What qualifies for Section 179?
Most tangible business property: machinery, equipment, computers, office furniture, vehicles (with weight limits), and off-the-shelf software. Must be placed in service in the tax year and used more than 50% for business. Real property and land do not qualify. Section 179 can be applied to financed equipment — you don't need to pay cash. The deduction is limited to your business's taxable income for the year.
Should I take Section 179 or bonus depreciation?
Use Section 179 first — it's more flexible (you choose which assets), has no phase-down, and the deduction can be carried forward if it exceeds income. Then use bonus depreciation on remaining basis if the business has more taxable income. Both can be used together in the same year. Consult a CPA for optimal structuring — the interaction between Sec 179, bonus depreciation, and your tax situation can be complex.
What are typical equipment financing rates?
Equipment loan rates depend heavily on the equipment type, business age, and credit: SBA 7(a) for equipment: Prime + 2.75–4.75% (~10–12% currently). Bank equipment loans: 6–12% for strong businesses. Online lenders: 10–25%. Startups or weaker credit: 20–30%+. Equipment leases: often quoted as a 'money factor' or implicit rate of 6–15%. Heavy equipment and specialized machinery often has better rates because the equipment itself is strong collateral.
Can I use Section 179 for leased equipment?
Generally no — Section 179 requires ownership. If you're financing via loan, you own the equipment and can deduct under Section 179. If leasing, the lease payments themselves are typically deductible as a business expense (operating lease), but you can't take the Section 179 first-year deduction. Finance lease (capital lease/lease-to-own) may allow Section 179 if it's classified as a purchase — ask your accountant which lease structure applies.
What types of businesses use equipment financing most?
Construction and contractors (heavy equipment, vehicles), manufacturing (machinery, CNC equipment), restaurants (commercial kitchen equipment), medical/dental practices (diagnostic equipment), trucking/transportation (vehicles), agriculture (farm equipment), and technology companies (servers, data center equipment). Equipment financing is one of the most common forms of business financing precisely because the asset being purchased serves as its own collateral.