Types of Business Equipment Finance: Finding the Right Fit for Your Business

When exploring the types of business equipment finance, the best option depends on your cash flow, tax situation, and whether you want to own or lease your equipment. Whether you’re looking to purchase equipment for a new business, upgrade machinery, or invest in tools for your business, understanding your options can help you make a decision that keeps your cash flow healthy and your operations running smoothly.

If you’re not sure which equipment finance option is right for you, don’t worry. We’ll break down the main types of business equipment finance and how they work.

Asset Lease: Flexible Financing Without Upfront Ownership

An asset lease is a type of equipment loan lets you use the equipment without having to buy it outright. Instead, a lender purchases the equipment, and you make set monthly payments for an agreed lease term. At the end of the lease, you can:

• Pay a residual amount to take ownership
• Refinance the lease for an extended term
• Return the equipment and upgrade to something new

Why choose asset leasing?

If your business needs regular equipment upgrades or you don’t want to tie up cash in purchases, an asset lease gives you flexibility without a big upfront cost.

• Fixed interest rates and predictable repayments for easier budgeting
• Flexible lease terms tailored to your business needs
• Potential tax deductions on lease payments (check with your accountant)

Best for: Businesses needing regular equipment upgrades or those looking to preserve cash flow while accessing essential assets.

Commercial Chattel Mortgage: Immediate Ownership with Structured Payments

A chattel mortgage is a type of business loan where you take ownership of the equipment immediately, but the lender holds security over it until the loan is fully repaid. It’s a great option if you want full control over your assets without the large upfront expense.

Why choose a chattel mortgage?

A chattel mortgage is a great option for businesses that want ownership without paying upfront. Benefits include:

• Fixed interest rates and repayments for financial predictability
• Flexible terms (typically between 1–7 years)
• Option to include a residual (balloon) payment to reduce monthly costs
• Potential tax benefits on interest and depreciation (speak with an accountant)

Best for: Businesses looking for long-term equipment ownership with structured financing.

Equipment Rental: Low-Risk, Short-Term Solution

Need equipment for a short time or don’t want to commit to ownership? Equipment rental could be the way to go. Instead of purchasing, you rent the equipment and make fixed monthly payments. At the end of the rental period, you can:

• Return the equipment with no further obligation
• Continue renting if you still need it
• Buy the equipment at fair market value

Why choose equipment rental?

If you need temporary or seasonal equipment, renting can be a smart way to access what you need without a long-term financial commitment. The main advantages of equipment rental are:

• Fixed repayments with no large upfront costs
• Flexibility to upgrade, return, or buy equipment at the end of the term
• No impact on business balance sheets (rented assets are not considered liabilities)
• Tax-deductible rental payments (consult your accountant for details)

Best for: Businesses needing short-term or seasonal equipment use without the risks of ownership.

Cash Flow Funding: Unlock Working Capital from Your Invoices

If your business has long payment terms (90+ days) and you’re waiting for invoices to be paid, cash flow funding allows you to borrow against them. Instead of waiting, you can access funds immediately to cover business expenses, buy equipment, or invest in growth.

Why choose cash flow funding?

This financing option is ideal for businesses that need immediate liquidity to cover expenses, invest in growth, or manage seasonal fluctuations. Benefits include:

• Quick approval and fast access to funds
• No need for upfront collateral—your invoices act as security
• Flexible terms that align with your cash flow cycle

Best for: Businesses with delayed receivables that need working capital to stay operational.

Choosing the Right Business Equipment Finance Option

The best finance option depends on how your business operates, your cash flow, and whether you want to own or lease your equipment.

• Want to own the equipment straight away? → A chattel mortgage might be best
• Need regular equipment upgrades? → Consider an asset lease
• Only need equipment for a short time? → Equipment rental could be the way to go
• Waiting on invoices to be paid but need cash now? → Cash flow funding can help

Trust Credit One for Easy Equipment Finance

At Credit One, we help businesses of all shapes and sizes finance equipment in a way that best suits their needs. Whether you’re looking at a chattel mortgage, asset lease, equipment rental, or cash flow funding, our knowledgeable and experienced team will guide you through the process and help you choose the right option for your business. Contact us today to speak to a member of the team and start your journey to easy equipment finance with Credit One!