How To Get Approved For A Start Up Business Equipment Lease FAST!
One of the biggest working capital drains for a start up business is buying equipment. One way to preserve your working capital would be to utilize start up business equipment leasing for the purchase of that equipment. Start up business equipment leasing , is a specialized form of financing and getting approved can be a little tricky if you are not experienced with business financing. here are some tips on how you can make your equipment lease request more appealing to lenders and get approved fast!
Do Your Research – Not all equipment leasing companies will finance start up businesses. Make sure they have a program for businesses with less than 3 years time in business
Check Your Credit . Most leasing companies will be looking at your personal credit score and not your business credit since many new businesses have very little credit. Equipment leasing is a great way to start establishing business credit. If you havent set up a Dunn and Bradstreet account for your business, now would be a good time to do so. An equipment lease will use your personal credit for approval BUT WILL NOT show up on your personal credit report. You can have it reported on your D&B file and start building credit.
If You Have Poor Personal Credit – If you have poor personal credit make sure you include a letter of explanation with your equipment lease application. Also be prepared to have to put down a larger security deposit, or obtain a co-signer. Not all equipment leasing companies will require this, but its good to be prepared.
- Prepare all necessary documentations. Once you have found your equipment leasing company ask them what are the requirements for approval. Most of them will require:
- An equipment lease application – fill this out completely
- 3 months bank statements (optional: they will need bank statements for anything over $15,000 or for people with credit problems)
- 1 year tax return (optional :– depends on your credit and the dollar amount of the lease)
- Personal financial statement: – (optional : depends on dollar amount and your credit. Generally not needed for leases under $50,000
- Invoice or list of equipment you want to purchase
Executive Summary: This can be 1 – 3 pages telling them about your business, experience, and how the equipment will be used to make your business more successful
Hiring a Certified Public Accountant if you have some time in business, you may want to hire a CPA to put together your financial documentation. But if you use a program like Quickbooks, you can print off the same types of financial documentation that is needed for your lease approval.
Provide Credible References If Possible. If you have done any kind of financing in the past, even just purchasing materials from a vendor that gave you a line of credit, you should put them on your application. They will feel more confident about working with your business if they know you have a history of repaying your debts on time.
Make Sure You Have Set Up Your Business Bank Account. You will probably have to pay your equipment lease thru ACH. ACH is an arrangement that involves three parties -you, your bank and your leasing company. Under this arrangement, payments will be automatically sent to your leasing company according to the payment schedule in your contract. Many financial companies feel safer knowing that the lease payment is set up for automatic payment.
- Location: If you are going to be working outside of your home, make sure you use that address as the business location on your lease. An equipment leasing company will pay your vendor directly for the equipment. They will first call you and make sure the equipment has been delivered and installed correctly. They will want to make sure you are happy with the condition of the equipment and that its functioning in your location. In some cases the equipment financing company will send out a third party to look over the equipment and verify that it was installed correctly.
Making sure you have all these documentations in place will help make your equipment lease application and approval go faster.
Irish Taylor is a business loan consultant with Startup Business Loans and has been providing consumers and business owners with startup business financing since 1992. For years she has helped people with credit and loan problems especially pertaining to business start up, SBA loans and Unsecured loans.