Buying a specific asset or need cash for operations? These two products solve different problems — choosing the wrong one can cost you thousands. Here's the complete breakdown.
Get a Decision in HoursChoose Equipment Financing if: You're buying a specific piece of business equipment — truck, oven, machinery, medical device. The equipment is the collateral, terms stretch 24–84 months, and rates are typically lower.
Choose Working Capital if: You need cash for operations — payroll, inventory, rent, marketing, or any general business expense. No specific asset needed, funds in 24 hours, terms 6–24 months.
Pro tip: Many businesses use both simultaneously — equipment financing to buy the asset, working capital to cover ramp-up costs.
Equipment financing is a loan or advance specifically designed to purchase, upgrade, or refinance business equipment. The equipment itself serves as collateral, which means lower risk for the lender and better rates for you.
Equipment cost: $120,000 (commercial oven + hood system + installation)
Down payment: $0 (100% financed) | Rate: ~18% APR | Term: 60 months
Monthly payment: $3,046 | Total paid: $182,760 | Interest cost: $62,760
Section 179 benefit: Deduct full $120,000 in year 1 — saves ~$28,800 in taxes at a 24% bracket, reducing effective net cost to $91,200.
A working capital loan provides unrestricted cash for day-to-day business operations. Unlike equipment financing, the funds can be used for anything — payroll, inventory, marketing, rent, hiring, repairs, or bridging a slow revenue period.
Advance: $80,000 | Factor Rate: 1.28x | Total Payback: $102,400 | Cost: $22,400
Term: 9 months | Daily ACH: $569 (180 business days)
The HVAC company used funds for: $45K payroll (slow season), $20K materials for three upcoming installs, $15K insurance renewal. Revenue from the three installs ($180K) repaid the advance with room to spare.
| Feature | Equipment Financing | Working Capital Loan |
|---|---|---|
| Purpose | Specific equipment purchase only | Any business expense |
| Loan Amount | $5,000–$5,000,000 | $10,000–$500,000 |
| Term Length | 24–84 months | 6–24 months |
| Collateral | Equipment being financed | Unsecured (UCC-1 + PG) |
| Typical Rate | 8–25% APR | Factor rate 1.1–1.5x |
| Credit Score Min | 600+ | 500+ |
| Revenue Min | $8,000+/month | $10,000+/month |
| Payment Type | Fixed monthly installment | Daily/weekly ACH or monthly |
| Ownership | You own it from day 1 | N/A — cash advance |
| Tax Advantage | Section 179 deduction | Interest deductible only |
| Time to Fund | 24–72 hours | 24 hours |
| Max Term Offered by MFE | 84 months (7 years) | 24 months |
| $100,000 Financed | Equipment Financing (60 mo @ 18%) | Working Capital (12 mo @ 1.35 factor) |
|---|---|---|
| Monthly Payment | $2,538 | $11,250 (daily: $535) |
| Total Payback | $152,280 | $135,000 |
| Total Interest/Cost | $52,280 | $35,000 |
| Daily Cash Flow Impact | $85/day | $535/day |
| Collateral Required | The equipment | None (UCC-1 + PG) |
Equipment financing has a lower monthly payment but higher total cost over a longer term. Working capital is more expensive in fee rate but shorter — the faster payoff means less total interest if you can handle the daily payment.
Examples: Commercial truck ($85K), restaurant hood system ($45K), CNC machine ($180K), medical imaging equipment ($250K), construction excavator ($320K)
Examples: Payroll during slow season, inventory for a big contract, hiring new staff, marketing campaign, emergency repairs, deposit on a lease
Many businesses are best served by combining both products strategically. Here are three real-world scenarios:
Equipment financing: $150K for commercial kitchen equipment (60-month term, $3,200/mo)
Working capital: $40K for hiring, training, marketing the new location (9-month term)
Total monthly commitment: ~$6,700 — manageable for a $80K/month revenue restaurant.
Equipment financing: $95K for a used Class 8 truck (48-month term, $2,600/mo)
Working capital: $25K for DOT compliance, insurance deposit, first month operating costs (6-month term)
The new truck generates $18K/month revenue — both loans paid within the first year of operation.
Equipment financing: $200K for digital X-ray and dental chair system (72-month term, $3,800/mo)
Working capital: $60K for staff, marketing the new capability, and patient outreach (12-month term)
New imaging capability adds $25K/month in procedure revenue within 90 days.
Equipment financing is tied to a specific asset — the equipment itself serves as collateral and the loan pays for that asset only. A working capital loan provides unrestricted cash for operating expenses, payroll, inventory, or any business need, with shorter terms and higher factor rates.
No. Equipment financing funds must be used to purchase or refinance specific business equipment. For general operating expenses, you need a working capital loan or line of credit.
Equipment financing typically has lower monthly payments because terms can stretch 24–84 months. Working capital loans run 6–24 months, creating higher daily or weekly payments on the same dollar amount.
MFE's working capital loans are unsecured — no specific collateral required. A UCC-1 blanket lien on business assets may be filed, plus a personal guarantee, but no specific asset is pledged.
MFE finances most business equipment: restaurant ovens and kitchen equipment, commercial trucks and trailers, medical equipment, manufacturing machinery, construction equipment, salon and spa equipment, and office equipment.
MFE equipment financing typically requires a 600+ credit score, though we have programs for scores as low as 550 for established businesses. Working capital loans are available with scores as low as 500.
Yes. Many businesses use both — equipment financing to acquire a specific asset and a working capital loan to cover the installation, training, inventory, and ramp-up costs that come with new equipment.
MFE can approve equipment financing in 24–72 hours. Larger transactions (over $150,000) may require additional documentation but still typically close within 5–7 business days.
Our advisors will review your situation and recommend the right product — or both, if that's the smart play.
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