Guide · Equipment financing, explained
Do you need a down payment for equipment financing?
By Alex Makowski Published
Usually, and typically 10 to 20 percent. Stronger credit, longer trading history and a highly resaleable asset push it toward zero; a newer business, weaker credit or specialised equipment pushes it higher. Zero-down deals exist and are generally paid for through the rate rather than genuinely free.
In this guide
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01
What sets the figure
How resaleable the asset is. A late-model truck may need nothing down; a bespoke machine with three possible buyers in the country needs a lot.
Time in business and credit. Both move the deposit more than they move the rate on this product.
Where you buy. Dealer purchases with clean invoicing generally need less than private-party or auction buys, where the funder is less certain of the valuation.
02
How to reduce it
Trade in an existing asset. Equity in something you already own frequently substitutes for cash.
Offer additional collateral — another unencumbered piece of equipment will often do what cash would.
Buy something more standard. The same money spent on a common model rather than a specialised one changes the deposit, sometimes dramatically.
Ask what a larger deposit buys. Sometimes a few points more reduces the rate enough to be worth it; sometimes it changes nothing and the cash is better kept.
03
Watch the zero-down offers
Zero down is real, but the deposit has usually been moved into the rate or the term rather than removed. Compare the total repayable, not the money you hand over today.
Financing the deposit separately, on a more expensive product, defeats the purpose entirely — you are paying working-capital pricing for the cheapest part of the deal.
Keep enough cash to run the asset. A financed machine with no working capital to operate it is a common and avoidable failure.
Written by
Alex Makowski, Owner
Alex Makowski owns and runs Business Loans for America and has been placing funding for U.S. small businesses since 2021. Businesses he has worked with have secured $50M+ in financing across 1,200+ placements. He writes and reviews every guide on this site.
FAQ
Related questions.
- Can the deposit be financed?
- Technically yes, on a separate facility, but it usually costs more than it saves and funders can see it happening.
- Does a bigger deposit always lower the rate?
- Not always. Ask for the numbers both ways rather than assuming — sometimes the cash is more useful in the account.
- Are soft costs like delivery financeable?
- Often, within a limit. Ask before you sign, because paying delivery and installation from cash you were counting on is a common surprise.
Guides
More on equipment financing, explained
Used equipment
Yes, and age caps matter more than condition.
Credit score needed
Matters more than for an advance, less than for a bank loan.
Section 179
You can often deduct the full price while still paying monthly.
New businesses
Easier than any other product, because the asset does the talking.
If you default
They take the asset — and can still pursue the shortfall.
What counts as equipment
If it has a serial number and a resale market, it can usually be financed.
Sources
- U.S. Small Business Administration — LoansFederal loan programmes, eligibility and what the SBA does and does not guarantee.
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