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- Equipment loans can often be funded quickly
- Large banks and the SBA take the longest to fund equipment loans
- Submitting a complete application with the required documentation can expedite loan processing
The best equipment loans can be funded in just a few days — provided your business documents are in order and you have a quote for the equipment you intend to buy.
Since equipment loans are a frequent need for many business owners, you have many options. And with those options comes a wide variety of funding timelines for you to consider.
Larger banks and SBA loans will take the longest, while online or alternative lenders may only take a day. Be prepared to spend time comparing lenders and submitting an application. The more you take care of when you apply, the easier it will be for a lender to process your equipment loan.
Where to get an equipment loan
Equipment loans are available from several lenders. And while reviewing options takes time, it gives your business a chance to find the best fit for its financial and growth needs.
- Banks and credit unions. Banks and credit unions often offer lower interest rates on equipment loans than manufacturer financing or alternative lenders. But, they may also take longer to process and fund your loan.
- SBA lenders. The typical SBA loan process can be lengthy, but you can use 504, 7(a) and Express loans to finance equipment. Express loans have a 36-hour response time but may still be slower than some alternative or online lenders.
- Online lenders. Online lenders are an alternative source of equipment financing. They can generally process applications for equipment loans quickly, but you may see higher rates.
- Manufacturer financing. Depending on the type of equipment, your business may be able to finance it directly through the manufacturer or seller.
How long will it take to receive an equipment loan?
Funding time varies based on the type of lender you select. You may pay more in interest for the speed of an alternative lender. So, if you aren’t in a rush for funding and qualify, an SBA or bank loan will often have a more competitive rate.
Banks and credit unions
Although banks and credit unions offer more competitive rates, their equipment loans — like most loan options — may take longer to fund. The entire process, from application to funding, could take 30 days or more, depending on the lender.
In general, the application may be more intensive and require more documentation. And the underwriting process could take longer, especially if the bank or credit union uses human underwriters rather than the underwriting software many online lenders use.
SBA 7(a) and 504 loans have a typical funding time of 30 to 90 days. The Express loan is much faster, as the SBA reviews an application within 36 hours but is still subject to lender requirements and funding schedules.
Some SBA-approved alternative lenders can get your equipment loan approved and funded much faster, while large national banks may take the full 30 to 90 days to fund your equipment loan.
On average, online lenders have the quickest loan approval and funding timelines. For equipment loans, it may take only a day or two for you to know your application status. Online lenders are also willing to work with startup businesses or business owners with bad credit scores of 500.
However, the process may take longer if the lender needs to inspect your equipment or you don’t have a quote from the seller to submit with your loan application.
No two lenders are alike, so as you explore your options, you’ll see varying loan amounts, interest rates and terms and different types of equipment loans.
If you apply for funding through a manufacturer, you may be able to get your loan funded quickly. A manufacturer or seller usually has preferred lenders they work with. Like all equipment loan options, it will depend on the type of equipment and the seller itself.
Although using an in-house financing option can be quicker, you may receive a higher rate due to the convenience.
Process for getting an equipment loan
The process of getting an equipment loan is relatively straightforward. They are a common loan option for businesses of every size, so you should be able to complete the process in a few steps.
- Check the requirements. Every lender has its own requirements, so confirm that your business meets or exceeds the minimum before applying.
- Compare lenders. In addition to general requirements, pick the best equipment loan based on each lender’s fees, processing time and general rates.
- Apply with three or more lenders. Once you have a handful of lenders that you qualify for, complete the application. There are common business loan documents you will need to keep the application process quick.
- Wait during the underwriting. Banks and SBA loans have a longer underwriting period than online or alternative lenders. You may need to wait anywhere from a few hours to 30 days for your application to be processed and approved or denied.
- Receive your loan funds. If approved, the lender will transfer the funds to your business bank account. This may also take a few days, so keep up with your balance to confirm when your loan funds are available.
There are also alternatives to equipment loans with similar processes. In some cases, an alternative may be faster than an equipment loan. Each loan type has its benefits and drawbacks, so it is important to research before applying.
Required documents for an equipment loan
In addition to a quote for the purchase price of the equipment, you will need to submit documents to prove your business’s finances. Not having these documents in order may delay approval or cause a lender to reject your application automatically.
Common documents include:
- Business plan and licensing
- Business tax returns.
- Business bank statements
- Profit and loss statements
- List of other debts, if applicable
The lender will also require information about each owner. Typical documents include Social Security numbers, personal tax returns and driver’s licenses.
The bottom line
Equipment financing is generally an efficient process from start to finish. Be prepared when you apply. This will streamline the process and help you secure quicker funding. And although every lender has its own timeline, in most cases, you can expect funding within one to two weeks after approval. Organization and lender will have the biggest impact on how long it takes to receive an equipment loan.
Frequently asked questions
It depends on the lender and how quickly your financial institution processes deposits. Typically, loan funds are available within a day or two of approval when you work with an online lender. If you work with a bank, it may take a week for your loan funds to be available.
Equipment loans can be used for a wide variety of purchases. From heavy-duty machinery to office equipment, you will likely be able to find some form of financing.
Your loan term may range from three to seven years. However, loan terms as short as 12 months and as long as 10 years are also available, depending on your business and the loan size. If you don’t have a prepayment penalty built into your contract, you can also manage your equipment loan by making extra payments to pay your loan down faster.