Equipment Financing Myths and Misconceptions

Posted April 02, 2024

Many companies use financing to acquire the equipment they need to operate their businesses. Because equipment is costly, many companies can’t afford to buy it outright or don't want to use their available cash to buy the equipment, so they rely on financing instead.

Financing equipment is not difficult or complex, but myths and misconceptions sometimes keep businesses from exploring financing options.

  1. Equipment financing is only for large businesses – not true.
  2. Equipment financing can only be used to purchase new equipment – not true.
  3. Getting an equipment loan is as difficult as getting a bank loan – not true.
  4. Financing is only for certain types of equipment – not true.
  5. Equipment financing is expensive – not true.
  6. The financing process is complex and takes too much time – not true.
  7. You can only finance through an equipment dealer - not true.
  8. Equipment financing ties you to obsolete technology – not true.
  9. Equipment financing is only for purchases - not the case.

Below we discuss why each of these myths and misconceptions is not true.

The Truth About Equipment Financing

Business of All Sizes Can Benefit from Equipment Financing

Many people think that only large companies finance equipment. In fact, many small and medium-sized businesses use equipment financing because they simply don't have the resources that many large businesses have. Truth be told, if you need to purchase an excavator or a semi-truck, the cost to purchase one is the same regardless of whether you are a small business or an extremely large one. The ability to access financing can help even the playing field when it comes to equipment purchases. A skilled lender familiar with your business and the equipment you use can make all the difference.

Finance the Purchase of New or Used Equipment

Some finance companies may not be willing to finance used equipment, but the right finance company can provide tailored financing to assist with acquiring used equipment. Commercial Credit Group Inc (CCG) regularly finances used equipment in the transportation, construction, waste, and manufacturing industries. CCG can help you structure your loan to make your purchase as efficient as possible.

Getting an Equipment Loan is Not Like Getting a Bank Loan

The basic processes for getting a bank loan and an equipment loan are similar, but they are not the same. An equipment finance company will need a completed credit application, a copy of the invoice for the equipment you want to purchase, and in most instances, will review your financial statements and/or tax returns. The right lender knows your business and can provide expedited approvals in a fraction of the time it would take a bank.

With a bank loan, the information required can be more complex. The banks pay a great deal of attention to ratios and other financial metrics, and if your numbers do not fit their criteria, your application can be denied. Banks may also require that your loan be subject to ongoing covenants that may be difficult to comply with, especially in times of seasonal or economic fluctuations.

Most Equipment Can Be Financed

You can find a lender to finance most types of equipment. The key is to find a lender that specializes in the type of equipment you need to purchase. These lenders understand the equipment you buy and the industry in which you operate. Seek out lenders that finance the type of equipment you use.

Equipment Financing is Not Expensive

The interest rate for an equipment loan is most often dependent upon the credit profile of the borrower. Financing equipment at a reasonable interest rate frees up your cash flow and capital and allows you to operate and grow your business. It also helps to establish and support your credit for future growth. CCG can help you structure a loan with payments that fit your cash flow and allow you to grow your business with the equipment you need.

The Financing Process Can Be Simple and Quick

The length of time it takes to complete and fund an equipment loan is often dependent on how long it takes the borrower to provide the necessary information to the lender. Financing transactions are most often delayed by a lack of communication or information. The faster you get the requested information to your lender, the faster they can evaluate, underwrite, and fund. In CCG's case, we've been able to fund transactions in under 24 hours.

Equipment Financing Can Be Completed Through a Variety of Lenders

Many equipment dealers offer financing through their manufacturer (called a captive lender). But the captive lenders have credit criteria that may not fit your situation. Also, captive lenders typically finance equipment they manufacture so if you need to purchase different brands of equipment you will have to seek multiple sources of financing. As noted earlier, it's best if you find a lender that specializes in your industry and the type of equipment you are purchasing.

Equipment Financing Does Not Tie You to Obsolete Technology

If your lender has structured your loan properly, you will build equity as you pay down the loan. This gives you the flexibility to sell or trade in the equipment to obtain newer models and technology. This is where an experienced lender can make all the difference. CCG knows the equipment you are financing and how you use it. Our skilled representatives specialize in one industry and can assist you in structuring your loan to best fit your business.

Leasing is a Form of Financing

Depending on the equipment and the finance company, you may be able to lease rather than purchase the equipment. This allows you to use the equipment on a long-term basis without having to make a large upfront cash investment. There are various leasing structures (including some that come with large end-of-term purchase options), as well as tax implications to consider.

Financing is a good way to get the equipment you need to grow your business while saving your cash for operating expenses. The process is simple, but it’s best to find a lender that specializes in your industry.


If you operate in the construction, transportation, manufacturing, or waste industries, Commercial Credit Group (CCG) can help you make your equipment purchases.

We’re here to answer your questions and make the financing process simple and smooth. Protection Status