There are times that companies face difficulties with their finances resulting in bad credit. A poor credit history restricts your chances of acceptance for equipment finance regardless if the equipment will help improve business profits.
Traditional lending institutions such as banks can deny you the loan you need. But there are specialized loan companies who can look beyond your poor credit. These lending institutions can offer you a second chance at availing the equipment you will need to grow your business by offering bad credit equipment finance.
Equipment Financing is short-term loans (about 3-5 years) extended to companies specifically to buy the equipment required for its operations. Equipment financing is a security loan, meaning the equipment you bought could be repossessed if payments go into default. Since the loan is discharged with a security, lending companies see it as low risk and may offer a lower interest rate compared to a standard loan.
To qualify for an equipment loan, an individual must have a credit score of 600, been in business for at least 11 months, and generate around $100,000 in earnings. If you have a bad credit but meet the other two requirements, there’s still an opportunity for you to avail of a fund. It really depends upon the lender’s assessment of your financial situation.
Equipment financing is an alternative for start-up and small businesses for growth and development particularly for those who don’t have enough capital to finance their purchase. And in case you have a poor to poor credit score, being awarded an equipment financing gives you the chance to improve your credit rating.
How to improve your chances of approval for equipment financing despite poor credit
You can improve your chances of an endorsement for equipment fund. By making ways to improve your credit standing and strengthen your application to lenders, there’s a fair chance that loan companies consider your loan application. Below are ways to strengthen your application.
1. Apply with a cosigner with good credit standing. Lenders can consider your application if you are applying with someone that has a better credit standing. The cosigner can provide security for your loan considering that the consignor has equivalent duties as the borrower.
2. Present other assets for collateral. In case you have other resources such as other kinds of equipment or even real estate property, you can offer it as a collateral. It strengthens your application to secure the loan.
3. Do you have enough cash to put as down payment to significantly decrease your total loan amount? If you can present bigger 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 good revenue for the past months. Lenders like to see a growing steady company, therefore, it is essential to provide income statements and other documents to support your claim.
5. Seek professional help. With bad credit, lenders will provide you difficulty acquiring a loan. But with proper help from loan specialists, you can improve your odds of getting the right lender that can look beyond your poor credit.
Bad Credit Equipment Finance is a kind of business loan that provides funding for equipment despite of awful credit history. You’ll have a better prospect of getting an approval when you seek help from loan experts who have years of experience helping businesses acquire the ideal loan for their needs.