- SBA loans offer the best terms for equipment financing—lower rates, up to 10-year terms (vs. 3-5 years conventional), and 10-20% down payments.
- SBA 7(a) is most flexible (combines equipment + working capital); SBA 504 offers the lowest fixed rates for large purchases ($500K+).
- Almost any business equipment qualifies: manufacturing, construction, vehicles, restaurant, medical, technology, and more.
- You can finance used equipment with SBA loans—just need an appraisal and sufficient remaining useful life.
Need to purchase equipment for your business? SBA loans offer some of the best terms available for equipment financing—lower interest rates, longer repayment terms, and more flexible qualification requirements than conventional equipment loans or leases.
SBA Equipment Financing Overview
Why Use SBA Loans for Equipment?
SBA loans offer significant advantages over conventional equipment loans and leases:
- Lower interest rates: SBA rates are capped by law, typically 2.25-2.75% over Prime
- Longer repayment terms: Up to 10 years for equipment (vs. 3-5 years conventional)
- Lower monthly payments: Longer terms mean better cash flow
- You own the equipment: Unlike leases, you build equity
- No balloon payments: Fully amortizing loans
- Combine with other needs: Finance equipment plus working capital in one loan
SBA Programs for Equipment Financing
Three SBA programs can be used for equipment:
- SBA 7(a) Loans: Most flexible, up to $5 million, 10-year terms for equipment
- SBA 504 Loans: Best for large equipment purchases ($500K+), fixed rates
- SBA Express: Faster approval for smaller needs up to $500,000
SBA 7(a) vs. 504 for Equipment
When to Use SBA 7(a)
The SBA 7(a) program is typically best for equipment financing when:
- You need flexibility (can combine equipment with working capital)
- Equipment purchase is under $1 million
- You want one loan for multiple purposes
- Speed is important (faster than 504)
- You’re also acquiring a business or buying real estate
When to Use SBA 504
The SBA 504 program may be better when:
- You’re buying major equipment ($500K+)
- You want the lowest possible fixed rate
- Equipment is long-lived (20+ year useful life)
- You’re also buying or constructing real estate
Comparison Table
| Feature | SBA 7(a) | SBA 504 |
|---|---|---|
| Maximum loan amount | $5 million | $5.5 million (equipment portion) |
| Interest rate type | Variable or fixed | Fixed (20-year debenture rate) |
| Maximum term (equipment) | 10 years | 10-20 years (based on useful life) |
| Down payment | 10-20% | 10-15% |
| Speed | 30-60 days | 60-90 days |
| Can combine with working capital | Yes | No |
What Equipment Qualifies for SBA Financing?
Eligible Equipment Types
Almost any business equipment qualifies for SBA financing:
- Manufacturing equipment: CNC machines, presses, production lines
- Construction equipment: Excavators, cranes, heavy machinery
- Vehicles: Commercial trucks, delivery vans, fleet vehicles
- Restaurant equipment: Kitchen equipment, refrigeration, POS systems
- Medical equipment: Diagnostic equipment, imaging machines
- Technology: Servers, networking equipment, specialized hardware
- Office equipment: Furniture, fixtures, computers
- Agricultural equipment: Tractors, harvesters, irrigation systems
Requirements for Eligibility
- Equipment must be used for business purposes
- Must be purchased (not leased)
- Seller cannot be a related party (with some exceptions)
- For used equipment: must be appraised or valued appropriately
Equipment for personal use, speculative equipment purchases, and equipment for businesses in ineligible industries (per SBA size standards) cannot be financed with SBA loans.
Loan Amounts and Terms
How Much Can You Borrow?
| SBA Program | Minimum | Maximum |
|---|---|---|
| SBA 7(a) | No minimum (practical: $50K) | $5 million |
| SBA 504 | $125,000 | $5.5 million |
| SBA Express | No minimum | $500,000 |
Repayment Terms
SBA equipment loan terms are based on the useful life of the equipment:
- Standard equipment: Up to 10 years
- Long-lived equipment (504 only): Up to 20 years for equipment with 20+ year useful life
- Vehicles: Typically 7-10 years
- Computers/technology: Often 5-7 years
When your SBA loan covers multiple purposes (equipment plus working capital, or equipment plus real estate), the term is a weighted average based on the amount allocated to each purpose.
Down Payment Requirements
Standard Requirements
For equipment-only SBA loans:
- SBA 7(a): 10-20% down payment
- SBA 504: 10-15% down payment
- SBA Express: Varies by lender (10-25%)
Factors That Affect Down Payment
- Creditworthiness: Stronger credit may mean lower down payment
- Business cash flow: Strong DSCR improves terms
- Collateral: Well-secured loans may have lower equity requirements
- Industry risk: Lower-risk industries may qualify for lower down payments
- Equipment type: Standard equipment vs. specialized (harder to liquidate)
Using Equipment as Collateral
The equipment you’re purchasing typically serves as primary collateral. For SBA loans, the lender takes a first-position lien on all financed equipment.
Current SBA Interest Rates for Equipment (2026)
SBA 7(a) Rates
SBA 7(a) rates are tied to the Prime Rate (currently 7.50% as of February 2026) plus a spread:
| Loan Amount | Maximum Spread | Rate Range |
|---|---|---|
| $50,000 or less | Prime + 6.5% | Up to 14.00% |
| $50,001 – $250,000 | Prime + 6.0% | Up to 13.50% |
| $250,001 – $350,000 | Prime + 4.5% | Up to 12.00% |
| Over $350,000 | Prime + 3.0% | Up to 10.50% |
Note: These are maximum allowable rates. Competitive lenders often price below these caps.
SBA 504 Rates
SBA 504 loans offer fixed rates based on 10-year or 20-year debenture rates, which are typically lower than 7(a) variable rates. As of February 2026, 504 equipment rates range from approximately 5.5% to 6.5% fixed.
Application Process for SBA Equipment Loans
Step 1: Gather Documentation
You’ll need:
- Equipment quote or invoice from vendor
- Equipment specifications and useful life estimate
- Business tax returns (3 years)
- Personal tax returns (3 years)
- Personal Financial Statement (SBA Form 413)
- Business financial statements (P&L, balance sheet)
- Business plan or narrative explaining equipment need
Step 2: Submit to Lenders
Submit your application to multiple SBA lenders for competitive term sheets. An SBA broker can submit to 5-10 lenders simultaneously.
Step 3: Underwriting
The lender reviews your financials, verifies equipment quotes, and may order an appraisal for used or specialized equipment.
Step 4: Approval and Closing
Once approved, you’ll sign loan documents and funds are released—often directly to the equipment vendor.
Timeline
- SBA Express: 2-4 weeks
- SBA 7(a): 4-8 weeks
- SBA 504: 8-12 weeks
SBA vs. Conventional Equipment Financing
| Factor | SBA Loan | Conventional Loan | Equipment Lease |
|---|---|---|---|
| Interest rate | Prime + 2.25-3% | Prime + 3-6% | 8-15% |
| Term length | Up to 10 years | 3-5 years | 2-5 years |
| Down payment | 10-20% | 20-30% | 0-10% |
| You own the asset | Yes | Yes | No (unless buyout) |
| Approval time | 4-8 weeks | 1-3 weeks | 1-2 weeks |
| Qualification difficulty | Moderate | Higher | Lower |
SBA makes sense when you want to minimize monthly payments (longer terms), own the equipment and build equity, or are combining equipment with other financing needs. Conventional/lease makes sense when you need equipment immediately, it will become obsolete quickly, or you prefer to upgrade frequently.
Financing Used Equipment with SBA Loans
Can You Finance Used Equipment?
Yes. SBA loans can finance used equipment, subject to:
- Appraisal or valuation: Lenders require independent verification of value
- Remaining useful life: Equipment must have sufficient remaining useful life
- Loan-to-value limits: Typically 75-90% of appraised value
- Condition documentation: May require inspection for major equipment
Sources for Used Equipment
- Dealer trade-ins and refurbished equipment
- Auction purchases
- Private sales from other businesses
- Equipment included in business acquisitions
Key Considerations
- Term length may be limited by remaining useful life
- May require more documentation than new equipment
- Ensure equipment meets your operational needs
SBA loans offer the best terms available for equipment financing—lower rates, longer terms (up to 10 years), and manageable down payments (10-20%). Use SBA 7(a) for flexibility and the ability to combine equipment with working capital; use SBA 504 for the lowest fixed rates on large purchases. Both new and used equipment qualify, making SBA financing accessible for virtually any business equipment need.
Frequently Asked Questions
Up to $5 million with SBA 7(a) or $5.5 million with SBA 504. For larger needs, multiple SBA loans or conventional financing may be combined.
Typically 4-8 weeks for SBA 7(a), 8-12 weeks for SBA 504. SBA Express can close in 2-4 weeks for amounts up to $500,000.
Generally 10-20% for SBA 7(a) and 10-15% for SBA 504. Exact requirements depend on creditworthiness and deal structure.
Yes, with SBA 7(a). You can combine equipment financing with working capital needs in a single loan. SBA 504 is for fixed assets only.
Minor changes are typically accommodated. Significant changes may require loan modification. Keep your lender informed of any changes.
SBA 7(a) loans have prepayment penalties only if the loan is paid off in the first three years. SBA 504 has different prepayment terms based on the debenture structure.
