The right IT equipment can make a world of difference in many businesses. It can help your company run more efficiently, improve your bottom line, and help you to stay ahead of the competition. 

Unfortunately, buying the right IT equipment can also be expensive. Many business owners rely on financing to purchase the equipment their companies need to operate. 

If you’re searching for IT equipment financing, this guide will help you discover what to look for in a lender. We’ll also give you tips on how to be sure you’re getting a good deal. 

Technology Equipment Financing and Leasing for 2020

Technology isn’t cheap, but that doesn’t mean IT equipment financing has to cost an arm and a leg. Interest rates for technology equipment financing start at less than 5% for well-qualified borrowers. Your cost will be based on a variety of factors such as your personal credit, business credit, years in business, and annual revenue. 

7 Options for Computer Equipment Financing

Technology for businesses comes in many shapes and sizes. So do business financing options. Gone are the days of bank loans being the only choice when you need to borrow money for your business. Here are seven companies worth checking out when you need computer equipment financing. 

Kapitus

Kapitus, founded in 2006, offers equipment financing and other business funding options. Well-qualified applicants may be able to access between $10,000 to $500,000 in funding. 

Rates: 7.00% – 30%

Requirements: 

• 600 FICO Score (675 FICO Score for financing over $150,000)
• At least 2 years in business (for loan amounts of $150,000+)
• No bankruptcy filings for 3+ years

Loan Amounts: $10,000 to $5,000,000

Repayment Terms: 2 – 7 years

Pros:

• Applicants with fair personal credit scores may qualify (albeit at a higher rate)
• Up to $45,000 in funding available for startups (with a 600+ FICO Score)
• Low (or zero) down payment requirement 

Cons: 

• Weekly or bi-weekly payments for some borrowers
• Origination fee ranges from 3.5% to 5%

SBA Loan by SmartBiz

SBA 7(a) and 504 loans are two options businesses can use to finance equipment purchases. Yet although they represent an affordable way for businesses to borrow money, qualifying for an SBA loan can be difficult. SmartBiz aims to cut the red tape and help creditworthy small business owners secure cost-effective funding faster and easier. 

Rates: 4.75% to 7%

Requirements: 

• 2+ years in business (with at least 2 years of tax returns)
• FICO SBSS Score of 140 or higher
• Must satisfy other SBA loan requirements

Loan Amounts: $30,000 to $5 million

Repayment Terms: 10 – 25 years

Pros: 

• Low starting interest rates 
• Potential to stretch payments out over many years
• High loan amounts available
• Quicker funding period than traditional banks

Cons: 

• Owners must provide personal guarantees
• SBA qualification requirements can be difficult to meet
• SBA loan funding speed is slower than some other financing options

Cit

CIT has been helping companies and consumers secure loans in the United States for more than a century. Among other financing options, CIT offers technology financing services for small businesses. 

Rates: Starting at 5.49% (Maximum rate not disclosed)

Requirements: Minimum score not disclosed — reported to be 700 

Loan Amounts: $1,000 to $500,000

Repayment Terms: 6 – 72 months

Pros: 

• Fast funding — as quick as 1 day
• Loan and lease options available
• Payment flexibility with monthly, seasonal, and deferred payment options

Cons: 

• Good personal credit needed to qualify
• Must provide detailed financial documents for loan applications over $500,000 
• Lack of transparency regarding maximum loan size and minimum credit requirements

Trust Capital

Trust Capital has a reputation for helping business applicants get approved for the funding they need to reach their goals. According to the lender, it’s approval ratio is an impressive 89%. Trust Capital offers IT financing and leasing, among other business loan and working capital options. 

Rates: Not disclosed

Requirements: 

• 600+ credit score (startup IT companies only)
• No bankruptcies in the last 7 years
• No unpaid tax liens
• Active business entity (filed with secretary of state) with current business license

Loan Amounts: Up to $250,000 (simple application) or $5 million (full financial disclosure) 

Repayment Terms: 12 – 72 months

Pros:

• Up to 100% purchase financing available
• Deferred payment options
• No down payment

Cons: 

• Personal guarantees needed from all owners
• Lack of transparency regarding rates and fees 

National Funding

National Funding has been helping small businesses secure loans and working capital since 1999. Among other services, the California-based lender offers equipment financing and IT leasing options. 

Rates: Not disclosed

Requirements: 

• FICO Score higher than 575
• 6 months in business
• Supply equipment quote from a vendor

Loan Amounts: Equipment leasing up to $150,000

Repayment Terms: Varies from a “short period” to over a decade

Pros:

• Potentially qualify with poor credit, but expect higher interest rates
• No down payment required
• Lowest payment guarantee program offered with new lease applications

Cons: 

• Maximum loan amount is small compared with other lenders
• Lack of transparency on website regarding rates, fees, and terms

Vohkus

Vohkus, founded in 2001, provides IT products and services to businesses across the globe. The company also helps businesses find cost-effective financing and leasing solutions so they can afford the computer and hardware products they need to reach their goals. 

Rates: Not disclosed

Requirements: Not disclosed

Loan Amounts: Not disclosed

Repayment Terms: Not disclosed

Pros:

• Leasing and financing options available
• Free initial consultation to find the right products to help increase business productivity
• Extended warranties on IT equipment

Cons: 

• Lack of transparency on website regarding financing and leasing details
• Consultation required to learn more about financing options

Amur Equipment Finance

Amur Equipment Finance was founded in 1996. The company has originated more than $1 billion in equipment leases for small businesses. In addition to leases, Amur Equipment Finance also provides equipment financing to businesses who wish to purchase their equipment — IT products or otherwise — outright. 

Rates: Not disclosed

Requirements: Not disclosed, but lender states it serves “all credit profiles”

Loan Amounts: $10,000 to $2 million+

Repayment Terms: Not disclosed, but you can estimate payments online

Pros:

• Deferred payment plans and seasonal payments available
• Lease and equipment financing options

Cons: 

• Rates, terms, and fees not disclosed on website

How to Qualify for Technology Equipment Financing

When you apply for any type of equipment financing, your lender will consider similar information. The application process often starts with a review of your business credit score and, perhaps, your personal credit as well. 

Tip: You can open a free Nav account to review your personal and business credit scores in one place. 

Aside from your credit information, a lender may also consider the following when you fill out your IT equipment financing application: 

• Your debt-to-income ratio
• How long your business has been established
• Your business’ annual revenue
• UCC filings and existing debts in your company’s name

The following issues could also be red flags to lenders and may make it difficult to qualify for technology equipment financing: 

• Bankruptcy filings in the last 7 years
• Unresolved tax liens
• Personal credit scores under 600
• Lack of proper business licenses or active filing status with your secretary of state

Is It Possible to Qualify for IT Equipment Financing with Bad Credit? 

Having bad credit doesn’t automatically mean that you can’t qualify for IT equipment financing. Business loans for bad credit do exist. However, with a poor credit rating you should be prepared to pay a higher cost. 

Certain types of financing may be more forgiving when it comes to your credit. Merchant cash advances, invoice financing, and cash flow loans may fit into this category. (Be sure to check with the individual lender before you apply, as some have stricter credit requirements.)

All three financing options have a few features in common. First, they’re typically short-term financing solutions. They can also be expensive, with interest rates often higher than business credit cards. 

Be sure to count the cost upfront. You should make sure you can afford to keep up with the payments before you decide to move forward with any high-cost financing offer. 

How Many Years Can You Finance Computer Equipment? 

Just like rates and fees vary widely between lenders, repayment terms have a wide range as well. Short-term financing options may need to be repaid in less than one year, sometimes with daily or weekly drafts from your business checking account. 

On the opposite side of the spectrum, some technology equipment financing can stretch out for years or even decades. SBA loans, for example, can have repayment terms as long as 25 years. 

Should You Buy or Lease IT Equipment? 

There are two primary ways to secure funding for your IT equipment purchases. You can buy or lease. Before you decide which option is best for your business, here are some pros and cons to weigh.  

Pros of Buying IT Equipment

• Equipment loans can be more affordable than leasing. However, this isn’t guaranteed so you should always compare multiple financing options.
• The equipment belongs to you. Your company gains an asset that you could resell at a later date. 
• Buying equipment outright comes with tax benefits. As the owner, your business may be able to deduct your equipment loan interest plus depreciation. 

Cons of Buying IT Equipment

• You may have to put more money down upfront. But if you can find a lender that offers 100% financing on IT equipment, this won’t be a problem. 
• Bad credit could make it difficult to find affordable financing. Lenders typically reserve their best rates and terms for the most creditworthy borrowers. 
• Upgrading may be difficult. If your equipment becomes outdated before you pay off your loan, it might not be affordable to secure new equipment. 

Pros of Renting IT Equipment

• A lease may sometimes be easier to qualify for than an equipment loan. Of course, this can vary depending on your situation. 
• IT equipment may become dated sooner than other types of equipment. A lease may make it easier to upgrade sooner. 
• Leases don’t generally require down payments. So there’s less out-of-pocket cost upfront, helping you to maintain a healthy cash flow. 

Cons of Renting IT Equipment

• Long-term leases can be expensive. Compare costs to be sure, but you can often save money when you buy equipment that you plan to use for a long time outright. 
• Your lease might come with a prepayment penalty. If you want to pay off your lease early, the penalty could be expensive. 
• There are fewer tax benefits. Since you don’t own the equipment, you can’t deduct depreciation on your tax return. 

Nav’s Final Word: IT Equipment Financing

Many businesses need up-to-date technology to remain competitive in the marketplace. The right IT equipment can also make your business more efficient and profitable. As a result, finding the best IT equipment financing for your business is essential. 

Take the time to shop around and compare offers from multiple lenders before you commit to an equipment loan or lease for your business. It’s also a good idea to check your credit reports before you apply for financing. You want to make sure that your credit history is error-free and in the best shape possible.