How do I finance or lease equipment for my franchise?

Equipment financing lets you buy franchise gear without sinking all your cash upfront.

Yes — you can finance franchise equipment with a minimum 580 FICO score, 6 months in business, and $100K+ annual revenue. Rates run 8–25% APR with 48–84 month terms and 15–20% down, though 650+ credit may get zero down. Get a rate estimate in 3 minutes — no credit-score impact.

The specifics

Equipment financing is a secured loan where the gear itself backs the debt. Because the lender can repossess and resell the equipment if you default, approval is faster and rates are lower than unsecured options.

Qualification thresholds:

• Credit score: 580 minimum; 650+ unlocks 0% down and best rates
• Time in business: 6 months minimum
• Annual revenue: $100K minimum
• Loan size: $10K–$5M
• Down payment: 15–20% of the financed amount (waived at 650+ FICO)
• Monthly debt service ceiling: 12% of gross monthly revenue

Rate and term structure:

• APR: 8–25% depending on credit tier, equipment type, and lender
• Term: 48–84 months (4–7 years), matched to asset depreciation
• Funding timeline: 3–7 business days
• Used equipment surcharge: 1–2% APR premium over new

For example, financing $50,000 in kitchen equipment at 15% APR over 60 months costs roughly $943/month. If your franchise does $200K monthly revenue, that payment is 0.5% of gross — well inside the 12% ceiling.

According to the SBA's equipment financing guide, equipment loans are the most common form of franchise acquisition financing because they're fast, require lower credit scores than working capital loans, and align payment terms with the productive life of the asset.

Qualification & edge cases

If you're at 620–679 FICO (fair credit): You'll pay a 3–5% APR premium and likely need 20% down. Some lenders at this tier still approve; ask about co-signer options or a smaller initial purchase to prove payment history.

If you're under 6 months in business or have less than $100K annual revenue: Traditional equipment lenders will decline. Consider a business term loan for equipment under $100K (approval in 2–5 days, though rates run 9–35% APR), or pair a personal guarantee with collateral (home equity, cash reserves) to offset risk.

If you're financing used equipment: Used gear costs 1–2% more in APR because it has residual value risk. Lenders prefer new or certified refurbished equipment. Get a pre-financing appraisal from the seller's OEM or independent appraiser to lock in the loan amount.

If you want to acquire a new franchise location and need both real estate and equipment: Bundle them under an SBA 7(a) acquisition loan (rates Prime + 2.75–4.75%, terms up to 25 years for real estate, 10 years for equipment). This is slower (30–90 days) but dramatically cheaper long-term than equipment-only financing.

If you need multiple units or multi-unit franchise financing: Many lenders offer tiered pricing on cumulative equipment purchases. Multi-unit franchise financing can lock in lower APR across all locations if you borrow together.

Background & how it works

Equipment financing emerged as the standard franchise capital tool because franchise systems—whether QSR, fitness, cleaning, or healthcare—rely on predictable, depreciating assets: ovens, treadmills, cleaning rigs, dental chairs. Unlike working capital (which is burned), equipment generates revenue and has salvage value.

According to Franchise Business Review's 2026 financing trends, equipment and vehicle purchases now account for 40%+ of all franchise capital requests, up from 32% in 2020. The International Franchise Association reports that franchisees with financed equipment rather than all-cash purchases scale faster and achieve profitability 18–24 months earlier because they preserve working capital for payroll and marketing.

How the process works:

1. Lender appraises the gear — cost, condition, residual value, brand reputation
2. Loan is sized — typically 80–85% of appraised value (your down payment is 15–20%)
3. Lender secures a UCC-1 lien — you can't sell or refinance the equipment without payoff
4. You receive funds — direct to equipment supplier or you, depending on lender terms
5. You take possession and depreciate — over the loan term, you may deduct depreciation or use Section 179 to expense the full amount in year one (up to $1,220,000 in 2026)

Tax advantage: Financed equipment qualifies for Section 179 expensing, allowing you to deduct the entire purchase price in the year of acquisition rather than depreciating it over 5–7 years. This reduces taxable income immediately and improves early-stage cash flow on paper.

Lenders also distinguish between SBA 7(a) equipment loans (lower APR, slower approval, better terms for borrowers with 24+ months history) and non-SBA equipment financing (faster, slightly higher rates, eligible even at 6 months in business). According to Bridge Marketplace's 2026 franchise financing ranking, the fastest-growing segment is 3–7 day equipment approval from tech-enabled lenders, used by franchisees who need to open within a calendar quarter.

Bottom line

Equipment financing is the fastest, lowest-friction way to outfit a franchise without decimating your reserve. Rates of 8–25% APR and 3–7 day funding beat merchant cash advances and working capital loans, and the math is transparent—your payment is tied to the asset's useful life. If you qualify (580+ credit, 6 months in, $100K+ revenue), get a rate estimate in 3 minutes with no credit-score impact. If you don't, a business term loan or SBA 7(a) may bridge the gap.

Sources

• Small Business Administration — SBA Lenders
• Franchise Business Review — Trends in Franchise Financing
• International Franchise Association — Franchising Economic Outlook
• Bridge Marketplace — Best Franchise Financing Companies 2026
• Internal Revenue Service — Section 179 Expensing Limits 2026