What each is built for
Equipment financing funds the purchase of a specific asset — a truck, machine, or technology — with the equipment itself typically serving as collateral.
Working capital is a short-term lump sum for day-to-day operations: payroll, inventory, rent, marketing. It's not tied to a specific asset.
Using working capital to buy equipment
You can use working capital to buy equipment, but because it's unsecured and short-term, it often costs more per dollar than equipment financing.
Working capital also doesn't align repayment to the asset's useful life, so you may be paying off equipment long after it's earning.
When equipment financing fits
You're buying a specific, identifiable asset you'll use for years.
You want the asset to secure the financing, which can make approval easier.
You want repayment aligned to the asset's life.
When working capital fits
You need flexible cash for operations, not a specific asset.
You need funds quickly and the use is short-term.
Your equipment need is small relative to other operational needs.
The takeaway
If you're buying a durable asset, equipment financing is usually cheaper and better aligned. If you need flexible cash for operations, working capital is the right tool — even if some of it goes toward a small equipment purchase.