How to Get Approved for Easy Equipment Financing in Record Time
Purchasing business equipment requires some serious consideration, especially when it comes to financing. Most lenders will check your personal and business credit score before approving an equipment loan. The lender will also want to see your business’s annual revenues and financial statements.
The good news is that many equipment financing providers can fund small businesses in a few business days or less. But, interest rates will vary.
Know the Lender’s Policies
When you opt for easy equipment financing, the lender might request additional documentation to evaluate your business financials to ensure you have enough cash flow to manage the recurring debt payments. They may also consider your credit scores, years in business, and annual revenues.
The duration of your loan can vary between three to ten years, depending on the type of equipment and what the lender feels is the asset’s maximum value from an investment standpoint. The more favorable these factors look, the lower your interest rates.
In addition to the equipment itself, you might also have to cover “soft costs” like taxes, delivery, and installation fees. These expenses can add up quickly, so you’ll want to understand how much the loan will cost before signing the dotted line. Some lenders include soft costs in the total loan amount, while others will ask you to put up other business assets or a personal guarantee to secure the debt.
Get Your Credit Score in Order
If you have good credit, it may be easier to secure business equipment financing. However, several options exist to provide funding. The equipment you purchase will often act as collateral to secure the loan. Lenders will consider your business’s revenue, credit score, and time in business when approving you for an equipment loan.
You can improve your chances of securing an equipment loan by paying off balances, requesting delinquencies be removed from your record, and staying out of new debt in the months leading up to your application. Getting your credit score in order can also help reduce rates and terms for the loan you’re offered. Using a financing marketplace can save you time by comparing offers from multiple lenders in one place.
Get a Down Payment
Lenders are more likely to approve businesses for equipment financing if they make a sizable down payment. In turn, they may offer more favorable terms and reduce their exposure to risk on the loan. However, it’s important to carefully evaluate your cash flow to ensure you can afford a regular monthly loan payment and any potential interest costs. Failure to pay your business loan on time could damage your credit score and jeopardize other business assets or even personal ones if you’ve given a personal guarantee.
Each business is different, and each has its own unique needs.
Get a Good Deal
Even if you have bad credit, you may still be able to secure equipment financing. Unlike business lines of credit and business credit cards, many equipment loan solutions (such as revenue-based financing or accounts receivable factoring) don’t have any credit score minimums. In addition, documentation requirements for these financing options are typically less demanding, as the equipment acts as collateral.
Regardless of your credit score, it’s a good idea to compare rates and terms before you decide on what type of equipment financing to pursue. A lower interest rate could save you thousands in the long run.
Purchasing equipment with an easy-to-use business loan isn’t just a smart financial move; it can also help you meet your goals faster by mitigating the need to wait for cash. Fortunately, finding the right financing solution for your needs is easier than ever, even if you have bad credit. With the right lender and proper preparation, you can get your business’s equipment in record time.
