For a startup business, applying for a bank loan can prove to be difficult especially for those with no business credit history. The 
first question you should ask your prospective equipment lease broker is, Do you have a program fro startup businesses. That simple question will save you a whole lot of time!
Who Can Lease
Both start up and established businesses can qualify for an equipment lease. In fact, this method of financing is being implemented by small businesses and large corporations. Equipment leasing is not just known for its tax benefits, but also the ease of being approved. Making it the method of choice for many start up businesses that need to preserve as much of their working capital as possible. Why Lease Equipment
- Ease of approval – There are some lease financiers like leasefunders.com, that specialize in providing financing for startup businesses.
- Lease request can be approved within 24 hours of the application being submitted and evaluated.
- Minimal documentation needed. Generally an application and an executive summary. For businesses wanting more than $15,000 we may ask for personal bank statements or personal tax returns – just to prove there is sufficient working capital in the business.
Furthermore, equipment lease financing is very cost-effective. Most leases can be started with just 2 payments down (first and last payment) For qualified businesses, some lessors offer flexible repayment terms, such as seasonal payments for companies such as landscapers who make most of their money in the summer months.
Through leasing, you can use your working capital on other expenditures such as purchasing supplies, hiring workers, advertising your products and services, etc.
What do you need in order to apply for an equipment lease
- Equipment lease application – please make sure you fill this out completely. That is the biggest hold up for processing a lease request.
- For start-up businesses, we like to see an executive summary that tells us about your business, your experience in that industry and what you plan on using the equipment for
- An invoice from the vendor you want to buy the equipment from
- If there are any credit problems, a letter of explanation should be sent with the application
Check Your Credit
Many clients call the office and they have no idea what their credit looks like. There are many places online where you can download your credit report with score. While that is not the same sort of credit report we get as financiers, it will give you some idea of what kind of credit score you have. Some equipment leasing companies are strict about granting approval and may demand good to excellent credit history. However, there are companies that also offer to lease to clients who are credit challenged.
In fact, even business owners who have been discharged from bankruptcy have the chance to get approved as well. If you have bad credit, you may need to submit a written explanation of your credit history along with your lease application.
Tips To Improve Your Chances Of Getting Approved
- Don’t “shop” your lease request. It makes sense to call the leasing company and tell them about yourself and your business. You can even fax a copy of your credit report to see if they can work with you. Just keep in mind they CAN NOT use the credit report you send as a means of approving your lease request. They will need to pull it themselves and get a risk score directly from Experian or whomever they are using. Keep in mind the score they get will more than likely be different than the one you got on your consumer credit report.
- Do send a letter of explanation for any credit problems. If you have paid off debts that are showing as unpaid on your credit report. Be prepared to show them proof that its paid. Also for your own benefit make sure you send the proof to all 3 credit bureaus so this mistake is fixed.
- Send your lender an executive summary letting your financier know who you are, your experiences, and why your business will be successful. Don’t forget to mention any big contracts that you have landed and need the equipment lease to fulfill. I’m always surprised to learn halfway thru a tough deal that the new equipment is to fulfill a big order whose monthly revenue will more than pay for the lease.
- Understand their minimum requirements for an approval. No question is a stupid question. Pick up the phone and interview your prospective financier.
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