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Equipment financing refers to a loan used to purchase business-related equipment, such as a restaurant oven, vehicle or copy machine. When you take out an equipment loan, you'll need to make periodic payments that include interest and principal over a fixed term. As security for the loan, the lender may require a lien on the equipment as collateral against your debt, similar to how an auto loan works. Once the loan is paid in full, you own the equipment free of any lien. The lender may also impose a lien upon some of your other business assets or require a personal guarantee. If you fail to repay your loan, the lender could repossess your business assets, and even your personal assets if you gave a personal guarantee. You'll need to carefully review the loan terms to understand your risk.