Equipment leasing allows a business owner to preserve their working capital
Lets be real, obtaining working capital for start up businesses can be difficult. And any working capital your business has should be utilized for the day to day running of your business. Not being depleted to purchase equipment!
For business owners who have just started their businesses, equipment leasing is a very viable option for obtaining financing. Equipment leasing can only be used to purchase equipment. And its fairly easy to get approved for, even for a start up business.
Requirements for equipment lease approval
- An equipment lease application – is generally 1 page and for a start up, the business owner should fill out as much as possible but understand they may not have any trade references
- Most equipment leases are application only up to $15,000. Once you get over $15,000 they want bank statements. Once you get over $25,000 they may want you to submit your last years tax return (business or personal)
- 3 months bank statements – this is where you show the bank how safe dealing with your business will be. I’m constantly surprised at start up business owners who do not put their best foot forward at this stage. Its understandable if you don’t have 3 months business bank statements, But its perfectly ok to submit your personal bank statements. You want to show the bank that you can make the payments NOW. And its not based on “if your business improves”
- Executive summary – this is usually 1 or 2 page document giving a broad overview of your business.
- Resumes of the business owners. This is another place for you to “shine” really make sure your leasing broker knows that you have a lot of experience in your chosen industry
- Invoices for the equipment you want to buy. With equipment leasing you can choose the equipment vendor that you work with. Just keep in mind not all leasing companies are the same. Some leasing companies have strict restrictions on used equipment or they don’t allow you to buy the equipment from another business owner who is selling equipment they no longer need
- When choosing equipment keep in mind the leasing company isn’t responsible if the used equipment you buy stops working. Its up to you to look over the equipment before you buy it.
- Also if you buy equipment in a private party sale, you generally have no warranty on the equipment
- Regardless, you still owe the equipment lease if the equipment stops working. So be careful of whom you buy from.
Work only with companies that want to work with start up businesses. Once you have decided that equipment leasing is the way that you want to find the company you will work with. Keep in mind not all equipment leasing companies will work with start up businesses. That should be the first question you ask when you call them. If you have credit problems this is the time to discuss them, before you submit your application.
A lot of times I see start up business owners credit reports and I see leasing companies that don’t work with start up have pulled their credit. Keep in mind each time a finance company pulls your credit, it will effect your credit score negatively.
If you need an equipment lease for your business. Click here! We would love to talk to you about our start up business equipment leasing program!
