Equipment financing allows small businesses to acquire the machinery, vehicles, technology, or tools they need without paying the full cost upfront. Instead of draining cash reserves, businesses can spread the cost over time while putting the equipment to work immediately.

Types of Equipment Financing

• Equipment loans: Borrow a lump sum to purchase equipment outright. The equipment itself often serves as collateral.
• Equipment leasing: Lease equipment for a set period with the option to purchase at the end of the term.
• SBA equipment loans: Use an SBA 7(a) or 504 loan to finance larger equipment purchases at competitive rates.

Common Requirements

Qualifying for equipment financing typically involves:

• Minimum credit score of 600-650 (varies by lender)
• At least 1-2 years in business
• Annual revenue sufficient to cover payments
• Equipment quote or invoice from the vendor
• Business financial statements

Benefits of Equipment Financing

Equipment financing preserves working capital, may offer tax advantages through depreciation deductions, and helps businesses stay competitive by accessing the latest technology. Many lenders offer fast approvals and funding within days.

Get Started

FAAS Funding connects business owners with equipment financing solutions tailored to their needs. Complete a quick eligibility review to explore your options.

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When it comes to funding your business, two of the most common options are a business line of credit and a term loan. Both serve important purposes, but they work very differently. Understanding the key differences can help you choose the right product for your situation.

What Is a Business Line of Credit?

A business line of credit gives you access to a revolving pool of funds that you can draw from as needed. You only pay interest on the amount you use, and once you repay it, the funds become available again. This makes it ideal for managing cash flow gaps, covering unexpected expenses, or handling seasonal fluctuations.

What Is a Term Loan?

A term loan provides a lump sum of capital upfront that you repay over a fixed period with regular payments. Term loans are best suited for specific, one-time investments such as equipment purchases, expansion projects, or real estate acquisitions.

Key Differences

• Access to funds: Lines of credit are revolving; term loans are a one-time disbursement
• Repayment: Lines of credit have flexible repayment; term loans have fixed schedules
• Interest: Lines of credit charge interest only on drawn amounts; term loans charge on the full balance
• Best for: Lines of credit suit ongoing needs; term loans suit large planned purchases
• Rates: Term loans typically offer lower rates; lines of credit may have variable rates

Which Should You Choose?

If you need flexible, ongoing access to capital for day-to-day operations, a line of credit is likely the better fit. If you have a specific project or purchase in mind with a clear cost, a term loan may offer better rates and predictable payments.

Explore Your Options

FAAS Funding offers multiple capital programs for business owners. Whether you need a line of credit, term loan, or another funding solution, start with a quick eligibility review.

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SBA loans are one of the most popular funding options for small businesses in the United States. Backed by the U.S. Small Business Administration, these loans offer competitive rates and longer repayment terms than many conventional business loans. However, the qualification process involves meeting specific criteria set by both the SBA and the participating lender.

Common SBA Loan Requirements

While requirements vary by program (7(a), 504, microloans), most SBA loans share these general eligibility criteria:

• Business size: Must meet SBA size standards for your industry
• Business type: Must be a for-profit business operating in the U.S.
• Credit score: Typically 680+ for most SBA 7(a) loans
• Time in business: At least 2 years preferred, though startups may qualify for microloans
• Revenue: Sufficient cash flow to demonstrate repayment ability
• Collateral: May be required depending on loan amount
• Down payment: Usually 10-20% equity injection
• Industry restrictions: Some industries are ineligible (gambling, lending, etc.)

SBA 7(a) vs SBA 504 Loans

The two most common SBA loan types differ in their purpose and structure. The 7(a) program is the most flexible, covering working capital, equipment, and real estate. The 504 program focuses on major fixed assets like commercial real estate and large equipment purchases, offering lower down payments and longer terms.

How to Strengthen Your SBA Loan Application

Preparation is key to a successful SBA loan application. Strong business financials, a detailed business plan, organized tax returns, and a clear use of funds will improve your chances of approval. Working with an experienced funding partner can also help streamline the process.

Explore Your Funding Options

Not sure if an SBA loan is right for your business? FAAS Funding offers multiple capital programs for business owners and investors. Start with a quick eligibility review to see which programs may fit your scenario.

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