Bonus depreciation steps down from 40% to 20% on January 1, 2027. Operators planning major equipment purchases should accelerate where economically rational.
The TCJA-era bonus depreciation schedule continues its phase-out. 2026 sits at 40%, dropping to 20% in 2027, and to zero in 2028 unless extended. For operators planning capital equipment purchases, the tax math materially favors accelerating into 2026.
Section 179 cap ($1.22M for 2026) provides an independent path to first-year expensing for smaller purchases — but is income-limited and cannot create an NOL. Bonus depreciation has no income limit.
Both Section 179 and bonus depreciation apply to financed equipment from day one. A 100%-financed $500K purchase generates the same year-one deduction as a cash purchase. The tax savings often exceed year-one financing payments, producing net positive cash impact in year one.
Twelve-month default rates on 2026 originations are tracking 80 bps below the 2023 vintage at the same seasoning point, with the largest improvement in services and B2B.
Funders that adopted soft-pull pre-qualification in 2025 are reporting 2.3x higher application-to-funding conversion and materially lower CAC than peers still gating with hard pulls.
Falling SBA fees and faster PLP processing have changed the math. For tickets under $500K with weaker collateral, 7(a) is now structurally cheaper than conventional term once total cost of capital is measured.
