March 17, 2026 Pulling Back the Curtain on Capex Finance

Why the traditional equipment finance model often costs companies more than it should.

The equipment finance market has historically been highly fragmented, consisting mainly of subscale non-bank lenders and conservative commercial banks. As a result, companies often face an inefficient and expensive process when looking to access equipment-backed lines of credit, with multiple intermediaries and opaque pricing structures.  

When we formed Clarus Capital in 2021, our goal was to modernize the industry through a scaled direct lending platform capable of underwriting transactions ranging $5-$100M while eliminating the need for intermediaries that traditionally add cost and complexity.

Following over $1bn of capital deployed in the equipment finance market, we’ve learned several lessons, including best practices and common pitfalls we see company make during the capital raise process. Below is a summary of those findings. For a more detailed overview, please access our Essential Guide to Equipment Finance, which includes detailed information on terms, process, and market considerations.

Best Practices for Companies Considering Equipment Finance:

1. Know your counterparty: Brokers and other intermediaries often present as “capital providers” but, in reality, they are syndicating transactions to third-party lenders while layering in additional fees. Key to avoiding hidden and unnecessary fees is to understand which institution will be long-term holders of the lease or loan
2. Negotiate key economic terms upfront: Many financing proposals are silent on key terms such as fees charged for an early prepayment, which, if not structured properly, can result in material additional cost borne by the company and current ownership
3. Insist on transparency: The true cost of capital in equipment finance can be difficult to compare across lenders. Pricing is frequently quoted using an opaque “lease rate factor” and financeable equipment value can range widely based on the lender’s valuation approach 
4. Consider non-traditional equipment to maximize optionality: In additional to traditional manufacturing, transportation, and other process equipment, consider each lenders’ willingness to finance “soft costs” or other equipment categories (e.g., IT equipment, warehouse racking, automation, or material handling tools, etc.)

Click below to download the guide.

Clarus Capital, LLC | claruscap.com

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