An equipment loan is a loan taken out with the intended purpose of purchasing equipment. Typically, the equipment secures the loan meaning that if you can no longer afford to pay the loan, the equipment gets repossessed as collateral. These loans are perfect for business owners that need a piece of equipment long-term but can’t afford to make the purchase upfront as the lending institution typically agrees to deploy the majority of the capital so that you can pay in periodic phases. While the arrangement will ultimately cost more than if you had bought the equipment upfront, equipment loans allow you to receive the equipment you need, while leaving you with sufficient working capital.application process vary as well.