IT equipment may make a huge difference in your business. It can make your business function more smoothly, increase your profits, and keep you one step ahead of the competition.

Unfortunately, investing in the right IT equipment can be expensive. That is why many businesses use IT equipment financing to buy the items their businesses need to operate.

If you’re looking for IT equipment financing, this guide will help you understand the concept of equipment financing. We’ll also give you some tips on how to be sure that you’re getting a good deal.

IT Equipment Financing

What is IT Equipment Financing?

Tech Startups Working To Get IT Equipment Financing

IT equipment financing is a type of loan that enables businesses to get the equipment and other tools they need.

In general, the lender provides the business with money that is secured by the equipment purchased or rented, and the business repays the money with interest in monthly installments.

The equipment can be used as security. When the business fails to meet the repayment terms, the equipment can be taken away. On the other hand, after the loan is paid in full, the business will own the equipment.

Even though technology is expensive, financing for IT equipment doesn’t have to cost you an arm and a leg. There are many financing options for you out there.

Interest rates on financing for IT equipment begin at less than 5% for qualified borrowers. Your charge will depend on a number of things. It may include your personal and business credit, the number of years you’ve been in business, and your annual sales.

How to Qualify for an IT Equipment Financing?

IT Equipment Financing Application

When you apply for any type of equipment financing, your lender will take similar facts into account. Reviewing your business and maybe personal credit scores is a common first step in the application process.

Aside from your credit information, a lender may also consider the following while reviewing your IT equipment financing application:

  • Your debt-to-income ratio
  • How long has your company been around
  • Your company’s yearly revenue
  • Existing debts under your company’s name and UCC filings

The following problems could also raise red flags for lenders and make it more challenging to meet the requirements for lending for technology equipment:

  • Bankruptcies filed in the previous seven years
  • Pending tax liens
  • Low personal credit ratings
  • Inability to obtain the necessary business licenses or maintain a current file with your secretary of state

What are the Benefits of Getting an Equipment Loan?

Tax Advantages

Some forms of equipment financing, such as equipment leasing are more tax advantageous than outright purchases. This is because leasing an item results in a monthly expense rather than an asset on your balance sheet.


Most types of equipment financing offer predictable payments, so you may stretch out the cost over time. As a result, managing cash flow is a little bit easier, and you can focus on running the company.

Flexibility and Scalability

If you finance one piece of equipment and your company expands, you can rapidly acquire additional things without making a big investment.

Flexibility and Scalability

Access to other lines of credit is one of the frequently overlooked but significant benefits of financing equipment rather than purchasing it altogether. Equipment financing typically has a predictable monthly cost for similar reasons as tax advantages, so you can obtain additional business financing in addition to it.

How Long Can You Finance an Equipment?

The time period you can take out an equipment loan depends on a number of factors, including the cost of the equipment, how much it is expected to depreciate, and the length of time the lender is willing to provide you with the financing. Equipment can be financed for any length of time, from one year to seven years and all in between.

Should You Buy or Lease IT Equipment?

IT Equipment

There are primarily two ways to obtain money for your IT equipment purchases. You can either buy or lease.

Whether you should buy or lease depends on your current situation and future plans for your business.

We recommend thinking about the things you should consider before buying IT equipment first and thoroughly exploring your options before making a decision.