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Equipment Financing vs Short Term Business Loan: Which Is Right for Your Business?

Equipment financing spreads costs over time, while short-term loans provide immediate cash for flexible business needs.

⚡ Quick Verdict

Equipment financing locks in predictable payments tied directly to an asset that pays for itself, making it ideal if you need specific machinery or vehicles. A short-term business loan gives you flexible cash fast for any operational need, though at a higher cost, so choose it only when speed matters more than long-term savings.

Side-by-Side Comparison

Feature Equipment Financing Short Term Business Loan
Funding Amounts$10K – $5M$10K – $500K
Rates / Cost6% – 18% APRStarting at 1.12x factor
Term Length12 – 60 months3 – 18 months
Funding Speed3 – 7 daysSame day – 48 hours
Min. Credit Score600+ preferred550+ OK
Collateral RequiredEquipment itselfNone required
RepaymentMonthly installmentsDaily/weekly ACH

When to Choose Each Option

Choose Equipment Financing when:

  • You need funding fast (same day possible)
  • Your credit score is below 640
  • You want to avoid collateral requirements
  • You need amounts from $10K up to $20M
  • You prefer a direct lender with no broker fees

Choose Short Term Business Loan when:

  • You already have an established relationship with Short Term Business Loan
  • Your business revenue primarily flows through their platform
  • You need amounts in the $10K – $500K range
  • You prefer their Daily/weekly ACH repayment structure
  • You've been declined elsewhere and want to explore all options

Why Businesses Choose SMB Capital Funding

SMB Capital Funding gets you approved and funded faster than traditional short term business loans, with direct lender expertise that eliminates broker delays and reduces your time to capital. We offer flexible credit requirements and loan amounts up to $20M, giving growing businesses the customized financing solution they need without the rigid restrictions of conventional lenders.

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Frequently Asked Questions

What is the difference between Equipment Financing and Short Term Business Loan?
Equipment financing is specifically designed to purchase business equipment and assets, where the equipment itself serves as collateral, typically offering longer repayment terms of 3-10 years. A short term business loan is more flexible cash for general business needs with repayment periods usually between 3-18 months and higher interest rates but faster funding. If you're exploring either option, SMB Capital Funding offers solutions tailored to small business needs, helping you determine which financing structure best fits your equipment purchases or immediate working capital requirements.
How quickly can I get funded?
SMB Capital Funding offers same-day to 48-hour funding for most products. Simply apply online and our team will reach out within minutes.
Is there a minimum credit score?
Most of our working capital products are available with a 550+ credit score. We look at your overall business health, not just your credit score.
Do I need collateral?
Most of our short-term business funding products require no collateral. Equipment financing uses the equipment itself as collateral.

SMB Capital Funding is a direct lender offering working capital solutions to US-based small businesses. Funding amounts and terms vary based on business qualifications. This comparison is provided for informational purposes. All products subject to approval.