Updated October 22, 2026
Quick answer
Yes, if there is real equity. The usual structure is a cash-out refinance: the new lender pays off the existing balance and advances the rest of what the machine supports, typically sized at 50-80% of forced liquidation value minus the payoff. The deal-killer is often not the loan you know about but a blanket UCC lien from another lender that already covers all your equipment.
Equity Is the Only Thing That Can Be Lent Against
A machine with a loan on it can still raise money, but only the part you own. The arithmetic:
- The lender values the machine at liquidation value.
- It applies its advance rate - a share of that value, never all of it.
- It subtracts the payoff on the existing loan.
- What is left, less closing costs, is what reaches you.
| Owned outright | Still owes $40,000 | |
|---|---|---|
| Forced liquidation value | $100,000 | $100,000 |
| Advance at 65% | $65,000 | $65,000 |
| Less existing payoff | $0 | $40,000 |
| Cash to you (before costs) | $65,000 | $25,000 |
Illustrative arithmetic. If the payoff is close to the advance, there is nothing to draw, and the more useful conversation is about the payment rather than the equity.
Cash-Out Refinance vs a Second Lien
There are two ways to borrow against a machine that already has a lender on it:
- Cash-out refinance. The new lender pays off the first lender in full and takes the first position. This is the common route, because lenders prefer to be first in line.
- Second-position loan. The new lender lends behind the existing one and is paid only after it. Fewer lenders will do this on equipment, and it usually costs more, because a second lien recovers little in a forced sale.
If the existing loan has a low rate you want to keep, raise that up front - it decides which lenders are worth talking to.
How Equipment Liens Work When There Is No Title
Most construction machines are not covered by a state title statute, so a lender's lien is not written on a title. It is recorded by filing a UCC-1 financing statement, usually with the secretary of state where your business is organized. Titled units such as dump trucks and lowboy trailers are the exception: their liens go on the title, as with a commercial truck title loan.
That matters for two reasons. A new lender will search the UCC records before it lends, and anything filed against your equipment shows up whether or not you think of it as a loan on that machine. And when a loan is paid off, the old lender should file a termination (UCC-3) - if it never did, the old lien still sits on the record.
The Blanket Lien Problem
The most common surprise is a blanket lien: a UCC-1 that covers "all assets" or "all equipment" of the business. Bank lines of credit, SBA loans and many merchant cash advances file them. If one exists, that lender already has a claim on the excavator you thought you owned free and clear.
What happens next depends on the blanket lienholder:
- It may agree to subordinate its lien on the specific machine, letting the new lender go first on that unit.
- It may need to be paid off as part of the deal.
- It may refuse, in which case the machine cannot be used as first-position collateral.
If the blanket filing is from an advance you have already paid off, getting it released is usually a paperwork problem - see releasing a UCC lien.
What to Have Ready
- A current payoff letter from the existing lender, with a good-through date.
- The loan or lease agreement, so the new lender can see whether it is a loan or a lease with a buyout.
- Your own UCC search, or at least a list of every lender and advance provider you have used.
- Serial numbers, hours, photos and service records for the machine.
Deals in this category stall on liens far more often than on credit. Clearing them up before you apply is the difference between days and weeks.
Frequently Asked Questions
Can I get an equity loan on equipment I am still paying for?
Yes, if the machine is worth meaningfully more than what you owe. The usual structure is a cash-out refinance that pays off the existing lender and advances the remaining equity, less costs.
What is a blanket lien?
A UCC-1 filing that covers all of a business's assets or all of its equipment, rather than one machine. Banks, SBA lenders and many merchant cash advance providers file them, and they can block a new lender from taking first position on your equipment.
Will a lender take second position behind my current loan?
Some will, but fewer than will refinance, and second-position equipment loans usually cost more because the lender recovers little if the machine is sold.
How do I find out what liens are on my equipment?
Search the UCC records with the secretary of state where your business is organized. A lender will run the same search before it funds.
My old loan is paid off but the lien is still on file. What now?
Ask the former lender to file a UCC-3 termination. Secured parties are obliged to terminate filings once the debt is paid, and a lender can usually close once the termination is filed or the release is in hand.
Sources & Further Reading
- UCC § 9-310: When Filing Is Required to Perfect a Security Interest — The rule that a lender perfects a lien on most equipment by filing a financing statement (UCC-1) rather than through a title.
- UCC § 9-311: Property Subject to Certificate-of-Title Statutes — Why titled vehicles such as dump trucks and lowboy trailers are handled through the title, unlike untitled machines.
- UCC § 9-513: Termination Statement — The obligation to file a termination (UCC-3) once a secured debt is paid, which clears an old lien off the record.
Figures above describe ranges commonly seen across lenders and reflect published guidance as of the date on this page. Confirm current terms with the cited source or your lender before acting.