The Structure
How $2M of Year-End Equipment Financing Is Structured
One facility, one application, several machines from more than one builder. The structure is ordinary equipment financing — the machines secure themselves — with one thing that made it matter: timing. Equipment is deductible in the year it is placed in service, not the year it is paid for. Financing does not change that. A manufacturer putting roughly 10% down in December deducts the full $2M against the profit it earned that same year.
Ten percent down in December. The whole $2M deducted against the year the profit came in
Representative structure
Larger year-end purchases fund the same way when revenue, cash flow, and story qualify.
The Transaction
What the Manufacturer Was Buying
Bobby Friel
Founder, Basecamp Funding
Every operator who has had a great year knows the fourth-quarter conversation with the CPA: you can hand the difference to the IRS, or you can put it into equipment you were going to buy anyway. The only question is whether the machines are running by the 31st.
A manufacturer came off its strongest profit year and was looking at a tax bill to match. The plan was $2M of heavy production equipment it needed anyway — and the deduction that comes with putting it in service before December 31. The catch was the calendar: it was the fourth quarter, and a bank’s equipment process would have landed the machines in January. Equipment financing at roughly 10% down put every machine on the floor and in service before year-end. Funded in 6 days. The full Section 179 deduction landed in the year the profit did.
Underwriting
How Year-End Equipment Financing Actually Works
The equipment secures the loan. That is what makes $2M fundable in six days — and six days is what makes the deduction land in the right year. The credit decision and the calendar are the same problem here.
The Bank
What a bank underwrites.
The manufacturer’s balance sheet, on its own schedule. A strong profit year helps, but the bank’s equipment process runs weeks, and in the fourth quarter weeks is the whole game. Machines that fund in January are deducted against next year’s income — which may be smaller, and is definitely not the year the tax bill came from.
This Structure
What equipment financing underwrites.
The machines: specified, quoted, deliverable, and worth a known number on a resale market. The manufacturer’s deposit history sets the terms. The lender is not waiting on a committee; it is checking a build sheet against a market it prices every day.
Placed in Service Is the Only Date That Matters
The deduction follows when the equipment is operating, not when the invoice is paid and not when the financing closes. That means the machines had to be delivered, installed, and running by December 31 — and the financing had to be done far enough ahead of that to let delivery and installation happen. A six-day funding was not a convenience. It was the margin that made the deduction possible.
Why Financing Does Not Reduce the Deduction
A manufacturer putting roughly $200K down on $2M of equipment deducts the full $2M in year one. The financed portion counts. That is the part most operators do not believe until their CPA confirms it: the write-off is many times larger than the cash that left the business. The machine works the whole time, the payments are spread across its useful life, and the tax benefit arrives in the year it is needed.
What the 2026 Limits Actually Are
The Section 179 deduction limit for 2026 is $2,560,000, with the phase-out beginning at $4,090,000 of total equipment placed in service. Above that, 100% bonus depreciation — now permanent — covers what Section 179 does not. A $2M purchase sits comfortably inside the limit. Your CPA models the exact figures for your entity and bracket; the worked numbers below are representative.
Mixed Builders, One Closing
The $2M was not one machine. It was several, from more than one builder, on more than one delivery schedule. A captive finance arm handles its own brand. An independent equipment structure covered the whole order in one facility with one closing date — which, in a fourth-quarter timeline, is the difference between one installation window and three.
What the Equipment Actually Buys
Capacity the manufacturer was going to need in the following year regardless, now paid for partly by a tax bill that was otherwise leaving the building. And the machines were chosen for the work, not for the deduction — the deduction just determined which year they arrived.
Run the arithmetic your own way: what did your CPA estimate you owe this year, and what is the equipment on your list that you would buy in the next twelve months anyway?
For most manufacturers coming off a strong year, the answer is that the equipment was already justified and the calendar decided the year. That is a different question than whether a bank can close before the 31st.
The Products
The Products That Funded This Transaction
| Product | Role here |
|---|---|
| Equipment Financing → | Several production machines from more than one builder, one facility, placed in service before December 31 |
Financing this whole sector: Manufacturing Financing →
Tax Strategy
Section 179 + 100% Bonus Depreciation on $2M of Production Equipment
If last year was strong and you’re about to write a check to the IRS — stop. Acquire qualifying equipment with as little as 10% down, finance the rest, and write off the full purchase price in year one. Section 179 covers it up to the annual cap; 100% bonus depreciation — made permanent in 2025, with no cap and no income limit — carries the rest.
At the top bracket, that first-year deduction can return meaningful tax savings — and for an established business with strong cash flow, it’s the difference between writing a check to the IRS and putting the same money into your own equipment. Your CPA models the exact numbers for your bracket and structure.
Worked scenario · top bracket · illustrative
You financed the machine and put down a fraction of its price — but you deduct the full price in year one. The write-off is bigger than your down payment, and the equipment keeps working the whole time.
Scales with your numbers
Illustrative only. Actual savings depend on your tax bracket, entity type, state conformity, and CPA guidance. Section 179 and bonus depreciation are elections your CPA makes for your situation; above the Section 179 cap, 100% bonus depreciation carries the balance.
Terms reflect credit, revenue, time in business, and each lender. Every file is unique — see what the desk structures for yours in the 60-second qualifier.
Bobby’s Take
“Operators come off a strong year and hand the difference to the IRS. Put ten percent down on the equipment, deduct the whole purchase, and the write-off is bigger than the check you wrote. The only thing you cannot finance is the calendar — the machine has to be running by the 31st.”
Bobby Friel · Founder · 20+ years in banking and finance
The Result
What Changed After Close
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See What Your Year-End Purchase Looks Like
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Related
Similar Structures
Representative scenarios — illustrative, anonymized figures, not specific client transactions.
FAQ
Section 179 and Year-End Equipment Financing — Questions, Answered
Can you take the Section 179 deduction on financed equipment?
Yes. The deduction follows the equipment being placed in service, not how it was paid for. A manufacturer putting roughly 10% down on $2M of machines in December deducts the full $2M against that year’s income. The financed portion counts. Your CPA confirms the figures for your entity and bracket.
What is the Section 179 limit for 2026?
The 2026 deduction limit is $2,560,000, and the phase-out begins once total equipment placed in service exceeds $4,090,000. Above that, 100% bonus depreciation — which is now permanent — covers what Section 179 does not. A $2M purchase sits well inside the limit.
What does “placed in service” mean for the deduction?
Delivered, installed, and operating for its intended use by December 31. Not ordered, not paid for, not sitting on a dock. That is why the financing timeline matters: the funding has to close early enough for delivery and installation to happen before year-end. A six-day funding is what leaves room for that.
Why does a bank’s equipment process miss the year-end window?
Because it runs on the bank’s calendar — weeks of committee and documentation — and in the fourth quarter weeks is the whole game. Machines that fund in January are deducted against next year’s income, which may be smaller and is not the year the tax bill came from. Equipment financing that underwrites the machines themselves closes in days.
How much do you need down on year-end equipment?
Roughly 10% is common when the equipment is specified and the operator’s deposit history supports it. On $2M, that is about $200K of cash for a $2M deduction — the write-off is many times the cash that left the business, which is the entire point of financing rather than paying cash in a strong year.
Can one facility cover machines from different builders?
Yes, and in a year-end timeline that matters more than usual. A captive finance arm handles its own brand on its own schedule. An independent equipment structure covers the whole order — several machines, several builders — in one facility with one closing, which means one installation window instead of three racing the same deadline.
Should you buy equipment just for the deduction?
No. Buy equipment the business needs in the next twelve months anyway, and let the calendar decide which year it arrives. The deduction makes a justified purchase cheaper in a strong year; it does not make an unjustified one smart. Your CPA and your production schedule should agree before the financing does.
