Leasing Business Equipment with Bad Credit

Having bad credit can prove to be a handicap not just for consumers but for businesses as well. BadCredit Applying for a business loan is not easy as most banks and lending companies strictly require good or excellent credit.  If you have a problem with bad credit, your loan application can be rejected if you submit it to the wrong lender.

One financing option is equipment leasing.  If you’re in need of equipment, you can preserve your cash flow through leasing instead of purchasing.  The good news is that there are leasing companies that offer special lease programs for customers with bad credit.  By searching for these specific leasing companies, you can acquire the financing needed to obtain the equipment you need.

Typically, leasing companies that offer programs for bad credit require that all credit problems are in the past.   Your credit report should also be free from tax liens and judgments.  If you do have tax liens or judgements, they should be paid , of if in repayment make sure you have proof of your repayment plan and payments made.  However, for businesses with a record of bankruptcy, they may need to wait for at least 3 years after being discharged before they can apply for an equipment lease.

What can you do to ensure the approval of your lease application?  Consider these tips:

Be ready with an explanation.  Upon submitting your lease application, provide a written explanation regarding the negative items on your  credit report.  What are the circumstances behind your bad credit? If you have been through bankruptcy, what lead you to that situation?  This extra step will allow a prospective lessor to consider the circumstances behind the poor score.  It can significantly help you in getting a lease.

Prepare the paperwork.  Most lenders will want to see a financial statement , and up to two years of your personal and / or business tax returns. A prospective lessor will closely evaluate your financial information to make sure that you will be able to submit your monthly lease payments with any problems.  Remember, because of your bad credit history, you need to prove that you will be able to make the monthly payment.

Approach the right lessor.  Keep in mind, that not all leasing companies offer programs to businesses with bad credit history.  Submitting a lease application to the wrong lessor will of course, lead to a negative response.  Hence, it’s important to do your research carefully and approach the right lessor.

Do not submit multiple applications.  Be careful about shopping around for lease quotes.  Do not submit lease applications to different companies just to see which lessor will give the quickest response or which one will grant approval.  You should be aware that your credit score drops each time a lessor pulls your credit.  In addition, too many inquiries at such a short span time will only give rise to doubts and it could turn a yes into a no.

Once you obtain your equipment lease, be consistent with your monthly lease payments.  See to it that you will be able to submit your monthly lease payments according to your lessor’s terms.  Remember, a business equipment lease can help you create a good credit profile for your business.

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3 thoughts on “Leasing Business Equipment with Bad Credit

  1. We don’t have any currently ongoing past due charges, but we did have one about a year ago. The bigger problem though is the fact that we have a big balance on our company credit card and we also have a loan that we’re still paying off. We can’t get a loan, I’ve tried and it’s impossible. So the only option is equipment leasing, but I’m not so sure that we qualify for this either. Our problem right now is the large credit usage vs. the small available credit. I guess I’ll just have to make a call to figure it out.

  2. The banks give you more credit than you can spend when you don’t need them, but when you start borrowing a little more than usual, then they start cutting down on your credit. Why do they even give me the power to borrow in the first place then? You borrow a little, then they decrease your line of credit, your credit score goes down, your APR goes up, and your line gets slashed even more. The chain reaction to borrowing is vicious. Now I’m left with the only option to lease additional business equipment and I don’t even know if they’ll accept it with my credit. Isn’t our credit system wonderful?

  3. Equipment leasing has an easier approval process than bank financing, but every now and then a situation arises that requires some thinking outside of the box. Thats one of the reasons we started our bad credit leasing program . Its for any business that may have trouble getting approved for traditional equipment leasing programs. Please give me a call at 1-888-308-7160 and I would be happy to discuss leasing options with you! Just ask for Liz!

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