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 aboveIn 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 MonthsThis 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 RevenueIt 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 BankIf 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 SiteCrowdfunding 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.