There are times when companies face difficulties with their finances leading to bad credit. A bad credit history limits your chances of approval for the financing of equipment, which equipment will help improve the benefits of the business.
Traditional lending institutions such as banks can refuse you the loan you need. But there are specialized loan companies that can look beyond your bad credit. These loan institutions can give you a second chance of having the equipment you need to develop your business by providing a finance of mediocre credit hardware.
Bad credit equipment finance for growing companies
Equipment financing is short-term loans (about 3 to 5 years) extended to companies specifically to purchase the necessary equipment for operations. Funding for equipment is a collateral loan, which means that the equipment you have purchased could be included in the case of payments. Because the loan is released with a guarantee, loan companies consider low risk and can offer a lower interest rate compared to a standard loan.
To qualify for a loan of equipment, you have to have a credit score of at least 600 people, from a company for at least 11 months and to generate about $ 100,000 of income. If you have bad credit, but answer the other two requirements, you always have a chance to benefit from a finance. It really depends on the evaluation of the lender in your financial situation.
Equipment financing is an alternative for start-up and small growth and development companies, especially for those who do not have enough capital to finance their purchase. And if you have a bad credit rating, equipment financing gives you the opportunity to improve your credit score.
How to improve your chances of approval for the financing of equipment despite bad credit
You can increase your chances of approval for the financing of the equipment. By making ways to improve your credit and strengthen your demand for lenders, there is a fair chance that loan companies consider your loan application. You will find below ways to strengthen your application.
1. Apply with a co-signer with good standing credit. Lenders can consider applying if you are applying with someone who has a better credit standing. The co-signer can ensure the security of the loan considering that the sender has equal obligations as a pencil.
2. Present other assets for the warranty. If you have other assets such as other types of equipment or even real estate, you can offer it as collateral. It strengthens your application to secure the loan.
3. Larger payments. Do you have enough money to put in payment time to significantly reduce your total loan amount? If you are able to submit larger payments, lenders can consider you a candidate for the financing of mediocre credit equipment.
4. Proof of showing that business increases sharply. Provide documents such as bank returns showing a good turnover in recent months. Lenders like to see a constantly growing business, it is therefore essential to provide income tax returns and other documents to support your application.
5. Seek professional help. With bad credit, lenders will make you hard to acquire a loan. They can even deny the loan immediately after checking your credit score. But with proper help from loan experts, you can increase your chance to get the right lender who can look beyond your bad credit.