There are times when a business faces difficulties with its finances, leading to bad credit. Bad credit history limits your chances of being approved to finance equipment, whether or not the equipment will help improve business profits.
Traditional credit institutions such as banks can deny you the necessary loan. But there are specialized loan companies that can outweigh your bad credit. These credit institutions can give you a second chance to take advantage of the equipment you need to grow your business by offering poor credit equipment financing.
Poor financing of credit equipment for growing business
Equipment financing is short-term loans (about 3-5 years) granted to businesses specifically for the purchase of equipment needed for its operation. Equipment financing is collateral, which means that the equipment you purchased can be returned in case payments become outstanding. Because the loan is secured, lending companies view it as low-risk and may offer a lower interest rate than a standard loan.
To qualify for an equipment loan, a person must have a credit rating of at least 600, be in business for at least 11 months, and generate about $ 100,000 in revenue. If you have bad credit but meet the other two requirements, there is still a chance to take advantage of finances. It really depends on the lender’s assessment of your financial situation.
Equipment financing is an alternative for start-ups and small businesses for growth and development, especially for those who do not have enough capital to finance their purchase. And if you have a weak to bad credit rating, providing equipment financing gives you the opportunity to improve your credit rating.
How to improve your chances of approval for financing the equipment despite the bad credit
You can increase your chances of approval for equipment financing. By creating ways to improve your credit status and strengthen your application to lenders, there is a good chance that credit companies will consider your loan application. Below are ways to improve your application.
1. Apply with a cashier with good credit standing. Lenders can consider your application if you are applying to someone who has better credit stability. The recipient can provide collateral for the loan, given that the sender has the same obligations as the borrower.
2. Present other collateral assets. If you have other assets such as other types of equipment or even real estate, you can offer it as collateral. Strengthens your loan application.
3. Larger down payments. Do you have enough cash to deposit as a down payment to significantly reduce the total amount of your loan? If you can submit higher down payments, lenders may consider you a candidate for poor credit equipment financing.
4. The evidence for show business is getting stronger. Provide documents such as bank statements showing good income in recent months. Lenders like to see a growing stable business, which is why it is essential to provide income statements and other documents in support of your claim.
5. Seek professional help. With bad credit, lenders will make it difficult for you to get credit. They may even refuse the loan immediately after checking your credit rating. But with the right help from loan experts, you can increase your chances of getting the right lender that may seem beyond your bad credit.