Best Equipment Loans in South Africa for 2025
- Written by Wesley Vos
- Updated
Equipment Loans
Merchant Capital: Best for flexible repayment options
Interest (APR)
Personalised
Loan Amount
R50k-R5m
Loan Term
Aligned with business cash flow
Apply on partner site
Pros & cons
Pros
- Fast funding within 48 hours
- Flexible repayment aligned with cash flow
- No traditional collateral required
- Shari'ah-compliant financing available
- Tailored solutions for SMEs
Cons
- Interest rates not publicly disclosed
- Minimum turnover requirement of R50,000
- Limited to businesses with 12+ months of trading history
- Potential fees not specified upfront
- Repayment terms may vary per business
Our take
Overview
Established in 2012, Merchant Capital is a leading South African financial services provider specializing in alternative funding solutions for small and medium-sized enterprises (SMEs). It offers flexible financing options tailored to the unique needs of businesses across various sectors.
Their equipment business loans are designed to help you acquire essential machinery and equipment without the burden of traditional collateral requirements. Merchant Capital emphasizes quick approval processes and repayment terms aligned with your business’s cash flow, making it easier to invest in necessary assets.
Key Facts
- Loan Amount Range: Merchant Capital offers equipment business loans ranging from R50,000 to R5 million, catering to diverse business needs.
- Repayment Terms: Repayments are structured to match your cash flow, with options like daily or weekly debit orders.
- Interest Rates: Interest rates are customized based on your business profile; specific rates are provided upon application.
- Unique Feature: Merchant Capital offers Shari’ah-compliant financing options, accommodating businesses adhering to Islamic financial principles.
Known qualification & document requirements
- Minimum monthly turnover of R50,000
- At least 12 months of trading history
- Valid business registration documents
- Latest 6 months of bank statements
- Proof of business address
Fees
Specific details, such as initiation or monthly administration fees, are not publicly available. It’s advisable to contact Merchant Capital directly for comprehensive information on any applicable fees.
Time to receive funds
Upon approval, funds are typically disbursed within 48 hours, enabling prompt investment in your business operations.
Illustrative Example
Loan Amount: R250,000
Repayment Terms: 12 months
Annual Interest Rate: 18%
Fees: R2,000 initiation fee + R500 monthly admin fee
Monthly Instalment: R22,917.97
Total Cost of Credit: R30,015.64
Total Repayment: R280,015.64
This is an illustrative example. Your rate, fees, and terms may vary based on your business profile. Request a personalized quote directly from Merchant Capital.
Equipment Loans
GroWise Capital: Best for SMEs with seasonal revenue
Pros & cons
Pros
- Fast funding disbursement within hours
- Flexible repayment options tailored to cash flow
- No upfront or hidden fees
- Quick online application process
- Supports SMMEs with accessible funding
Cons
- Higher finance fees compared to traditional loans
- Short repayment terms may strain cash flow
- Minimum turnover requirement excludes smaller startups
- Limited to businesses with six months of operational history
- Certain industries may not qualify
Our take
Overview
GroWise Capital, founded in 2019, is a South African fintech company dedicated to providing fast, tailored funding solutions for small and medium-sized businesses. With a focus on empowering entrepreneurs, GroWise Capital offers a range of products, including equipment financing, to help companies acquire essential assets for growth and operations.
Using innovative technology, GroWise Capital simplifies the application and approval process, enabling businesses to access funding within hours. Their customer-centric approach and commitment to supporting local SMEs have earned them a strong reputation among South African business owners.
Key Facts
- Loan Amount Range: Offers funding from R15,000 to R3 million for various equipment needs.
- Repayment Terms: Flexible repayment periods ranging from 6 weeks to 12 months.
- Interest Rates: Charges fixed finance fees based on your business’s risk profile.
- Unique Features: Fast approval and disbursement, often within hours of application.
- Application Process: Completely online and easy to complete in just minutes.
Known qualification & document requirements
- Registered business in South Africa
- Minimum six months of operational history
- Monthly turnover of at least R50,000
- Six months of business bank statements
- Valid business registration documents
Fees
GroWise Capital charges fixed finance fees based on your business’s risk profile. There are no initiation or monthly administration fees.
Time to receive funds
Funds are typically disbursed within two hours after application approval, provided all documentation is complete.
Illustrative Example
Loan Amount: R250,000
Repayment Terms: 12 months
Annual Finance Fee: 20% (R50,000)
Fees: No initiation or admin fees
Monthly Instalment: R25,000
Total Cost of Credit: R50,000
Total Repayment: R300,000
This is an illustrative example. Your rate, fees, and terms may vary based on your business profile. Request a personalised quote directly from GroWise Capital.
Equipment Loans
ProfitShare Partners: Best for seamless, paperless applications
Pros & cons
Pros
- Fast funding within 24 hours
- Flexible repayment terms up to 12 months
- No collateral required for loans
- Transparent cost structure with no hidden fees
- Early repayment allowed without penalties
Cons
- Higher monthly costs in initial months
- Short repayment terms may strain cash flow
- Minimum revenue requirement of R500,000
- Limited to businesses with at least one year of operation
- Online bank account linking required for application
Our take
Overview
Lula, formerly known as Lulalend, is a South African financial services provider established in 2014 to support small and medium-sized enterprises (SMEs). By leveraging advanced technology, Lula offers swift and accessible funding solutions tailored to the unique needs of local businesses.
Specialising in unsecured business loans, Lula provides equipment financing up to R5 million with a straightforward online application process. Their commitment to rapid service ensures that, upon approval, funds can be disbursed within 24 hours, enabling you to acquire essential business equipment promptly.
Key Facts
- Loan Amount Range: Access funding from R10,000 to R5 million, accommodating various business sizes and equipment needs.
- Repayment Terms: Flexible repayment options over 3, 6, 9, or 12 months, allowing you to choose terms that align with your cash flow.
- Interest Rates: Depending on your chosen plan, monthly costs range between 2% and 6% of the advanced amount for the initial months, followed by 2% for the remaining term.
- Unique Features: No collateral is required, the application is completely paperless, and there are no early repayment penalties, providing a hassle-free borrowing experience.
Known qualification & document requirements
- Minimum of one year of business operations
- Annual revenue of at least R500,000
- Registered business in South Africa
- Securely linked bank account for transaction data
Fees
Lula does not charge initiation or monthly administration fees. The cost structure is based on fixed monthly costs as a percentage of the principal amount, determined by your business’s credit assessment. There are no penalties for early repayment, allowing you to save on costs if you settle the loan beforehand.
Time to receive funds
Upon approval, funds are typically disbursed within 24 hours. To expedite the process, it is recommended that you link your online bank account during the application, enabling faster assessment and fund allocation.
Illustrative Example
Loan Amount: R250,000
Repayment Terms: 12 months
Monthly Costs: 5% for the first 3 months, 2% for the remaining 9 months
Fees: No initiation or admin fees
Breakdown of Costs:
First 3 months: R250,000 × 5% = R12,500 per month
Remaining 9 months: R250,000 × 2% = R5,000 per month
Total Monthly Payments (First 3 months): R12,500 × 3 = R37,500
Total Monthly Payments (Next 9 months): R5,000 × 9 = R45,000
Total Repayment: R37,500 + R45,000 = R82,500
This is an illustrative example. Your rate, fees, and terms may vary based on your business profile. Request a personalised quote directly from Lula.
Compare equipment loan rates with Fundrate's top picks
Lender | Best For | Est. Annual Apr | Loan Amount | Loan Term |
|---|---|---|---|---|
Merchant Capital | Flexible repayment options | Personalised | R50k-R5m | Aligned with business cash flow |
GroWise Capital | SMEs with seasonal revenue | Approx 20% | R15k-R3m | 6 w-12 mo |
Lula | Seamless, paperless applications | 24%-60% | R10k-R5m | 3-12 mo |
Pros and cons of equipment loans
While equipment business loans loans can provide crucial funding, they aren’t ideal for every business. Weigh the pros and cons before committing.
- Equipment acts as collateral, lowering risk
- Enables access to high-value machinery upfront
- Flexible repayment aligned with asset lifespan
- Boosts operational efficiency and growth potential
- Tailored options for industry-specific equipment
- Higher interest rates for riskier businesses
- Requires supplier invoices or purchase agreements
- Shorter repayment terms may strain cash flow
- Strict eligibility criteria for startups
- Potential repossession if repayments are missed
What is a Business Equipment Loan (Asset Financing)?
Business Equipment Loans, or Asset Financing, are financial solutions designed to help you acquire essential equipment or machinery for your business operations. Instead of paying upfront, you can spread the cost of the equipment over a fixed term, making it more affordable while preserving cash flow. These loans are tailored for businesses in various industries, from manufacturing and agriculture to healthcare and logistics.
With asset financing, the equipment typically acts as collateral, reducing the need for additional security. This type of funding is particularly beneficial for South African businesses looking to invest in high-value assets without straining their working capital.
How does a Business Equipment Loan Work?
Business Equipment Loans allow you to finance the purchase of equipment or machinery critical to your business. The lender usually requires equipment details, including supplier quotes or purchase agreements, to approve the loan. Once approved, the funds are disbursed directly to the supplier or you, depending on the agreement.
Repayment terms vary but often align with the asset’s useful life, making payments manageable. The equipment is collateral, meaning the lender can repossess it if repayments are not made. This setup often results in lower interest rates than unsecured loans, providing a cost-effective way to invest in business growth.
Loan Use Cases
Business Equipment Loans can be used for:
- Purchasing machinery or tools for manufacturing or production.
- Acquiring vehicles for logistics to improve supply chain efficiency.
- Upgrading technology or IT systems to enhance operations.
- Securing industry-specific equipment such as medical devices or construction machinery.
These loans are ideal for South African businesses requiring immediate equipment access without depleting their capital reserves.
Loan Eligibility Factors
To qualify for a Business Equipment Loan, lenders typically require:
- A minimum trading history of six months to one year.
- Revenue thresholds, often exceeding R500,000 annually.
- A satisfactory business and/or personal credit score.
- Proof of asset purchase or supplier details, such as invoices or quotes.
Credit Score Impact and How to Improve It
Your credit score plays a significant role in determining loan approval and the interest rates offered. Lenders may focus more on the asset’s value, but a strong credit score can lead to more favourable terms.
Tips to improve your credit score:
- Settle outstanding debts and avoid missed payments.
- Monitor your credit report for inaccuracies.
- Maintain a low credit utilisation ratio.
- Ensure your business’s financial records are accurate and up to date.
Interest Rates Breakdown
Interest rates for Business Equipment Loans in South Africa typically range from 10% to 20%, depending on the lender, asset type, and business profile.
- Fixed vs. Variable Rates: Fixed rates provide consistent repayments, while variable rates may fluctuate.
- Factors Influencing Rates: These include the asset’s value, loan term, and your business’s financial health.
Repayment Terms and Flexibility
Repayment terms for Business Equipment Loans often range from 12 to 72 months, with options like:
- Balloon payments to reduce monthly instalments.
- Seasonal payment plans for businesses in industries like agriculture or tourism.
- Early repayment options to save on interest costs.
Flexible repayment structures help align payments with your business’s cash flow cycles.
Comparison with Other Business Loan Types
Compared to other loans like working capital loans or merchant cash advances, Business Equipment Loans are more asset-specific. They are ideal for funding tangible assets, whereas working capital loans address operational expenses. Lines of credit offer flexibility for ongoing needs but may not cover high-value equipment purchases.
Regulatory and Legal Considerations in South Africa
South Africa’s National Credit Act ensures transparency and fairness in lending. Key considerations include:
- Lenders must disclose fees and interest rates.
- Repossession rights apply if repayment terms are not met.
- Borrowers have protections against predatory lending practices.
Alternatives to Business Equipment Loans
If a Business Equipment Loan doesn’t suit your needs, consider:
- Equipment leasing: Rent equipment without ownership obligations.
- Lines of credit: Access funds as needed for smaller purchases.
- Government grants or subsidies: Available for specific industries and business sizes.
How to Apply for a Business Equipment Loan
- Eligibility assessment: Confirm that your business meets the lender’s criteria.
- Document preparation: Gather supplier quotes, business registration documents, and financial records.
- Application submission: Apply online or in person with a detailed proposal.
- Approval process: The lender may evaluate the asset and your business’s creditworthiness.
- Receiving funds: Funds are disbursed to you or the supplier to finalise the purchase.
FAQs
What are the typical interest rates for Equipment Business Loans in South Africa?
Interest rates usually range between 10% and 20%, depending on the lender, loan term, and asset type.
How long does it take to get approved for an Equipment Business Loan?
Approval can take anywhere from 24 hours to 7 business days, depending on the lender and the completeness of your application.
What financial documents do I need to apply for an Equipment Business Loan?
You’ll typically need:
- Supplier invoices or quotes
- Business registration documents
- Bank statements (past six months)
- Financial records or proof of income
Can I qualify for an Equipment Business Loan if my business is less than a year old?
Some lenders may require at least 6-12 months of trading history, but startups may qualify if they can demonstrate strong revenue potential or have a guarantor.
Do I need collateral to secure an Equipment Business Loan?
The equipment you’re financing acts as collateral, reducing the need for additional security.
What is the maximum loan amount I can apply for?
Loan amounts typically range from R50,000 to R10 million, depending on your business’s financial profile and the asset value.
How do repayment terms work for Equipment Business Loans?
Repayment terms range from 12 to 72 months, with options like balloon payments or seasonal plans to match your cash flow.
Are there penalties for early repayment?
Most lenders allow early repayment, and some may even offer discounts. However, confirm with your lender if fees apply.
How does my personal or business credit score affect my application?
A good credit score can secure better rates and terms, but asset financing may rely more on the value of the equipment as collateral.
Are Equipment Business Loans available for specific industries?
Yes, many lenders cater to industries like agriculture, construction, manufacturing, and healthcare, offering tailored loans for specialized equipment.
How we choose our best equipment loan lenders
To select the best loans, Fundrate evaluates the most prominent lenders in South Africa. Each lender was ranked focusing on four main categories:
Affordability
This section of the scoring evaluates interest rates, penalties, and fees. Lower rates and fees, along with fewer penalties, contribute to a higher score. Lenders that offer rate discounts, grace periods, and the option to change the due date receive bonus points.
Availability
This category considers factors such as minimum loan amounts, number of repayment terms, eligibility requirements, the option to apply with a co-borrower or co-signer, and the loan turnaround time.
Customer experience
This category includes customer service hours, the availability of online applications, online account access, and mobile apps.
Transparency
For this factor, we assess how clearly information is presented to borrowers on the lender’s website. This includes details on credit requirements, rates, fees, and the availability of prequalification.