How to get Equipment Financing with Bad Credit

It’s not a secret that it’s much harder to secure financing when you have a credit score lower than 600. Some people just can’t secure financing through traditional means. Whether that means your bank has turned you down, or you have recent charge offs. We sympathize with you, because we can relate that maintaining your credit score isn’t a priority when you’re running a business.

Since Banks don’t approve equipment leasing to customers with scores under 600. This presents a difficult situation when you can’t get the equipment that you need. We understand the need of certain equipment to get jobs. Working capital, cash advance options are sometimes much more expensive and difficult to get – if you’re in a time crunch that just isn’t viable. Coming completely out of pocket for an equipment purchase can cripple your company’s cash flow as well.
So How can you get equipment leasing or a business loan for bad credit? (Read our tips to boost your credit score) Only alternative Lenders like Providence Capital Funding can give you different options.

If your credit is below 600, you’ll want to get a cosigner. A cosigner is someone who will add their name to the lease. A Cosigner would be legally accepting obligation for your debt. Typically, your cosigner would need average credit at bare minimum. This is typically the easiest option to go with as you just need to add another name to documents. Just remember that your cosigner is just as liable as you are.

Larger down payment

Another alternative to get financing is putting down a larger down payment. If you’re having difficulty convincing someone to be a cosigner for you, putting a larger down payment can get the deal approved. You’ll have to come up with a significant down payment to negate the risk. Many times, Alternative lenders look for 20%+ down to make the deal work.

Collateral

The final method we have, is to put up a personal guarantee/ Collateral. This is oftentimes looked at as a last resort. There’s a very high percentage that your application will be approved with a personal guarantee. You’re able to use property that you own free of liens to use as collateral toward your new equipment lease. If you are in a cash crunch and really need the piece of equipment – putting collateral down is a great way to get approved.

There’s no way of guaranteeing an approval so if you see any company that does that, it should be a huge red flag. When you see terms like “ Bad Credit Okay! “ and “ Guaranteed approval “- keep in mind that it’s simply false. Don’t fall for these claims as it can end up damaging you more than helping. When they run your credit– there’s a high chance of lowering your score. The companies that make these types of promises are the ones that try to lure you in and switch it up. Stay wary of companies without any presence on review sites like Yelp and Google Reviews. If you’d like a no-obligation consultation on some equipment you’d like financed, feel free to fill out our Quick Quote Request.

If you still would like to learn more, click here for our Beginners Equipment Finance & Leasing Guide!