There are times that businesses face difficulties with their financing resulting in bad credit. A bad credit history restricts your odds of approval for equipment finance regardless if the equipment will help improve company profits.
Traditional lending institutions such as banks may deny you the loan you require. However, there are specialized loan companies who can look beyond your poor credit. These lending institutions can give you a second chance at availing the gear you need to grow your business by providing poor credit equipment finance.
Bad Credit Equipment Finance for Growing Businesses
Equipment Financing is short-term loans (about 3-5 years) extended to companies specifically to purchase the equipment needed for its operations. Equipment financing is a collateral loan, meaning the equipment you purchased could be repossessed if payments go into default. Since the loan is released with a collateral, lending companies see it as low risk and might offer a lower interest rate compared to a standard loan.
To qualify for an equipment loan, an individual must have a credit rating of at least 600, been in business for at least 11 months, and create approximately $100,000 in earnings. For those who have a bad credit but meet the other two requirements, there’s still an opportunity that you avail of a finance. It really depends on the lender’s assessment of your financial situation.
Equipment financing is an alternative for start-up and tiny businesses for growth and development especially for people who don’t have enough capital to fund their purchase. And in case you’ve got a poor to bad credit score, being granted an equipment financing provides you the chance to improve your credit rating.
How to improve your chances of approval for equipment financing despite poor credit
You can increase your chances of an approval for equipment finance. By making ways to improve your credit standing and strengthen your application to lenders, there’s a fair possibility that loan companies will consider your loan application.
1. Apply using a cosigner with good credit standing. Lenders can consider your application if you’re applying with someone that has a better credit standing. The cosigner can provide security for your loan considering that the consignor has equal duties as the borrower.
2. Present other assets for collateral. If you have other resources such as other types of equipment or even real estate property, you can provide it as a collateral. It strengthens your application to guarantee the loan.
3. Bigger down payments. Do you have enough cash to put down payment to significantly decrease your total loan amount? If you can present larger down payments, lenders may consider you a candidate for poor credit equipment finance.
4. Evidence to show business is growing strong. Provide documents like bank statements showing a fantastic revenue for the past months. Lenders prefer to see a growing steady business, therefore, it is essential to give income statements and other documents to support your claim.
5. Seek expert help. With bad credit, lenders will provide you difficulty acquiring a loan. But with proper help from loan specialists, you can increase your odds of getting the right lender that can look beyond your poor credit.
Bad Credit Equipment Finance is a type of business loan that offers financing for equipment despite of bad credit history. You’ll have a better chance of getting an approval when you seek assistance from loan experts who have years of experience assisting businesses acquire the right loan for their needs.