By financen | November 21, 2018 - 10:19 am - Posted in Bad Credit

Occasionally, businesses face financial constraints throughout their operations resulting in what is known as Bad Credit. It is an unwelcome scenario where getting approval for obtaining equipment finance becomes somewhat a pipedream, regardless of whether the equipment in question guarantees improving the prospects of the business. Known financial institutions like banks are highly likely to deny you loans, but that should not mark the end. Today, there are specific lending institutions that will look beyond your bad credit and avail the required equipment for getting your business back on the right track.

Equipment Financing

Equipment finance is a short-term loan given to businesses for the specific reason of purchasing equipment required for normal operations. However, it is a collateral loan whereby equipment bought can be repossessed if the loan agreement has defaulted. Lenders usually categorize it as a low-risk loan since it is given with collateral. Hence, lower interest rates compared to standard loans. The loan period is usually between 3 and five years.

Qualifications for an Equipment Finance Loan

One must provide proof of a credit score of at least 600; business must have been in operation for at least 11 months, and with a proven revenue generation of $100,000. It is within the jurisdiction of the power of the lender, however, to give their assessment should you fail in any of the above qualifications. Obtaining equipment finance gives you a reprieve regarding correcting your bad credit score.

How to grow the prospects of getting your equipment financing approved despite negative credit

Any effort made towards improving your credit gives you a better chance of getting your loan approved. Highlighted below are some proven ways which you can use to bolster your chances of having a successful loan application.

#1. Get a cosigner with a good credit When your cosigner has a positive credit standing, lenders can easily consider your application as the cosigner provides loan security. Financial institutions consider a consigner equally obligated as the borrower.

#2. Provide additional assets as collateral If you have other valuable equipment, you can present them to the lender as collateral as they strengthen your loan application status. Real estate property can also act as collateral.

#3. Present a more significant down payment This can only be applicable if you have sufficient funds to buy out a large part of the total loan amount. Presenting a larger down payment gives you credence to be considered as a candidate for poor credit equipment finance by lenders.

#4. Proof of good business prospects You may prove to the lenders that your business is growing strong by providing valid documents like bank statements. If you can convince lenders that your business revenue has been increasing steadily over the last few months, your loan application is as good as successful.

#5. Consult financial experts You are bound to face a hard time with most lenders the moment you apply for a loan because of your bad credit. Some will dismiss your application outright without giving it a second thought and convincing them otherwise could prove futile. However, seeking assistance from loan experts can be a good idea. They know ways and means of maneuvering through different lenders despite having bad credit.

Another option is to take the time to improve your credit score. Click here to get more information on how you can make that ha

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This entry was posted on Wednesday, November 21st, 2018 at 10:19 am and is filed under Bad Credit. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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