash flow. Register with Swoop 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.

Swoop promise

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.