Business leasing can be a great option for owners that needs to acquire equipment but are on a limited budget. Ready to use leasing to help finance your business? If yes, consider the following tips to make your leasing experience a success and hassle-free:
1. Check your business credit. Some leasing companies only accept customers with solid business credit history. Some businesses that have been in operations for quite a few years do not have credit history and have yet to start building credit.
Thus, whether you are an established business or a start-up business, it’s a good idea to check the prospective lessor’s requirements.
An impressive business credit rating will work to your advantage. Many leasing companies will be willing to work with you and offer you their best deals. On the other hand, if you have no credit or bad credit, you should look for leasing companies that offer special lease programs and thus, avoid rejection.
2. Do your own research. The rates, fees and terms will vary from one lease provider to the next. You should spend some time exploring the market to make sure that you choose the best business leasing partner.
However, do not submit lease applications to multiple leasing companies just to compare deals as this will be bad for your credit. Take note that each credit inquiry can deduct a few points from your credit score. Furthermore, a lessor might be inclined to decline your application upon seeing too many inquiries in your report. You should only submit a lease application to the company that you think is your best choice.
3. Organize your financial information. Most business leasing companies will require the submission of financial documents. You will also need to provide business tax returns for the last two years so make sure that you have all these documents at hand. Aside from business finance sheets, you should be prepared to submit personal finance documents and personal income tax returns as well.
4. Improve your chances of approval. If you have bad credit, remember to find a lessor who will be willing to work with you. Nevertheless, if you have a record of bankruptcy, bear in mind that some leasing companies will only consider your application if you have been discharged for at least three years.
You can improve your chances of getting financed by submitting a letter of explanation along with your lease application, even though it is not explicitly required by the lessor. What are the circumstances that lead you to have bad credit and what steps have you already taken to rebuild your credit? Providing these details in your letter will ensure a prospective lessor that all your credit problems are in the past and that you are now capable to keep up with your lease payments.
5. Inform the lessor how leasing can help your business. If your financial statements are not impressive, enclose a letter with your lease application and discuss how acquiring new or additional equipment will open up more opportunities and enhance your business. This step will strengthen your chance of getting approved more quickly.
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Equipment Leasing – A Practical Method of Business Financing