Should I ever use an MCA to buy equipment?

No. Equipment financing is specifically designed for equipment purchases and is almost always cheaper. Using an MCA for equipment is one of the most common and costly mistakes business owners make. If you can't qualify for equipment financing, wait, improve qualification, or consider used equipment financing.

What is Section 179 and does it apply to equipment financing?

Section 179 of the U.S. tax code allows businesses to deduct the full purchase price of qualifying equipment in the year of purchase (up to $1.16 million in 2024, adjusted annually). It applies to financed equipment too, not just cash purchases. Always consult a tax professional.

← MCA Alternatives: 8 Better Ways to Fund Your Small Business

MCA vs Equipment Financing 2026: The Right Way to Fund Business Equipment

Q: Is equipment financing cheaper than an MCA?

Dramatically cheaper. Equipment financing runs 8-20% APR. MCAs run 40-80% effective APR. For a $60,000 equipment purchase, financing at 10% over 5 years costs about $16,500 in interest. An MCA for the same amount costs $19,200 over just 10 months (much higher annualized).

Q: Can I get equipment financing with bad credit?

Most equipment lenders require 600-620 credit minimum. Some specialty lenders accept 550+ with larger down payments. The equipment itself serves as collateral, which makes qualification easier than unsecured loans.

MCA vs equipment financing compared on cost, qualification, and structure. See why equipment financing is almost always the better choice for equipment purchases.

By Bar Alezrah6 min readPublished April 14, 2026 · Updated April 14, 2026

Key Takeaways

Equipment financing is dramatically cheaper. Equipment loans run 8-20% APR. MCAs run 40-80% effective APR.
The equipment is the collateral. Lower rates because the lender can repossess the equipment if you default.
Qualification is easier than SBA because the equipment secures the loan. Scores as low as 600-620 often qualify.
Never use an MCA to buy equipment. It's one of the most common MCA mistakes and costs businesses tens of thousands unnecessarily.
Terms match equipment life: 2-7 years typical, so payments align with how long the equipment lasts.

If you need to buy trucks, machinery, medical equipment, restaurant equipment, or any other business asset, equipment financing is almost always the right answer, not an MCA. The math isn't close. This comparison shows exactly why.

Side-by-Side Comparison

| | Equipment Financing | Merchant Cash Advance | |---|---|---| | Typical APR | 8% to 20% | 40% to 80% effective APR | | Collateral | The equipment itself | None (but UCC filed on receivables) | | Amount | Up to 100% of equipment cost | $5,000 to $600,000 | | Term | 2 to 7 years | 6 to 18 months | | Funding speed | 2-7 days | 1-3 days | | Minimum credit score | 600-620 typical | 500-625 | | Requires down payment | Sometimes 10-20% | No | | Ownership | You own the equipment at payoff | N/A |

Real Cost Example

You need a $60,000 work truck.

Equipment financing at 10% APR over 5 years:

Monthly payment: $1,275
Total repayment: $76,500
Cost of financing: $16,500

MCA at factor 1.32 (10 months):

Daily payment: $264
Total repayment: $79,200
Cost of financing: $19,200
BUT: MCA is done in 10 months, not 5 years

However, after the MCA is paid off in 10 months, you need to... still be running a truck for the remaining 5+ years. You'll likely take another MCA for working capital or maintenance at some point.

The real comparison: Equipment financing lets you spread cost over the equipment's useful life at 10% APR. An MCA forces you to repay in 10 months at effective 65% APR while the equipment is barely broken in.

Why Equipment Financing Almost Always Wins

Rate is lower because the equipment secures the loan
Term matches asset life, so you're not stuck paying for equipment that's already obsolete
Builds business credit — equipment lenders report to bureaus
Tax benefits — equipment financing payments often include deductible interest, and the equipment itself can be depreciated
Section 179 deduction may apply, allowing you to deduct the full equipment cost in year 1 (check with your accountant)

Top Equipment Financing Companies in 2026

Balboa Capital — broad industries, fast approval
Crest Capital — transparent online process
Taycor Financial — wide industry coverage
eLease — online equipment leasing
National Funding Equipment Financing — more flexible credit requirements
Industry-specific: CAT Financial (heavy equipment), John Deere Financial (ag equipment), Ford Commercial (vehicles), Dental practice finance (dental equipment)

For vehicles: manufacturer-backed financing (Ford Commercial Finance, Chevrolet Business Choice, RAM Commercial) often offers the best rates.

When an MCA Might Make Sense (Rare)

MCAs are not the right tool for equipment purchases. Period. But if you absolutely cannot qualify for equipment financing due to credit or time in business, consider:

Wait 3-6 months and improve qualification
Used equipment financing which has lower qualification thresholds
Equipment sale-leaseback — sell your current equipment to a lessor and lease it back (frees cash)
Supplier financing — many equipment dealers offer their own financing programs

Frequently Asked Questions

Is equipment financing cheaper than an MCA?

Dramatically. 8-20% APR vs 40-80%. $60K equipment: $16,500 financing cost vs $19,200 MCA in 10 months.

Can I get equipment financing with bad credit?

Most require 600-620. Some specialty lenders accept 550+ with down payment.

Should I use MCA for equipment?

No. Equipment financing is always cheaper and purpose-built.

What is Section 179?

Tax code letting businesses deduct full equipment cost in year of purchase. Applies to financed equipment. Consult tax pro.

Disclaimer: The MCA Guide provides free educational content about merchant cash advances. We are not a lender, broker, or financial advisor. This content is for informational purposes only and does not constitute financial, legal, or tax advice. Some links may be affiliate links. Always consult a qualified professional before making business financing decisions.