Tips For Growing Business With Terrible Equipment Finance Credit

A low credit rating tremendously limits our ability to borrow loans. As a business owner, your credit rating needs to be relatively immaculate to give you loan financing options when needed. Your business could be doing well but you need a little extra cash to bring in something that will ensure its output is top-notch. To this end, you will have to consider getting an equipment finance loan to get that new asset.

What Is Equipment Finance?

Equipment finance is a short-term finance loan that is designed to cater specifically for buying equipment. It is a great alternative loan because it allows business owners to borrow large sums of money for the business. Unlike conventional loans, whose amounts are capped tremendously and with arbitrary interest rates, equipment finance rates are fixed and on reducing balance on the principle paid. This type of loan is ideal for companies that have been in operation for over 11 months or established businesses that earn money but need loan financing to buy new equipment.

Requirements Of Equipment Finance

A Credit Score of 600 and above

In the banks’ minds, people with this type of rating are a low risk venture. They have the power to pay back the banks money.

Business Must Be In Operation For Over 11 Months

This is vital because a business that is over 11 months old has generated sufficient amount of capital to run by itself. They also have enough assets to give the banks something to think about.

Over USD100,000 In Revenue

It cannot be reiterated enough that banks will only money to people who have it. If you do not have money and want a loan, the loan officer will not give you the time of day and almost fall short of scoffing at your request.

Places To Find Loans If You Are Turned Away From A Bank

If you have terrible credit rating, traditional banking institutions might outright refuse to grant you a loan. They view you as a terrifying lending risk. They need to be sure that in giving you their money that they can get it back. To this end you need to explore getting companies that will overlook your credit rating. These options are mushrooming up constantly and they have offered new hope to businesses that need finances in short notice and they have a poor credit rating. Below are some institutions that you must explore getting loans from if your credit is wanting.

Crowdfunding And Social Lending Site

Crowdfunding is a powerful source of financing that has grown in popularity over the last couple of years. Today, you will find a huge number of crowdfunding site with Kickstarter, being the most popular and widely used. In this type of lending institution, the borrower signs up to the crowdfunding site and then sets up a campaign to promote his cause. Philanthropic users can donate to that campaign.

Social lending sites work similar to crowdfunding site. The only difference is that these sites consist of a group of individuals who pool their funds together. Members can borrow any amount from the pool. This amount must be paid back within a short time and with a little bit of interest. When compared to the interest rates considered in conventional lending institutions, they are comparatively low. Most small businesses have moved towards this form of financing because it takes off the huge burden of repaying huge interest to the bank.

Micro-Credit Institutions

These types of institutions exist to help business owners to grow their business. To this day, they are the main recourse for people who have been turned away by traditional banks. These banks have SBA backing. If you are a new venture or just need a guiding hand to get across the tough financial time, they will provide the guidance needed when required.

How To Get an Equipment Finance Loan With Bad Credit

If the above institutions are out of the question for you, then the following tips will help you secure that equipment finance loan.

Get Cosigner With A Good Credit Rating

Banks will have always have qualms about giving you a loan if your credit rating is low. However, if you come with cosigner whose rating is through the roof, they will entertain your request. It helps to have several options lined up instead of focusing on one individual. This is in case they develop cold feet and decline to show up to sign the documents.

Utilize Other Company Assets As Collateral

If your business has been in operation for over 11 months and above, you have already generated a substantial amount of assets and capital. You can leverage that to get a loan to buy the equipment you need. Before you go and borrow, you need to take a strict inventory of the assets that you have in your possession first. Get a clear lay of the land first so that when you put them up as collateral, you will not get blindsided by new information. It will also help you pinpoint high value assets.

Put Up A Huge Down Payment On The Loan

Did you know that you could lower the principle amount you pay back if you put up part of the loan as down payment? If you have quite a bit of funds lying around, you can put up a small down payment on the loan. This will go a long way in lessening the burden of paying the entire principle amount. This will also present you as a person who is fiscally responsible and worthy of a consideration for an equipment loan.

Show Proof That Your Company Is Financially Strong

It is vital that you provide bank statement for the year or more. This is a clear indicator of the revenues you generate as a business. As long as the amounts generated are consistent and growing, lenders will give you a look.