EQUIPMENT FINANCING: Definition, Companies & How it Works


If you own a small business, you understand how critical it is to get, upgrade, or replace the equipment you need to execute your everyday activities swiftly and affordably. Buying equipment altogether can place a significant strain on your cash flow. Still, equipment financing can be an excellent way to keep your business running smoothly or even grow to meet rising demand. We’ll go through the basics of Wells Fargo, heavy, and western equipment financing.

How Does Equipment Financing Work?

A loan used to purchase business-related equipment, such as a restaurant oven, automobile, or copy machine, is referred to as “equipment financing.” When you take out an equipment loan, you must make monthly payments that include interest and principal over a set period.

Similar to how an auto loan works, the lender may request a lien on the equipment as collateral against your debt as security for the loan. You own the equipment free and clear once the loan is paid in full. The lender may also require a personal guarantee or a lien on some of your other business assets. If you don’t pay back your loan, the lender may take back your business assets and, if you gave a personal guarantee, your own assets. To understand your risk, you must carefully analyze the loan details.

Western Equipment Financing

Western Equipment Finance is a division of Western State Bank that provides nationwide equipment financing. The corporation is headquartered in North Dakota.

Western offers diverse equipment financing options for both new and established enterprises. While the bank’s speed and flexibility will appeal to many potential consumers, its high credit requirements and opaque terms and fees may make this financing less than ideal for some.


  • Application simplification
  • Timely credit decisions
  • Short funding cycle


  • Uncertain borrower qualifications
  • Uncertain terms and fees

Terms and Fees

Western Equipment Financing doesn’t reveal much information about its goods up front, but the lender does offer some flexibility in terms of your contract.

Furthermore, Western provides equipment loans and various equipment lease options, so most borrowers should be able to find something that works for them. As was already said, newer businesses may have to meet more requirements to get the goods and services they want.

Equipment loans are similar to term loans but have a few perks and disadvantages. However, equipment loans must be utilized to purchase specific assets, unlike working capital loans. These assets are then used as loan collateral. Typically, equipment loans cover approximately 80% of the cost of the equipment, as appears to be the case with Western equipment financing. Once the equipment is acquired, you will make monthly payments until the loan is paid.

Heavy Equipment Financing

People often think heavy equipment financing is the same as equipment financing, which is not valid. Equipment financing is usually used for smaller items like file cabinets, computers, and desks. Heavy equipment financing, however, is needed for bigger things like those listed above.

Again, “heavy equipment” refers to equipment that performs heavy-duty tasks. This equipment can be costly, and heavy equipment loans allow you to purchase them without paying for them upfront.

How to Get Heavy Equipment Financing

Now that you know how different lenders’ heavy equipment financing rules work let’s take a step back and get a better idea of what it takes to qualify for heavy equipment financing. Heavy equipment financing, like any other company loan, is only available to business owners who meet specific criteria.

Fortunately, the qualification threshold for heavy equipment loans is not too high. In general, there are three ways to qualify for construction equipment financing.
Let us now examine them.

#1. Credit score

If your credit score is above 600 and you’ve been in the company for at least a year, you should be able to get heavy equipment financing.

#2. Cash flow

If your credit is poor, but your business revenues are substantial (in comparison to the cost of the equipment), you may be able to qualify for construction equipment financing based on your cash flow.

#3. Down payment

Even if your credit is terrible and your business revenue is mediocre, you can qualify for heavy equipment financing by making a down payment. For example, if you want to buy $25,000 worth of equipment and bring $5,000 to the table, you may qualify for construction equipment financing.

Heavy Equipment Financing for Bad Credit

Borrowers with poor credit have a better chance of getting a heavy equipment loan than other types of financing. Heavy equipment loans are less hazardous for lenders since they are collateralized by the equipment they finance. If you fail to repay the loan, the lender may seize and liquidate the equipment to recuperate their losses.

As a result, poor credit is not a deal breaker during the loan acceptance procedure. Borrowers with bad credit who can demonstrate substantial revenue or make a down payment on the equipment will most likely be approved.

Where Can I Find Heavy Equipment Financing?

Now that you understand heavy equipment financing, let’s look at some of the best lenders for these types of loans.
You should also be aware that bank funding is an option: Wells Fargo, Chase, Bank of America, and smaller local banks all provide construction equipment financing. It is generally your best alternative if you can qualify for a heavy equipment loan through a bank, as banks give the most affordable capital and the most extended periods.

If you don’t have access to a bank, these are some of the best online lenders for heavy equipment financing.

  • Direct Capital
  • Funding Circle
  • Balboa Capital
  • eLease
  • Crest Capital

Wells Fargo Equipment Financing

Wells Fargo equipment financing loans can help you invest in equipment with loan amounts ranging from $10,000 to $100,000, terms ranging from 2 to 6 years, and rates starting at 7%.
Whether you need to outfit your restaurant’s commercial kitchen, purchase work vehicles for your sales staff, or buy manufacturing equipment, a Wells Fargo equipment financing loan could be the perfect solution.

Furthermore, Wells Fargo is one of the most significant banks in the United States for business financing. Learn more about Wells Fargo’s equipment financing, including the cost, qualification requirements, and how to apply.

Wells Fargo Equipment Financing Cost and Terms

You should always shop around for the best equipment loan for your small business, but we’ve discovered that Wells Fargo equipment finance has competitive rates. Wells Fargo has over 6,000 branches throughout the United States so that most business owners can get equipment financing from them.

The Equipment Express loan is what Wells Fargo calls its equipment financing for small business customers. Wells Fargo also offers more considerable amounts of capital and more flexible terms for specific industries through a commercial equipment finance program. Still, for most small firms, the Equipment Express loan is sufficient financing.

Wells Fargo equipment finance loans for small enterprises are available under the following terms:

  • Vehicle and equipment financing of up to 100% is available.
  • The money might be used to purchase new or secondhand equipment or upgrade current equipment.
  • Loan sums range from $10,000 to $100,000.
  • Terms range from two to six years
  • Vehicle loan fixed rates begin at 7%.
  • Other equipment has fixed charges starting at 7.5%.

How to Apply for Wells Fargo Equipment Financing

The loan application procedure for Wells Fargo equipment financing is quite simple—but you’ll need to do your homework ahead of time and be prepared with the appropriate paperwork to ensure the seamless operation of your equipment finance process.

The following are the processes to apply for Wells Fargo equipment financing:

#1. Apply online. 

Customers with a Wells Fargo bank or savings account for at least one year can apply for an Equipment Express loan online. In the application, you will be required to give basic information about your company and its equipment. Anyone who owns 25% or more of the company must provide income and ownership information. Don’t worry; you won’t be required to produce a purchase order or dealer invoice for the equipment until later in the application process.

#2. Speak to a Wells Fargo loan consultant. 

After reviewing it, Wells Fargo will decide whether to approve your business loan application. If they decide to accept you, a Wells Fargo loan adviser will call you to obtain more information so that your loan may be processed. You may be required to submit further paperwork at this time. The loan expert will also explain how to submit vehicle title papers or equipment invoices.

#3. Submit documents. 

When you apply for an equipment loan with Wells Fargo, the bank will ask you to see specific documentation. Wells Fargo may need other documents in addition to those listed below, so be sure your company’s financial documents are in good order.

#4. Receive funds. 

When Wells Fargo receives the documents, the cash will be sent to your Wells Fargo bank account or savings account. In most circumstances, the funds should arrive within one working day.

Is an equipment loan a bank loan?

Equipment loans are used to purchase business equipment. Businesses frequently need to buy, replace, repair, or update numerous types of equipment to process, manufacture or generate their products.

What can equipment finance be used for?

“Equipment finance” is a loan used to buy business equipment like an oven for a restaurant, a car, or a copy machine. When you take out an equipment loan, you must make monthly payments that include interest and principal over a set period.

What is the interest rate on an equipment loan?

Interest rates on equipment loans often range between 2% and 20%. While the range is as broad as the tractor you’re financing; it’s just because your credit score and length of business heavily influences the rate you obtain.

Is equipment financing a good idea?

Even if you have the funds to complete the purchase, one crucial reason to finance the equipment is that it creates long-term business credit. There may come a time when you don’t have enough money to buy the tools or software you need.

How hard is it to get equipment financing?

You can acquire an equipment loan even if your credit is fair or low. Lenders will still check your credit history. Some equipment lenders may lend money to small business owners with credit scores as low as 550, but they will charge more interest and give them less time to repay the loan.

What is the credit score needed for equipment finance?

Some equipment loan businesses may consider applicants with credit scores as low as 575. The lender’s decision-making process includes more than just credit history.

What credit score is needed for an equipment loan?


Down payments: Large down payments (usually up to 20%) may be required for equipment loans. Credit score requirements: Typically, the minimum credit score required is 550.

What do you need for an equipment loan?

To get an equipment loan from a bank, you usually need good personal credit (a FICO score of 700 or higher), have been in business for a few years, and have sound financials. But if you meet these requirements, the most cost-effective thing to do would probably be to get a loan for equipment from a bank or credit union.


It is critical to understand that an equipment loan is not your only choice for raising capital for your firm. Consider a business credit card, invoice factoring, merchant cash advances, or angel investing if you’re purchasing inexpensive equipment. Each has advantages and disadvantages regarding terms, turnaround time, and qualification criteria.


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