Equipment financing almost always requires a credit check. However, there are still small-business loan options if you have fair or poor credit. You can get bad credit equipment financing from online lenders, but you should be wary of any company that promises “guaranteed approval.”
Reputable equipment lenders will check your credit history as part of the application process and won’t guarantee approval.
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Why equipment financing requires a credit check
Equipment lenders require a credit check to evaluate your financial history and determine your risk of defaulting on a loan. They use this information — along with your other credentials — to decide whether or not to approve your application, as well as set your interest rate and repayment terms.
However, because the equipment you’re looking to purchase serves as collateral on the loan, lenders may be more flexible with their eligibility requirements. You may not need to rely as heavily on your credit history or time in business to qualify for equipment financing.
How to get equipment financing with bad credit
You can get equipment financing with fair or poor credit — even though lenders will still pull your credit history. Some equipment lenders may provide funding to small-business owners with personal credit scores as low as 550, although they’ll likely charge higher interest rates and offer shorter repayment terms.
If you have bad credit (a score below 630), here are three tips to help you get equipment financing for your business.
1. Organize your business’s finances
Before you start comparing lenders and submitting loan applications, you should organize your finances to understand your business’s qualifications and where you stand from a lender’s perspective.
You’ll want to gather any documents that highlight your business’s strengths, like cash flow or annual revenue, especially if you’re concerned about your credit score. You can also prepare standard application documents such as bank statements, tax returns, profit and loss statements, and balance sheets.
2. Boost your application
There are other ways you can boost your equipment financing credentials before submitting an application:
- Build up your credit. You can check your personal credit score and try to build it up to help your loan application. You can look for errors on your credit report and dispute them with the applicable credit bureau, make more frequent payments, as well as pay down debt.
- Offer additional collateral. Although the equipment you’re purchasing serves as collateral on the loan, you might provide additional collateral, such as property or other equipment, to further secure the financing.
- Increase your down payment. Equipment lenders may require a down payment of up to 20%. If you can offer a larger down payment on your business loan, it may help increase your chances of approval, as well as lower your monthly payments.
- Get a co-signer. A co-signer with strong credit may be able to help you qualify for an equipment loan if you have fair or bad credit. However, note that your co-signer will be held responsible for the debt if you can’t repay.
3. Research and compare multiple lenders
When looking for bad credit equipment financing, you should consider several different lenders to find the best deal for your business.
Bad credit business loans typically have higher interest rates and shorter repayment terms than other types of financing, so it’s even more important to evaluate the cost of the loan and make sure it’s something you can afford.
Where to get bad credit equipment financing
Small-business owners with bad credit will typically have to turn to an online lender or fintech company to get equipment financing. Loan terms, interest rates and qualifications vary from lender to lender.
Here are a few options you might consider.
Triton Capital
Triton Capital can be a good option for fast, affordable equipment financing.
You can get an equipment loan up to $250,000 with terms ranging from 12 to 60 months. Interest rates start as low as
5.99
%. You can apply for Triton equipment financing online and receive same-day approval. Funding typically occurs within one to two business days.To qualify, you’ll need a minimum credit score of
600
, a minimum annual revenue of $250,000 and at least two years in business. Triton Capital can fund startups with less than two years in business, but interest rates on those loans will be higher.Balboa Capital
Newer businesses or those looking for larger loan amounts might consider Balboa Capital for equipment financing.
Balboa can provide equipment loans of up to $500,000. You can use these loans to finance commercial vehicles, computers, office equipment, machinery, software, furniture, among other types of business equipment. Balboa also lets you finance used or new equipment.
Repayment terms on these equipment loans typically range from 24 to 60 months, although low-cost equipment agreements may have shorter terms. Interest rates range based on your business’s credentials, your loan amount and repayment terms.
To qualify for equipment financing from Balboa, you’ll need a minimum annual revenue of $100,000, a minimum credit score of 620 and at least one year in business. You can apply for financing online and if approved, may be able to get same-day funding.
Currency Finance
Currency Finance may be a good option if you’re looking for construction equipment financing, commercial vehicle financing or farm equipment financing.
Currency offers equipment loans of up to $500,000 with repayment terms of up to 72 months. Interest rates will vary based on your credit and financial history, among other qualifications.
In general, to access equipment financing from Currency, you should have a minimum credit score of 625, at least two years in business and an established business credit history.
You can apply for financing online, and may be able to receive same-day funding. However, timelines can range, depending on when you complete your application, the type of financing you need and whether or not Currency needs to follow up with you for additional information.
Compare small-business loans
Looking for other types of business financing? Check out NerdWallet's list of best small-business loans to see and compare loan options.
Our recommendations are based on the market scope and track record of lenders, the needs of business owners, and an analysis of rates and other factors so that you can make the right financing decision.
Frequently Asked Questions
No credit check equipment financing means a lender does not pull your credit history when evaluating your loan application. However, most equipment lenders require a credit check — even if they work with businesses with bad credit.
You may be able to qualify for equipment financing with a credit score as low as 550. Because the equipment you’re purchasing serves as collateral on the loan, some lenders may not weigh your credit history as strongly when evaluating your application.
However, a stronger credit score will help you qualify for an equipment loan with the most competitive rates and terms.
Equipment loans can be easier to get than other types of small-business loans. The equipment you purchase serves as collateral on the loan, meaning you may not have to rely as heavily on other criteria, such as personal credit or time in business to qualify.
Startups and businesses with bad credit may qualify for equipment loans.
A version of this article originally appeared on Fundera, a subsidiary of NerdWallet.