AFO · Head-to-head
Both can fund a large equipment purchase, but they're underwritten on different things. Conventional senior debt is underwritten on the business's overall cash flow — the bank wants to see EBITDA coverage on the proposed total debt service. Equipment finance is underwritten primarily on the equipment itself — the asset secures the facility and the LTV (typically 75–90%) reflects what the lender expects to recover at resale.
Side by side
The matrix below pulls directly from the catalog. Each row shows the same data point across both programs so you can spot the differences at a glance.
| Attribute | Conventional Senior Term Loan or Revolver | Equipment Finance / Leasing |
|---|---|---|
| Capital type | Conventional senior debt | Equipment-secured debt |
| Family | Debt | Debt |
| Size range | $500,000 — $25,000,000 | $50,000 — $10,000,000 |
| Typical cost | Prime + 1–4%. GSA + personal guarantee for closely held companies. | Rate varies by equipment class and term. Typically Prime + 2–5%, no personal guarantee on larger deals. |
| Speed to close | Months | Days to weeks |
| Eligibility | Operating business with 1.2–1.5x EBITDA coverage on proposed debt service. Audited or review-engagement financials typically required. | Profitable operating business buying specific equipment, vehicles, or production lines. Equipment itself secures the facility. |
| Use of proceeds | Expansion, Acquisition, Refinancing, Equipment, Real estate, MBO / buyout | Equipment |
| Status | Live — self-serve | Live — self-serve |
Choosing between them
Each side describes the scenarios where the program is the stronger fit. Most real-world deals end up in the “in common” section below — neither/nor.
When to choose
Pick conventional senior debt when the equipment is part of a broader expansion that also needs working-capital headroom, the business has strong audited financials with EBITDA coverage clearly clearing 1.2–1.5x, and you want lower rate (Prime+1–4%) at the cost of tighter covenants. Senior debt offers more flexibility on covenants and prepayment than equipment-specific facilities.
When to choose
Pick equipment finance when the purchase is a defined piece of equipment (not a broader expansion), the business is profitable but doesn't have the audited financial package senior debt demands, or the timeline is tight (equipment lenders close in days where senior debt takes weeks). Higher rate (Prime+2–5%) but no impact on working-capital lines and 75–90% LTV without personal guarantees on larger deals.
On purchases over $1M the right answer is sometimes to stack both — equipment finance for the equipment slice, senior debt for the related working-capital and tenant-improvement needs. The CPA models the blended cost and the covenant interaction.
The CPA can look at your specific situation and tell you in one twenty-minute call which program (or stack) is the right structure — and what providers will want to see before the first conversation.