Almost all types of businesses need specific machinery or equipment for smooth functioning. Equipment loans are loans to buy business equipment. Businesses will often have the need to purchase, replace, repair, or upgrade various kinds of equipment to process,manufacture, or produce their product.Many times these equipment are higher in price. Thus businessmen opt for this type of loan to buy such equipment and pay it off with profits which will come from the use of these equipment or by putting them out on lease later. When considering business equipment loans, know that you can also look into leasing the equipment.The collateral for the loan is the item or items you purchase with the equipment loan.