How to Get Bad Credit Equipment Financing

As you have likely experienced, trying — and failing — to get bad credit equipment financing is one of the most frustrating vicious cycles on the business landscape.

On the one hand, you need to upgrade or purchase new equipment in order to generate revenues and profits, open accounts, pay your bills, and ultimately strengthen your credit score.

Yet, on the other hand, banks won’t give your loan application a second look unless you have exceptional personal and business credit scores.

In the past, business owners stuck in this dilemma typically had to scale back their business, sell it ASAP, or shut it down.

Fortunately, that is no longer the case because “bad credit equipment financing” is no longer a contradiction in terms. Rather, it is a solution that we enable every day for business owners across the country.

So, if you are looking to get equipment financing with a bad credit score, just continue reading to find out how:

Can You Get Bad Credit Equipment Financing?

Most business owners — and all of the successful ones — are wary of promises and claims that seem too good to be true.

And at first glance (and maybe at second and third as well!), you may be wondering “what the catch” is. After all, there must be a reason why non-bank lenders offer bad credit equipment financing while banks won’t even consider it.

The simple truth is that non-bank lenders are more comfortable with risk than banks and credit unions. What may pose a red flag to a bank doesn’t always matter to a non-bank lender, which allows a wider audience to access capital solutions, even with less-than-perfect financials.

So, can you get bad credit equipment financing? The answer is yes!

It is entirely possible to obtain equipment financing with a bad credit score, though options may be more limited and terms less favorable.

Lenders specializing in high-risk loans and alternative financing sources, such as National Business Capital, often provide financing solutions to businesses with less-than-ideal credit scores.

Equipment Funding Amounts, Terms, and Time to Funding

When it comes to getting bad credit equipment financing, keep in mind that every business is unique and has unique funding goals for growing their company with new or upgraded equipment.

National Business Capital can connect you with equipment loans and credit lines with interest rates, term lengths, and amounts that can match any specific needs of any business owner.

• Equipment Loan Amounts: $100,000 – $10,000,000
• Terms: 1 – 5 Years (Fixed and Flexible Repayment Schedules Available)
• Time to Receive Funding: 48 Hours to Access Funds (On Average)

When you’re applying for equipment funding, no matter your credit score, speed and flexibility are extremely important to avoid stalls in business operations and interruptions in your cash flow down the line.

Make sure to find a reputable organization, like National Business Capital, that works closely with you to customize your equipment loan so that you get the equipment you need – exactly when you need it – and optimize your business’s long-term growth potential.

Easier Equipment Loan Approvals for Bad Credit Borrowers

And what we’re very good at — if we do say so ourselves — is understanding that credit scores are not, and never will be, the best or only way to evaluate a business owner’s creditworthiness.

There are many other variables and factors to consider. In our view, the most important question to ask isn’t what a business owner has done in the past, but rather, what they’re doing today and what they have planned for tomorrow.

When we shift the focus from the past to the present and future, we change the approval paradigm — and that means bad credit equipment financing is no longer out of reach. In fact, since we approve about 90% of all business loan applications, the chances of getting a “yes” from us are very likely.

What Types of Businesses Can Get Bad Credit Equipment Financing?

Any business that needs equipment for a business purpose can secure equipment financing, even with bad credit. Here are a few of the many businesses that can leverage this type of financing.

• Construction contractors
• Manufacturers
• Restaurants
• Transportation companies
• Agricultural businesses
• Accounting firms
• Doctor’s offices
• Dentist offices
• Gyms and recreation centers
• And many more

Any business looking to purchase equipment can finance it instead of purchasing it outright. It’s usually a better financial move, too, as financed equipment can qualify for tax deductions, like Section 179, that reduce the amount owed on your annual tax return.

How to Get Equipment Financing With Bad Credit

Your credit score shouldn’t stand between your business and its full potential. Here are a few strategies to secure bad credit equipment financing, even if you have a less-than-favorable FICO score.

• Work with non-bank lenders – Banks and credit unions care more about credit scores than non-bank lenders, who often put a business’s profitability above its credit history. For this reason, it’s easier to reach an approval that allows you to secure the equipment you need.
• Leverage a financing product that doesn’t have credit score minimums—Some solutions, like revenue-based financing or accounts receivable factoring, don’t always come with credit score minimums. Borrowers with bad credit can quickly get approved and purchase the desired equipment.
• Proactively strengthen your credit score – If possible, you should spend time building your credit prior to applying for financing. You can pay off balances on credit accounts, request delinquencies be removed from your record by a credit bureau, make timely payments to vendors, and avoid opening new credit accounts in the period leading up to your application.
• Work with a financing marketplace – Marketplaces combine multiple lenders into one centralized platform, allowing businesses to apply once and receive the best offers they qualify for. Not only does this save time, but it also allows borrowers with bad credit to quickly find the best options for them.

Do You Qualify for Bad Credit Equipment Financing?

National makes approval fast, simple, and convenient for all types of business owners from virtually every industry and all credit profiles. Here’s what you need to qualify for bad credit equipment financing:

• $30,000 in Monthly Gross Sales
• 6+ Months in Business

If you meet those two requirements, you have an extremely high chance of approval for the equipment funds of your choice.

If you do not meet the requirements above, you must have a FICO score of at least 650+ to qualify.

Additionally, no collateral is required on behalf of the borrower in order to obtain equipment financing. Instead, the new or used equipment will be used as collateral itself, protecting the business and personal assets of the borrower.

With National’s simplified qualifications and streamlined approval process, over 90% of all business owners with bad credit get approved for our equipment financing programs.

Equipment Loan Calculator: Rates & Terms That Work for You

If you want a better idea as to the terms and conditions that will come with your equipment funding option, use National’s business equipment financing calculator by clicking the link below.

Once you’re directed to the equipment loan calculator page, use the sliders to find the equipment loan or credit line with terms, rates, and amounts that perfectly suit your needs.

Go to the Equipment Loan Calculator

How to Apply for Bad Credit Equipment Financing

The bottom line? We know that some of the most talented business owners happen to have impaired or bad credit. At National Business Capital, we’re honored to be a part of a business’s success story, whether they have good credit or not.

To learn more, contact our team today by completing our digital application or calling 1-855-866-9844. Discover how straightforward and stress-free it can be to get bad credit equipment financing and put your business on track to thrive for years and decades to come.

FAQ

What interest rates should I expect with bad credit?

With bad credit, expect higher interest rates for equipment financing as lenders view you as a higher risk. Rates can vary significantly but are typically well above prime rates to compensate for the increased likelihood of default.

Exact rates depend on the lender, the degree of credit issues, and the specific terms of the financing agreement.

Are there specific lenders who work with bad credit applicants?

Yes, there are specific lenders who specialize in working with bad credit applicants for equipment financing. These include alternative lending institutions, online lenders, and certain finance companies that focus on high-risk loans.

These lenders often have more flexible criteria and may offer financing solutions tailored to businesses with less-than-ideal credit histories, albeit usually at higher interest rates.

Will I need to provide additional collateral?

When seeking equipment financing with bad credit, you may be required to provide additional collateral beyond the equipment being financed. This collateral serves as extra security for the lender, mitigating the risk associated with your credit history.

The specific requirements can vary by lender, but offering additional assets can improve your chances of loan approval and potentially secure more favorable terms.

How can I improve my chances of approval?

To improve your chances of equipment financing approval, especially with bad credit, consider offering a larger down payment to reduce the loan amount, providing additional collateral, and securing a co-signer with better credit.

Demonstrating strong business financials, stable income, and a solid business plan can also help. Engaging with lenders who specialize in bad credit financing increases your likelihood of finding a suitable financing solution.

Does equipment financing impact my business credit score?

Yes, equipment financing can impact your business credit score. Timely repayments can positively influence your score, demonstrating creditworthiness to future lenders. Conversely, late or missed payments can harm your score, affecting your ability to secure financing in the future.