Starting a business can bring up many challenges for its owner, particularly when it comes to matters of financing. Investing on the needed equipment may require a large sum of money and if you are a business owner working on a small budget, you will need to find alternatives to purchasing new or even second-hand equipment.
This is where business lease financing can be the perfect solution. Instead of spending a considerable portion of your funds on purchase equipment, leasing gives business owners the opportunity to use their available cash flow on other costs or reserve it for future expenditures.
Equipment Lease – An Alternative to Business Loans
Indeed, acquiring a business loan is an option to gather the additional financing needed for purchasing equipment. Nevertheless, for entrepreneurs who have just started up their businesses, applying for a loan can be a rigorous process.
Banks and commercial lending companies usually have strict standards when it comes to releasing funds to new businesses. Of course, these financial institutions would want to ensure that their customers will be able to keep up with their loan payments. Business loan applicants will be required to submit various documentations or even collateral if they are going for a secured loan. Furthermore, even after submitting all prerequisites, it can take months before you can get an approval.
On the contrary, the process of acquiring start up equipment leasing is much less complicated than applying for a business loan. If you have been in operations for less than 2 years or only a few days old months, an equipment lease can be the best help you can get. The key is to find a leasing company that offers flexible lease programs that are especially designed for start-up or new businesses.
Getting Approval for A Start-up or New Business Lease
Generally, start up or new business owners applying for equipment lease must prepare to submit their personal financial statements, personal tax returns for the last 2 years, business plan, business summary, and the lease proposal.
To ensure approval, a new business owner must be able to show proof that he/she is managing a promising business and that he/she is capable of keeping up with the loan payments. Of course, having a good personal credit history helps but is not necessary since some leasing companies have programs made specially for people with bad credit. Therefore, if you have a history of bad credit, it is wise to make sure you send a letter of explanation along with your lease application to provide details about your credit situation.
Avoid submitting numerous requests to different equipment leasing companies. Remember that you need to find a leasing company that specially caters to new businesses. If you submit your application to the wrong lease provider, your application will get rejected and that could send a negative impression to other potential lenders.