Have you been denied to lease equipment for your business?
Equipment leasing has different underwriting criteria than non-traditional business loans, and there might be times where your business wont qualify for equipment leasing. Be glad there are still other solutions!
Credit Requirements:
With some of the equipment leasing companies, they will look at the business owner’s credit, as well as the company credit with Dun & Bradstreet. If both credit reports look poor, it’s very unlikely you’ll get approved for the lease. Non-traditional business loans, only look at the business owner(s) credit, and would like to see at least a 500 credit score or better.
Bankruptcy:
If you or your company has filed for a previous bankruptcy, this can be a huge hurdle with equipment financing. But if there’s a strong story, that will support the reason why there’s a good chance you might still get this overlooked. With non-traditional business loans, we will want to see at least 6 months seasoned from the discharged date, and if it was dismissed we’ll want to see 12 months. Even then, it’s still pretty difficult but we’ve seen clients with good explanations get funded.
Income Requirements:
What income? They have collateral, so it’s not uncommon to find lenders who don’t require proof of income. Some lenders like to see the last three months business bank statements, to get an idea on the daily average balance and deposits. When applying for a non-traditional business loan, the lender will want to see the last 6 months bank statements. If the business also processes credit cards, they’ll also want to see the last 4 months merchant statements.
Equipment Restrictions:
With equipment leasing, most lenders will shy away from aircraft and boats, and definitely no personal leasing. Even finding titled vehicles might be difficult to lease, only some lenders will consider doing them. If you were applying for a non-traditional business loan there would be no restrictions on the use of the funds. It can be used for anything, catching up on paying bills, vendors, materials, payroll, rent, expanding, remodeling, there are zero restrictions.
Early Payoff:
When you lease equipment, there is no benefit if you were to payoff the lease early. You still have to pay the balance and you still have the equipment for the remaining term that was on the original lease agreement. With non-traditional business loans, there are times where the lender will give a reduction on the interest if it’s an early payoff. There is absolutely no penalty if you pay it off early.
Length of Term:
It’s common to see equipment leases start at 12 months and go out as far as 60 months. Where non-traditional business loans will go out 18 months. After there’s been payment history, some lenders are willing to go out 24 months.
Does your business still need that equipment?
So from what you can see, non-traditional business loans like our working capital loan have been a great alternative to equipment leasing. If you’ve been turned down for equipment leasing or financing, give us a quick call and we’ll see if we can get you a business loan which will allow you to buy that equipment for your business. If you’re approved for extra capital, you can use that for anything you wish! If you’re local to Irvine or Orange County, feel free to set up a time to sit with one of our loan specialists. To set an appointment, please call 888-565-6692.
