For many businesses, equipment is the backbone of day-to-day operations. From trucks and heavy machinery to medical tools and IT systems, these purchases are often too costly to pay for upfront. That’s where equipment financing comes in. By spreading the cost into manageable payments, companies can keep their cash flow steady while still getting the tools they need to grow.
But in 2025, the rate you get on an equipment loan depends heavily on your credit profile. Just like with personal loans or mortgages, lenders use credit scores as a quick way to judge risk. The higher your score, the more likely you are to qualify for single-digit interest rates. On the other hand, businesses with weaker credit may still find financing, but often at much higher rates that can eat into profits.
Broadly speaking, borrowers with a 650+ credit score are in the best position, often seeing APRs in the 5–10% range. Mid-tier borrowers may face double-digit rates, while those with scores closer to the 500s will encounter stricter terms and rates that can climb much higher. Some lenders even price loans based on prime plus a margin, which in 2025 keeps many business loans in the 8–11% range.
Understanding these tiers matters because even a few percentage points can translate into thousands of dollars over the life of an equipment loan. For example, financing $100,000 at 7% vs. 14% can mean the difference between affordable growth and a serious strain on cash flow.
In this article, we’ll walk through equipment financing rates in 2025, broken down by credit tier. You’ll see what’s realistic to expect with excellent, fair, or poor credit—and learn strategies to improve your chances of landing the best possible terms. Whether you’re expanding a fleet, upgrading technology, or investing in new machinery, knowing where you stand can help you make a smarter, more cost-effective decision.
Table of Contents
Why Equipment Financing Matters in 2025
Equipment financing is projected to remain vital as interest rates adjust with inflation and credit conditions shift. According to the Federal Reserve, credit markets are expected to stay selective through 2025, making solid credit positioning and lender strategies essential.
Equipment financing helps businesses preserve working capital while gaining access to revenue-generating tools. From construction equipment to restaurant appliances, companies often cannot delay essential purchases. Financing provides predictable payments, tax advantages under IRS Section 179 (consult the IRS Publication 946), and flexibility.
Understanding Credit Tiers
Lenders typically evaluate equipment financing applicants by credit tier, ranging from “excellent” to “poor.” These categorizations heavily influence interest rates, down payments, and repayment terms.
| Credit Tier | FICO Score Range | Typical 2025 Equipment Financing Rates | Down Payment Expectations | Approval Speed |
|---|---|---|---|---|
| Excellent | 750–850 | 6% – 8% | 0–5% | Same day to 24 hrs |
| Good | 700–749 | 8% – 10% | 5–10% | 1–3 business days |
| Fair | 640–699 | 10% – 14% | 10–20% | 3–5 days |
| Poor/Subprime | Below 640 | 14% – 25% | 20%+ | 5–10 business days |
Excellent Credit Tier
If your score is above 750, lenders view you as minimal risk. Expect low interest rates, minimal down payments, and fast approval. You may even access zero down financing promotions offered by certain banks and online lenders in 2025.
Good Credit Tier
Applicants with scores between 700–749 enjoy competitive rates while still maintaining bargaining power with lenders. Many banks and fintech providers offer 3–5 year terms at under 10% in this tier.
Fair Credit Tier
A fair credit score range (640–699) is where financing often comes with double-digit interest rates. However, you can improve approval odds by offering collateral, co-signers, or larger down payments.
Poor Credit Tier
Businesses in subprime categories will see higher costs. Equipment financing rates may exceed 20%, and lenders will usually structure deals with steep down payments. Alternative lenders and vendor financing programs are often tapped here.
How Equipment Financing Works in Practice
The application process generally follows these steps:
- Apply online with a lender or bank (5–10 minutes).
- Submit personal and business credit details.
- Provide equipment quotes and vendor information.
- Lender underwrites loan, determines risk tier, offers financing options.
- Funds are disbursed directly to vendor or deposited to business account.
Setup costs include origination fees (1–4%), documentation fees ($100–$300), and initial down payments based on credit tier.
Comparing Lenders by Credit Tier
Not all lenders structure their offerings equally. By credit tier, banks, credit unions, and online fintechs rank differently on approval chances, turnaround, and fees.
| Lender Type | Best For | Rates (2025) | Key Features |
|---|---|---|---|
| Traditional Banks | Excellent, Good Credit | 6%–10% | Strong relationships, low rates, longer approval times |
| Credit Unions | Good, Fair Credit | 8%–12% | Community focus, flexible terms, membership required |
| Online Lenders / Fintech | Fair, Poor Credit | 10%–25% | Fast approvals, tech-driven, higher costs |
| Vendor Financing | All Tiers | 0% promotional – 20% | Convenient, built into purchase agreements |
Action Plan: Securing the Best Rate
You can actively influence your approval terms by preparing in advance:
- Improve business credit by paying suppliers early.
- Keep personal utilization under 30% on revolving credit.
- Prepare 2–3 years of tax returns and financial statements.
- Obtain competitive quotes from multiple lenders.
Pro Tip: Always compare lender APRs, not just “monthly payment.” The APR includes fees and gives you the true cost of financing.
Tax Considerations in 2025
Equipment financing often qualifies for accelerated depreciation benefits. Under IRS Section 179, businesses can deduct the full cost of qualifying equipment. This tax strategy can offset financing costs significantly.
FAQs About Equipment Financing Rates in 2025
- What is the average equipment financing rate in 2025?
Rates range from 6%–25% depending on credit tier and lender type. - Can startups qualify for equipment financing?
Yes, though many lenders ask for personal guarantees and higher down payments. - Is leasing equipment better than financing?
Leasing conserves cash flow but does not build equity; financing builds ownership. - Which credit score tier gets zero down offers?
Excellent credit borrowers most often qualify for zero down promotions. - Do equipment financing lenders check personal credit?
Almost all lenders run a credit check, some weigh business credit more. - Can I claim tax deductions if I finance equipment?
Yes, under Section 179 you can deduct financed equipment purchases. - Does collateral improve approval odds?
Yes, collateral reduces lender risk and may lower rates. - What fees should I expect?
Origination fees (1–4%), doc fees ($100–$300), and late fees apply. - How long are typical repayment terms?
3–7 years on average, depending on equipment type and lender. - Where do I compare live financing offers?
Start by requesting quotes from both traditional banks and online lenders to compare terms.
Conclusion
Equipment financing rates in 2025 by credit tiers are highly credit-dependent, ranging from low single digits for excellent borrowers to the mid-twenties for subprime applicants. Business owners must understand how credit tiers impact rates, fees, and approval structures. By preparing financials, improving credit, and shopping across multiple lenders, you can secure favorable terms that strengthen your company’s ability to grow sustainably. Remember to factor in tax deductions through Section 179 and balance monthly payments with long-term equity benefits. Start comparing your options now so your business is ready to act when opportunity strikes.
