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Equipment Financing vs Square Loans: Which Is Right for Your Business?

Equipment Financing offers long-term asset building, while Square Loans provide fast approval for immediate operational needs.

⚡ Quick Verdict

Equipment Financing is ideal if you need capital specifically for machinery or assets, offering lower rates and longer terms since the equipment serves as collateral, while Square Loans provide faster access to cash for any business need but come with higher costs and shorter repayment periods. If you're purchasing equipment, SMB Capital Funding's equipment financing delivers better long-term value, but if you need immediate working capital flexibility, Square's speed advantage may justify the premium cost.

Side-by-Side Comparison

Feature Equipment Financing Square Loans
Funding Amounts$10K – $5M$300 – $250K
Rates / Cost6% – 18% APRFixed fee (varies)
Term Length12 – 60 months18 months max
Funding Speed3 – 7 daysNext day
Min. Credit Score600+ preferredNo hard check
Collateral RequiredEquipment itselfNone
RepaymentMonthly installments% of Square sales

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 Square Loans when:

  • You already have an established relationship with Square Loans
  • Your business revenue primarily flows through their platform
  • You need amounts in the $300 – $250K range
  • You prefer their % of Square sales repayment structure
  • You've been declined elsewhere and want to explore all options

Why Businesses Choose SMB Capital Funding

SMB Capital Funding provides faster approval and funding timelines compared to Square Loans, while maintaining more flexible credit requirements that make it easier for business owners with less-than-perfect credit histories to qualify. As a direct lender offering up to $20M in capital, SMB Capital Funding eliminates broker intermediaries, giving you more control over the loan process and potentially better terms without third-party markups.

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Frequently Asked Questions

What is the difference between Equipment Financing and Square Loans?
Equipment Financing is a loan specifically designed to purchase machinery, tools, or other business equipment where the equipment itself serves as collateral, typically offering larger loan amounts and longer repayment terms. Square Loans, on the other hand, are short-term, flexible loans offered through the Square platform based on your sales volume, with faster approval and funding but generally higher interest rates and smaller amounts. If you're exploring financing options for your small business, SMB Capital Funding offers personalized solutions and can help you compare different loan types to find the best fit for your specific needs and equipment purchases
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.