Commercial Real Estate vs. Equipment Financing: Compare Business Funding
CRE loans vs. equipment financing — compare rates, down payments, timelines, and use cases for asset-backed business financing.
Commercial Real Estate Loan: Commercial real estate loans finance the purchase, renovation, or refinance of income-producing or owner-occupied commercial property. Equipment Financing: Equipment financing uses the purchased equipment as collateral, making it one of the most accessible forms of business funding for asset-heavy industries.
Commercial Real Estate Loan vs. Equipment Financing — side by side
| Commercial Real Estate Loan | Equipment Financing | |
|---|---|---|
| Typical amount | $250,000 – $25,000,000 | $5,000 – $5,000,000 |
| Typical term | 5 – 30 years | 2 – 7 years |
| Rate | 6% – 12% APR | 6% – 24% APR |
| Minimum time in business | 2 years | 1 year |
| Minimum credit score | 650+ | 600+ |
Which is right for your business?
- Commercial Real Estate Loan tends to fit best when you need purchase or renovation.
- Equipment Financing tends to fit best when you need machinery or vehicles.
Frequently asked questions
Can I finance equipment and real estate in the same loan?
SBA 7(a) can bundle both in one facility, but most lenders prefer separating them since each asset class has different underwriting standards. Combining them often means compromising terms on one or both.
Which has better rates — CRE or equipment financing?
Conventional CRE loans (5–9%) typically beat equipment financing (6–20%) for qualified borrowers because real estate holds value over time. Equipment financing wins on speed and simplicity for asset purchases.
Do both require a down payment?
CRE loans almost always require 20–35% down (SBA 504 as low as 10%). Equipment financing often allows 0% down for established businesses with good credit; startups may need 10–20%.
