Equipment financing was built specifically for equipment. An MCA was not. For most equipment purchases, the choice is clear — but there are exceptions worth knowing.
Equipment financing uses the purchased equipment as collateral, which dramatically reduces lender risk and enables substantially lower rates than unsecured MCA products. For nearly any equipment purchase — vehicles, machinery, technology, diagnostic equipment — equipment financing is the more economical choice. The exception: when the purchase is urgent and equipment financing processing time (2–7 days) is too slow.
| Factor | MCA | Equipment Financing |
|---|---|---|
| Use Case | Any business purpose | Equipment/asset purchase specific |
| Cost | Factor rate 1.10–1.50 | 5.9–20% APR |
| Effective APR | 20–60%+ | 5.9–20% |
| Collateral | None | The equipment itself |
| Down Payment Required | None | Usually 10–20% |
| Term Length | Weeks to months | 1–7 years (matches asset life) |
| Tax Treatment | Business expense | Section 179 deduction eligible |
| Credit Score Min | 500+ | 550–600+ typically |
| Approval Speed | Same day | 2–7 days |
One application reviews your eligibility across all products. No hard credit pull. No cost.