Everyone knows that buying equipment with a term loan spreads costs and preserves capital. But what if you could immediately amplify that benefit—bolster cash flow, reduce this year’s tax exposure, and emerge positioned for post-holiday expansion? That’s exactly what savvy businesses are doing by aligning term loan–funded equipment purchases with end-of-year Section 179 planning. Here’s what you need to know:
Term Loans + Section 179: A High-Impact Combo
Most banks talk about equipment financing as mere preservation of capital. Here, we go deeper: What if the equipment you buy with a term loan doesn’t just pay for itself over time—but accelerates returns and supercharges your after-tax cash?
How it works:
- You take out a term loan to acquire equipment, say in November or December.
- You place it into service before December 31, enabling Section 179 immediate expensing.1
- That means instead of depreciating over successive years (MACRS), you deduct the full cost in that same tax year.
What’s more, Section 179 now offers unprecedented limits. For 2025, businesses can deduct up to $2,500,000 in qualifying purchases, with a spending cap of $4,000,000, before a phaseout hits.2
This is serious financial currency—liquid funds you were about to pay out begin working for you right away.
Learn from the Year-End Strategists: Businesses That Bought in December and Reaped Big
A mid-sized construction firm financed a new excavator with a December term loan. They claimed the full purchase price under Section 179—this translated to hundreds of thousands in tax deductions, slashing their taxable income and freeing working capital to reinvest in business development—not depreciated over several years. Year-end financing is not about delaying—it’s about front-loading your ROI.
Layering Bonus Depreciation for Maximum Impact
In addition to Section 179, bonus depreciation allows even further first-year write-offs. It kicks in after the Section 179 cap has been used. So, equipment that pushes past the Section 179 limit can still be accelerated through bonus depreciation.2
This layered mechanism means that with the right strategy:
- Section 179 first: Up to $2.5M in 2025
- Bonus depreciation next: Takes the rest in year one
The result? A colossal first-year deduction that legitimately transforms how soon your equipment delivers value.
Why Year-End Timing Is a Game-Changer
- Tight Finance Windows: Equipment lead times can stretch into December. Planning early—and lining up loan approval now—ensures you don’t miss the “placed in service” deadline.2
- Cash Flow Rebound: The tax savings realized in the next tax filing season can offset loan payments, making the loan nearly self-funding.
- Strategic Momentum: End-of-year acquisitions with these tax advantages give businesses a jumpstart on growth in the new year—equipment ready, working capital conserved.
Beware Pitfalls—but Get Tactical with Your Advisor
- Business-use requirement: Vehicles, for instance, must be used more than 50% for business to qualify. Document usage meticulously.3
- SUV limits apply: SUVs between 6,000–14,000 lbs have their own deduction caps (e.g., ~$31,300 in 2025).3
- Income limitations: Section 179 deductions can’t exceed your business’s taxable income—but any excess can carry forward.4
- Recapture risk: If you drop usage below 50% in later years, the IRS may recapture deductions. Keep usage logs.3
Tip: Work closely with your CPA or tax advisor early to craft a plan that aligns placement, documentation, and finance timeline.
A Cinematic Call-to-Action for Your Business
Imagine this scenario: You—a forward-thinking small or mid-sized business owner—secure a term loan for new medical imaging equipment or trucks just before year-end. Come filing season, you’re facing a drastically reduced tax bill—not because of standard depreciation, but due to strategic use of Section 179 and bonus depreciation. That money becomes fuel for new hires, marketing, or more equipment.
Why settle for a term loan as just a loan? This is financing with a multiplier effect: tax efficiency, cash flow optimization, and competitive edge—all in one move.
Final Thought
This isn’t just about loaning money—it’s about architecting your business’s financial timing to extract maximum value from equipment investments. Strategic year-end financing transforms what’s usually a cost center into a turbocharger for growth.
Ready to Turn Strategy into Reality?
Your next move is simple:
- Call us today to discuss a tax-smart term loan for equipment purchase.
- Together, we’ll tailor financing that syncs with year-end placement and maximizes Section 179 and bonus depreciation opportunities.
- Invest smart—and walk into the new year with stronger cash flow, upgraded assets, and strategic momentum.
Call us now at 866.650.0720—let’s structure your term loan so your equipment pays you back in more ways than one. Learn more.
All loans and lines are subject to credit approval.
1Blue Bridge Financial
2commercialcreditgroup.com
3Investopedia
4section179.org
