Which funding products does this apply to?

Equipment Financing. Each has its own page listing the funders in this directory that offer it and what each one publishes about its terms.

Is this specific to construction?

It is written around how a construction business actually generates and collects cash, which is what makes its funding problem different. The mechanics transfer; the arithmetic may not.

The Find Me Funders research desk. Some drafting is AI-assisted, and every page that is says so at the top, including whether a person has checked its claims yet.

How do I know a figure here is right?

Where a page carries the green notice, its claims were checked against the sources listed at the end and a reviewer is named. Where it carries the amber one, nobody has verified it yet and you should confirm anything you plan to act on.

Are the examples real deals?

No. Every worked example is labelled illustrative and exists to show the arithmetic. What any particular lender charges is on that lender's page, where it publishes it.

Why do you never say what a typical rate is?

Because we cannot source it. A market average assembled from lenders who do not publish prices is a guess with a decimal point on it. Where a lender publishes a figure, we show that figure and say where it came from.

Is this financial or legal advice?

No. It is general information about how these products work. Outcomes depend on your contract and your state, and a lawyer or accountant licensed where you are is the person to ask about your situation.

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What happens if you default on equipment financing?

What an equipment funder does when you stop paying

Acceleration, repossession, sale, then a bill for the shortfall. The last step is the one people do not see coming.

By Find Me Funders research desk Updated 14 September 2026 987 words 4 min read

Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.

What happens if I default on equipment financing?

The funder accelerates the balance, takes the equipment, sells it, and bills you for the difference between what it recovered and what it was owed — the deficiency — plus repossession, storage and remarketing costs. Because auction proceeds are usually well below the outstanding balance, a deficiency is the normal outcome, not the exception, and your personal guarantee makes it yours. There is far more room to negotiate before a default than after, so call the funder early.

A missed payment is a billing problem. A default is a legal event, and it moves quickly once it starts.

The sequence

1. Default is declared.Read your definition of default. It is wider than non-payment: breach of any covenant, failure to insure, moving the equipment without consent, a material adverse change, cross-default to your other obligations with the same funder, or the death or bankruptcy of a guarantor.

2. Acceleration.The funder declares the whole remaining balance due now. On a lease, that usually means all remaining rents plus the residual or stipulated loss value. Some documents discount future rents to present value; many do not, and the difference is real money.

3. Repossession.For a security interest, Article 9 of the Uniform Commercial Code allows a secured party to take possession after default without a court order if it can be done without breach of the peace — see UCC 9-609. For a true lease, the lessor's remedies sit in Article 2A instead. Either way, expect a recovery agent, and expect the cost of that agent to be added to your balance.

4. Sale.The equipment is sold, usually at auction. Under Article 9 every aspect of the disposition must be commercially reasonable — UCC 9-610 — and you are generally entitled to advance notification of the sale.

5. The deficiency.Sale proceeds are applied to the balance and costs. If money is still owed, the funder sues for it. UCC 9-615 covers how proceeds are applied and when a deficiency is recoverable.

The arithmetic that surprises people

Illustrative only — you have 40 payments of $2,400 left, so acceleration produces $96,000. The machine sells at auction for $38,000 gross, and after transport, storage, repair and auction commission the net recovery is $33,000. The deficiency is $63,000, and it continues to accrue interest and legal costs.

You no longer have the equipment. You still owe most of the money. That is the part nobody explains at signing, and it is the ordinary result rather than a worst case, because forced-sale prices sit far below the value you were paying for.

The notice you should receive, and what to do with it

Before a secured party disposes of collateral it generally has to send you reasonable authenticated notification of the sale — UCC 9-611 — and for a commercial transaction the content of that notice is addressed at UCC 9-613. It tells you whether the sale is public or private, and when.

Read it rather than filing it. The notice is your only advance warning of the number that will drive your deficiency, and it is the moment at which you can still influence the recovery: by producing a buyer of your own, by pointing out that the equipment has value the recovery agent has not recognised, or by asking that it be sold through a trade channel rather than a general auction. A secured party's disposition has to be commercially reasonable in every aspect, and a documented objection made before the sale is worth considerably more than a complaint made after it.

Redemption, and why it is rarely the answer

Article 9 gives you a right to redeem the collateral before it is disposed of — UCC 9-623. The catch is what redemption costs.

Illustrative only —using the figures above: forty payments of $2,400 remain, and after acceleration the obligation is $96,000. Redemption requires fulfilment of the whole obligation plus the secured party's reasonable expenses and, where the agreement provides, attorney fees — so roughly $100,500, not the $7,200 of arrears that started this.

That is the practical lesson. Three missed payments can be cured for $7,200 while the loan is merely delinquent. Once acceleration has happened, the cure price is the entire balance. Everything about the arithmetic argues for calling before the third missed payment rather than after it.

There is a related provision worth knowing: under UCC 9-620 a secured party can propose to accept the collateral in full or partial satisfaction of the debt. Full satisfaction ends the deficiency. If a funder offers it, that is a materially better outcome than a sale plus a shortfall, and it is worth asking for explicitly — in writing, with the words "in full satisfaction" in them.

The personal guarantee

If you signed one — and on small-ticket equipment you almost certainly did — the deficiency is a personal debt. A judgment against you personally can be enforced against personal assets under state law. This is why "the business will just give the equipment back" is not a plan.

What to do before you get there

Call first.Funders would rather restructure than remarket, because remarketing loses them money too. Call before the missed payment, not after the third one. You have room to move while you are current and very little once you are not.

Ask for a specific accommodation.A deferral of two payments added to the end of the term. A three-month interest-only period. A term extension. Bring a short written explanation with the date the problem resolves and what changed.

Get it in writing.A verbal forbearance from a collector is not an amendment to your lease.

Consider a voluntary sale.If the equipment has value and you are willing to move, selling it yourself in a normal market almost always produces more than an auction does. You need the funder's cooperation on the payoff and lien release, and it will usually give it, because it improves the recovery.

Do not let the insurance lapse.Failure to insure is a default in its own right, and it turns a cash flow problem into a legal one.

Talk to a lawyer before you sign anything a collector sends you.Especially anything that reaffirms a balance, adds a guarantor, or confesses judgment.

The pattern worth internalising: everything is negotiable before default and almost nothing is after.