There are times when companies have trouble with their finances, which leads to bad credit. Poor credit limits your chances of getting approval for device financing, regardless of whether the devices help improve business profits.
Traditional credit institutions like banks may deny you the loan you need. However, there are specialized lending companies that can look beyond your bad credit. These credit institutions can give you a second chance to use the equipment you need to grow your business by offering poor credit facilities.
Bad credit equipment finance for growing companies
Device financing is a short-term loan (approx. 3 to 5 years) that is specifically given to companies in order to acquire the devices required for operation. Device financing is a collateral loan. This means that the devices you have purchased can be taken back in the event of a payment default. Because the loan is released with collateral, lenders consider it low risk and may offer a lower interest rate than a standard loan.
To qualify for an equipment loan, you must have a credit score of at least 600, be in business for at least 11 months, and generate sales of around $ 100,000. If you have a bad credit but meet the other two requirements, you can still get funding. This really depends on the lender’s assessment of your financial situation.
Equipment financing is an alternative for startups and small businesses for growth and development, especially for those who do not have enough capital to finance their purchase. And if you have bad to bad credit, equipment financing can help improve your credit rating.
How to improve your chances of approval for the financing of devices despite poor creditworthiness
You can increase your chances of getting device financing approval. By finding ways to improve your creditworthiness and strengthen your application to lenders, there is a fair chance that credit companies will review your loan application. Below are ways to strengthen your application.
1. Apply to a co-signer with a good credit rating. Lenders can consider your application if you are applying to someone with a better credit rating. The co-signer can provide security for the loan since the shipper has the same obligations as the borrower.
2. Present other assets for security. If you have other assets such as other types of equipment or even real estate, you can offer them as collateral. It strengthens your application for loan security.
3. Larger down payments. Do you have enough cash to make a deposit to significantly reduce your total loan amount? If you are able to make larger down payments, lenders can consider you a candidate for poor credit.
4. The evidence for show business is growing rapidly. Provide documents such as bank statements that show the earnings for the past few months. Lenders want steadily growing business. Therefore, it is important to provide profit and loss accounts 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. You can even refuse the loan immediately after checking your credit score. But with the right support from lending experts, you can increase your chances of finding the right lender who can look beyond your bad credit.