Many businesses are now turning towards equipment lease financing not only for starting up a business but for expanding an existing business as well. Equipment leasing provides and extremely flexible financing option for a start up business. Unlike most business loans that require 20% down payment, equipment leasing generally requires 2 payments as security and is even open to business owners with bad credit.
True, equipment leasing is a great option that any type of business can consider, especially start up businesses. Keep in mind not all equipment leasing companies work with start up business, but quite a few do (including us!)
Need equipment financing? Here is what you need to get started
Before submitting an online application you should first make sure the equipment financing company of your choice works with start up businesses. A quick look at their website or a quick phone call should answer that question fast enough.
When you call or email your leasing company of choice, have a list of questions that pretain to your business ready to ask them. Here are a few questions to get you started.
- Do you work with start up businesses
- What are your credit requirements
- Be prepared to tell them what kind of equipment you want to lease
- Ask them if they have lease to own options
If you have credit problems also ask:
- Do you work with business owners with bad credit
- Do you allow co-signers
- Will they approve if you have additional collateral
By learning as much information as you can about a leasing company, you can choose the one that will work with a business like yours and your special circumstances.
What kind of equipment financing terms are available
Next you want to find out about what kind of leases they offer and terms. Most leasing companies will offer 24 – 60 month terms depending on the type of equipment and your credit. When you call and ask for a quote, be TRUTHFUL.
Many times I get a call from a potential client that tells me they don’t have perfect credit, but the last time they checked they had 680+. So we quote based on that. But then we look at the credit and see they are closer to a 620 than a 680 or even worse. But they want the same rate quoted. It doesn’t work that way. Pull your credit before you apply so you can accurately answer questions about your credit. And if you have time before you need to get the equipment, you may want to consider using a credit repair company to improve your credit score.
What kind of financial documentation will you need:
You will need :
- 3 – 6 months of bank statements. Personal bank statements are fine for start ups
- If you need more that $20,000 and have less than a 680 credit score be prepared to submit your personal tax returns
- If you have bad credit you may need to show your tax returns regardless of the amount you need
- If you are offering additional collateral, have the make, model, year and condition of the equipment ready to submit with your application.
Liz Roberts is business credit specialist that helps many start up business owners to obtain financing for their business.