Tips to Get Equipment Financing With Bad Credit
Any type of business cannot thrive well without the appropriate equipment. Business equipment ranges from computers, telephone system, furniture, and so on. However, some of the equipment may be costly, and if you have a bad credit score, you have minimal chances of securing a loan. You can opt for equipment financing despite your bad credit score. Equipment financing is a loan that you can take to purchase business equipment. Alternative lenders come in handy if you have a bad credit score since they have lenient terms. Despite your bad credit history, here are a few tips on how to get equipment financing successfully.
Make a Huge Down Payment
In case you have enough cash at your disposal, you can make a size-able down payment for the equipment. This will lower the overall cost of the equipment and the loan amount. Making this big initial payment for the particular equipment shows the lender that you are capable of repaying their loan.
Show a Booming Business
As you are applying for the loan, it helps if you can prove to the lender that your business is soaring high. One way of doing this is by showing a growing revenue as per the bank statements. You can get the loan if you prove to the lender that your business is doing well.
Offering other assets as collateral for the equipment loan also gives you a better chance of securing the loan. These assets can be for your real estate or any other equipment that you use in your company. Even though the equipment that you are trying to finance can be collateral in itself, you stand a better chance of getting the loan when you offer a personal guarantee.
Get a Cosigner
A cosigner is a person who agrees to cosign your loan application by adding their name to the loan document. By signing their name, the cosigner legally accepts responsibility for your debt. Having a cosigner increases your chances of getting the equipment financing because they can pay the loan in case you fail to pay. For this reason, a cosigner has to be someone with a long credit history and a good credit score. The cosigner can be a family member or a friend.
With the above tips at hand, you can easily secure a loan to purchase business equipment despite your bad credit score. However, having a cosigner doubles the chances of securing the equipment loan needed.