How To Grow Your Business With Bad Credit Equipment Financing
There are times when businesses face difficulties with their finances that result in bad credit. A bad credit history restricts your chances of approval for equipment financing, regardless of whether the equipment will help improve business profits.
Traditional lenders like banks may deny you the loan you need. But there are specialized loan companies that can look beyond your bad credit. These lenders can give you a second chance to take advantage of the equipment you need to grow your business by offering poor financing for credit equipment.
Bad Credit Equipment Financing for Growing Businesses
Equipment financing are short-term loans (around 3-5 years) that are granted to companies specifically to purchase the equipment necessary for their operations. Equipment financing is a collateral loan, which means that the equipment you purchased could be recovered in the event that payments are late. Since the loan is released with collateral, it is viewed by loan companies as low risk and may offer a lower interest rate compared to a standard loan.
To qualify for an equipment loan, one must have a credit score of at least 600, have been in business for at least 11 months, and generate around $ 100,000 in income. If you have bad credit, but meet the other two requirements, there is still the possibility of taking advantage of financing. It really depends on the lender’s assessment of your financial situation.
Equipment financing is an alternative for the growth and development of new and small companies, especially for those that do not have enough capital to finance their purchase. And if you have a poor to bad credit score, receiving team financing gives you the opportunity to improve your credit score.
How to improve your chances of approval for equipment financing despite bad credit
It can increase your chances of getting approved for equipment financing. When looking for ways to improve your credit standing and strengthen your application to lenders, there is a great chance that loan companies will consider your loan application. Below are ways to strengthen your application.
1. Apply with a guarantor with good creditworthiness. Lenders may consider your application if you are applying with someone who has better credit standing. The co-signer can guarantee the loan considering that the consignor has the same obligations as the borrower.
2. Present other assets as collateral. If you have other assets such as other equipment or even real estate, you can offer it as collateral. Strengthen your application to guarantee the loan.
3. Larger down payments. Do you have enough cash to put down as a down payment and significantly reduce your total loan amount? If you can make larger down payments, lenders may consider you a candidate for poor credit team financing.
4. The test of show business is growing strongly. Provide documents like bank statements showing good income for the last few months. Lenders like to see a stable business growing, therefore it is essential to provide income statements and other documents to support your claim.
5. Seek professional help. With bad credit, lenders will make it difficult for you to get a loan. They can even deny the loan immediately after checking your credit score. But with the right help from loan experts, you can increase your chances of finding the right lender who can see beyond your bad credit.