If you run a construction business, you know how important it is to upgrade or replace your equipment, to keep up with the changing trends of the industry. While upgrading your equipment with new ones will facilitate efficiency and growth in your business, it might also put a substantial strain on the cash flow. A simple solution to this is equipment financing.
One of the most common inhibitions of business owners around financing heavy equipment is their bad credit score. If you have less than a 600 FICO score, you’re unlikely to be a candidate for a loan from a traditional lending institution like a bank. For instance, if you are considering getting backhoe financing with a bad credit score for your construction business, this one’s for you!
Leveraging Bad Credit Score for Equipment Financing
It offers a sustainable method of adding production assets to your business, especially taking into consideration how rapid technological advancements can render your investment obsolete in a matter of just a few years. This might come as a surprise to you; however, even with a bad credit score, equipment financing offers very flexible options that will not stress the business’s cash flow, as most payback terms run between 24 and 72 months.
The following are advantages of Bad Credit Equipment Financing as compared to business loans.
- No down payment, with the option to purchase the equipment at the end of the lease
- Tax-free loan payments if the supplier/equipment vendor is not required to collect tax.
- Customized leases and loans ranging from $10,000 to $2 million
How to Stand Out as a Candidate for Equipment Financing with Bad Credit?
If you’re still worried about bad credit history affecting your ability to qualify for the equipment loans, you can simply upgrade your chances of qualifying for equipment financing by taking a few extra steps.
- Find a consignor
- Making a big Downpayment
- Showing a solid Business Plan
How to Apply for Equipment Financing With Bad Credit?
The process for applying for equipment financing with a bad credit score is fairly simple.
Complete your loan application by submitting a full application along with any documents. After submitting your application, you are most likely to receive a decision regarding your loan within 24 to 48 hours. It is within a matter of days or weeks once your loan has been approved that your loan will be closed.
The following are the documents that you might need during the application process.
- Your driver’s license
- Personal credit score
- Business bank statements
- Equipment Quote
- A Voided Business Check
Who Qualifies for Bad Credit Equipment Financing?
Nearly every business can qualify for equipment financing. However, the rate of interest and the amount necessarily depend on the type of equipment, your business’s financials, and your credit history. Since your equipment is used as collateral, bad credit equipment financing is a great decision, even if your business or personal credit score isn’t perfect. That is to say, the equipment alone can be enough to get your business qualified for funding.