Equipment Financing for Contractors: Rates, Terms, and Options by Business Stage

Pick your situation

Your credit score, time in business, and cash flow pattern determine which equipment financing path makes sense. Find your row below, then follow the link to rates, terms, and application steps.

Situation	Best fit	Go to
Under 6 months in business	Startup-focused lenders, higher rates	Equipment Financing for New Contractors
6+ months, 650–699 credit	Near-prime term loans, lease options	Equipment Financing with Fair Credit
Below 650 credit or no credit history	Subprime lenders, asset-based terms	Equipment Financing with Bad or No Credit
Any stage, deciding lease vs. buy	Tax and cash flow comparison	Lease vs. Buy: Equipment Strategy for 2026

Key differences

Equipment financing moves faster than general working capital loans because the equipment itself secures the debt. A lender cares less about your credit history if the truck, compressor, or excavator can be repossessed and resold. That said, your business stage and credit profile still set your rate, term, and down payment.

Credit score tier. Contractors with 700+ credit qualify for prime rates—typically 8–12% APR—with online lenders approving in 3–5 business days. Fair-credit borrowers (650–699) see 14–22% APR but still find term loans and leases available. Below 650, you enter subprime territory: 24–36%+ APR, but specialized lenders still fund because they know the equipment's resale value covers their risk. The gap between a 750 score and a 620 score can mean $200–400 per month on a $50,000 loan.

Time in business. New contractors (under 6 months) rarely qualify for SBA 7(a) loans or traditional bank equipment loans. Instead, you'll find startup-specific lenders charging 20–35% APR on smaller amounts ($5,000–$25,000) and requiring either a personal guarantee or a co-signer with established credit. By 6 months, standard lenders open up. By 2 years, you access better rates and higher maximums.

Loan-to-value (LTV) and down payment. New equipment typically finances at 80% LTV (you put down 20%). Used equipment is tighter—60–75% LTV. If you're buying a $50,000 used excavator, expect to pay $12,500–$20,000 down. New equipment: $10,000. This matters because many contractors are cash-flow constrained; a 20% down requirement can force you to delay the purchase or carry invoice factoring debt while you save.

Term length. Equipment terms run 24–84 months, but the sweet spot is 36–60 months. Shorter terms mean higher monthly payments but lower total interest. Longer terms reduce cash strain but cost you thousands more. A $40,000 skid steer at 18% over 36 months costs roughly $1,280/month; over 60 months, it's $900/month but you pay nearly $13,000 in interest instead of $6,000.

Speed to funding. Online specialty lenders fund in 1–3 business days. Banks and SBA loans take 2–4 weeks. If you need a compressor or ladder truck by Friday, online is your only option. Traditional lending works if you're planning 4–6 weeks ahead.

Subcontractors and invoice timing. If you're financing equipment while managing slow-pay general contractors, consider pairing construction equipment financing rates 2026 with invoice factoring for subcontractors. Factor your AR to cover equipment payments while you wait for draw checks. Many lenders will let you layer both.

Use the affordability calculator to model payments across rate and term scenarios before you apply. Most contractors find that locking in a fixed rate before rates shift is worth the 1–2% origination fee.