If you're buying a specific piece of equipment, equipment financing is usually 2-4× cheaper than an MCA. Here's why — and when the MCA still wins.
Owners often use MCAs to buy equipment. For most purchases, it's the wrong product for the job — equipment financing is purpose-built for equipment purchases, uses the equipment itself as collateral, and runs at meaningfully lower rates over a longer term. Here's the comparison and the cases where MCA still wins.
Equipment financing is a loan or lease tied to a specific piece of equipment. The equipment serves as collateral, which is why rates are far lower than unsecured products. Typical 2026 ranges: 8-20% APR over 24-72 months, often 0% or 10% down depending on credit. The SBA 504 program offers fixed-rate equipment and real-estate financing for eligible businesses — one of the most cost-effective options for major equipment purchases. Equipment purchases may also qualify for IRS Section 179 immediate expensing, reducing after-tax cost further.
Total dollars are within a few thousand — but pay attention to the term. The MCA repays in 9 months. The equipment loan repays in 60. On a monthly cash-flow basis, the MCA is roughly 6× more demanding. For a long-lived asset, equipment financing's longer term means lower cumulative cost than repeatedly using shorter-term capital for the same purpose. That's why we route equipment requests to equipment financing first whenever the business qualifies.
There are narrow cases where an MCA does win for an equipment-adjacent purchase:
Many owners take an MCA for equipment because they assume their credit isn't strong enough for equipment financing. Equipment financing is actually one of the most credit-friendly products because the equipment itself secures the loan. 580 FICO can often get equipment financing where it can't get a term loan or line of credit. Don't assume — apply.
If you're buying a tangible asset with resale value, your first call should be equipment financing. Reserve MCAs for non-financeable purposes or genuine speed emergencies. ClearValue Lending will route equipment requests to equipment financing partners by default — that's the right answer for almost everyone. For more on matching product to use of funds, see Short-term vs. long-term financing and MCA vs. bank loan.
Almost always, yes. Equipment financing typically prices at 8-20% APR over 24-72 months, with the equipment serving as collateral. MCAs run 25-55% APR-equivalent over 9 months and are unsecured (with a personal guarantee and UCC lien on the business). For a long-lived asset, equipment financing's longer term means lower cumulative cost than repeatedly using short-term capital for the same purpose.
Yes, often. Equipment financing is one of the most credit-friendly products because the equipment itself secures the loan. Owners with 580 FICO can frequently qualify for equipment financing where they wouldn't qualify for an unsecured term loan or line of credit. Final approval, down payment, and rate are the lender's decision based on the file.
Narrow cases: used or specialty equipment lenders won't finance (custom builds, unique fabrications); software or digital tools that aren't financeable as physical collateral; equipment + working capital combined (e.g., new oven plus payroll for the kitchen staff); genuine 48-hour speed emergencies where equipment financing's 5-15 day timeline can't beat the deadline.
Varies by lender and credit profile. Strong-credit borrowers can sometimes get 0% down financing; typical down payments run 10-20%. The equipment's value, age, useful life, and resale market all factor in. New equipment generally gets better terms than used.
Section 179 lets businesses deduct the full purchase price of qualifying equipment purchased or financed during the tax year, up to a 2026 cap of $2,560,000 (up from $1.16M pre-2025 — the One Big Beautiful Bill Act raised the cap substantially starting in 2025). Interest on equipment financing is typically deductible as a business expense. Specific tax treatment depends on whether you structure as a loan or a lease — talk to a CPA before assuming.
Typical timeline is 5-15 business days from application to funded — slower than an MCA but much faster than a bank term loan or SBA. Some equipment financing lenders can fund in 48-72 hours for strong-credit borrowers on standard equipment. Final timing is the lender's call.