Nominal (simple) Interest Definition: Nominal interest is not the same as annualized percentage rate. Nominal interest is the yearly cost of funds expressed as a percent based on the initial cost of the equipment.

The profit from the equipment should be the determining factor on whether to purchase equipment and not the interest rate.

Talk to your CPA as we are not qualified to provide tax advice. Quite often it is more profitable to finance equipment than pay cash. Small businesses are able to utilize tax code 179 which may let you increase your tax write-offs by financing with an Equipment Financing Agreement or Lease Agreement.