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Small Business Equipment Financing For Good & Bad Credit

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$5,000 – $500,000
4 to 24 months
As soon as one business day
  • Acquire necessary equipment without requiring a large upfront payment
  • Preserves cash flow
  • Reduces your business's tax burden
  • Equipment may become outdated while financing
  • Lenders may require collateral

Small Business Equipment Financing For Good & Bad Credit

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Lenders for equipment loans for bad credit:

Equipment is essential for most businesses. However, it can be expensive. Thankfully, equipment can be financed. Equipment financing may be easier to qualify for than other types of business loans since it can be secured with the equipment. However, if you have bad credit, you may face some challenges. Understanding the components of your personal and or business credit score that are holding you back can be helpful. If you have bad credit and little to no time to improve your score, finding the right lender will be key. 

Lender highlight: OnDeck

  • Best for equipment financing for bad credit
  • Minimum credit score requirement 625

OnDeck offers fast funding and can be leveraged to build business credit. With business lines of credit and term loans available to qualified business owners, farm business owners can get the funding they need with OnDeck. There are some downsides to consider though such as daily or weekly repayments, high interest rates, and collateral or personal guarantee requirements. With bad credit, there will likely be a tradeoff when it comes to financing. So while there may be some downside, the opportunity to get the funds you need should not be overlooked. 

Lenders for farm equipment financing for bad credit

Farming requires equipment, labor, land, and passion. Plus, with seasonal demand and environment restraints, farming will require cash flow. If you own a farming business and have found yourself with a need for equipment financing, there may be a solution available even with bad credit. While we encourage farming business owners to take action to improve their credit score before applying, you may not have the time. Keep in mind that as a business owner pursuing a business loan, your personal and or business credit score may be considered. 

Lender highlight: Kapitus

Kapitus offers a variety of lending products including small business loans, equipment financing, invoice factoring, and more. With a low minimum credit score requirement, they can provide an opportunity to finance farm equipment with bad credit. The minimum credit score requirement can vary depending on the lending product you choose. Funding times can also vary depending on the type of loan you choose, but some loans can be funded in as little as 24 hours once approved. 

Lenders for restaurant equipment financing for bad credit

Restaurants need all types of equipment from refrigerators to plates and utensils, equipment is a core component of restaurants. As with other industries, bad credit can be a roadblock if you need financing for equipment. Finding the right lender can help you unlock the opportunity to get the funding you need for equipment. 

Lender highlight: OnDeck

Restaurant  owners can access funds quickly with OnDeck. While the rates may be higher (as expected with bad credit), OnDeck offers the opportunity to build business credit. OnDeck offers a business line of credit and term loans to qualified business owners. Some potential downsides are daily or weekly repayments, high interest rates, and collateral or personal guarantee requirements. 

Lenders for Commercial equipment financing

Commercial equipment financing is a specialty that VFI Financial can help with. Commercial equipment usually comes with a hefty price tag, which is one of the reasons financing may be hard to find. VFI is a lender that specializes in commercial and equipment  financing. With decades of expertise, they can help you get the funds you need while being a trusted partner to help you grow. Making the right financial decisions is critical as a business owner. Therefore, having the right financial partners in your corner can make all the difference.

What is equipment financing?

Equipment financing allows businesses to buy equipment and machinery for business and pay for it over time. Typically, the equipment or machinery being purchased with an equipment loan is used as collateral to secure the loan. Meaning, if for any reason a business should happen to default on the loan, the lender has the right to seize the equipment and machinery to cover the remaining balance of the loan. 

Equipment financing is most commonly used to purchase more expensive equipment and machinery that would normally take up a large portion of a company’s cash flow. By financing the purchase of the equipment and machinery needed when first starting out or expanding to keep up with increased demand, a business can hold on to more of its cash reserves by paying for the purchases over time with monthly payments.

Some of the most common types of equipment purchased with equipment financing include the following.

  • Large industrial machinery, factory equipment, and smaller specialized equipment
  • Heavy equipment
  • Vehicles, delivery trucks, and forklifts
  • Restaurant necessities like ovens, stoves, mixers, tables, chairs, and cooking utensils
  • Computers, photocopiers, printers, and other electronic equipment needed to run an office
  • Shelving and storage solutions for retail locations and warehouses
  • Healthcare equipment
  • Specialized tools
  • Office furniture
  • Landscaping machinery and equipment
  • Agricultural equipment and farm machinery
  • IT infrastructure like servers, routers, and more

Again, when a business is looking to purchase equipment like what is listed above, they can use equipment financing to get the equipment and machinery they need now and pay for it over time. This allows them to hold on to more of their working capital while having access to the equipment immediately to use it to generate revenue.

Kapitus Equipment Financing

Business Requirements

  • 675 credit score
  • 3+ years in business
  • Equipment Invoice

Fast Equipment Financing

  • Terms Up To 60 Months
  • Funding in as Little 24 Hours

Some Equipment Kapitus Finances

  • John Deere Mowers
  • Cat Construction Equipment
  • Tractors
  • Front End Loaders
  • Dozers
  • Excavators
  • Forestry Equipment
  • Skid Steers
  • Trucking
  • John Deere Lawn & Garden
  • Kobelco Equipment
  • Row Crop Tractors
  • Seeding Equipment
  • Utility Vehicles

How does equipment financing work?

Typically, equipment financing works when a business owner identifies some large purchases of equipment or machinery that is needed to either start a business or to expand. For example, if you’re working on opening your own clothing store, you may need to purchase things like shelving, mannequins, display tables, and a POS system to complete orders and track inventory. 

Once you have an idea of how much money you are going to need to make all of the required purchases, you can then approach a lender and begin the conversation about equipment financing. 

Most equipment loans are secured loans that use the equipment purchased as collateral. Additionally, depending on your creditworthiness, the amount of revenue you generate, and your time in business, a lender may ask you further to secure the equipment loan with additional business assets. They may even ask you to secure the equipment loan with a personal guarantee depending on the size of the loan and your creditworthiness. A personal guarantee gives a lender the right to seize the personal property and assets of anyone who possesses a 20% or more ownership stake in the business. 

Another important point to remember is that most lenders are going to require a down payment, typically somewhere around 20% or higher. 

Once all the fine details have been sorted out with the lender and the equipment loan has been approved, you will receive the large lump sum payment into the designated account. With the money in hand, you can begin making all of the equipment purchases you need and start using it to run your business. Some lenders will pay the supplier directly for the equipment. Once the loan has been funded, the business must adhere to the predetermined repayment schedule. When the loan is paid off, you will own the equipment without strings attached.

Equipment financing vs. equipment leasing

It’s important not to confuse equipment financing with equipment leasing. Equipment financing is a business loan acquired through a bank, credit union, or online lender that uses the equipment purchased as collateral to secure the loan. As long as the monthly payments are met, the business retains ownership of the equipment until the loan is repaid. 

Equipment leasing is entirely different. Equipment leasing is where the equipment ownership is retained by someone else, and your business pays rent to use it. The amount of rent and the length of the rental period is agreed upon between the owner of the equipment and the business looking to lease it. At the end of the rental period, the owner of the equipment and the business leasing the equipment can decide to let either the business buy the equipment outright, or they can renew the lease. 

What are the benefits of equipment financing?

There are numerous benefits to using equipment financing to get the equipment and machinery your business needs. Here are some of the most attractive benefits any business owner like yourself can enjoy.

  • Hold on to cash reserves
  • Minimizes risk by not making huge upfront investments 
  • Keeps a business up-to-date with the latest technology
  • Leverage equipment expertise if equipment or machinery should break down or need repairs

What are the pros and cons of equipment financing?

Equipment financing can be a wonderful way for new businesses to get all of the equipment they need to operate without spending all of their much-needed cash reserves. However, some downsides should be considered before signing on the dotted line. 

Here are some of the pros and cons of equipment financing.

  • Pros
  • Opportunity to build business credit history
  • Get the equipment you need without placing financial strain on the business
  • Flexible repayment schedules and competitive interest rates
  • Cons
  • Increases equipment cost
  • Monthly payments can eat into your cash flow
  • Severe consequences for default

Is it hard to get financed for equipment?

It’s easier to qualify for equipment financing than it is for other types of business financing. The main reason is that equipment loans are almost always secured. When you take out an equipment loan, the equipment and collateral you purchased are used as collateral. Because of this, most lenders see equipment financing as less risky. 

Although the minimum requirements for qualification differ from lender to lender, in general, a business owner with a FICO score of at least 650, annual revenue of at least $120,000, and 6 months or more of time in business should have options for obtaining equipment financing. 

How long can you finance equipment?

The loan terms for equipment financing can vary depending on the lender, the size of the loan, and the type of equipment being purchased. Typically, equipment financing can come with terms that span as little as 24 months to up to 7 or 10 years if the equipment is costly. 

What credit score is needed for an equipment loan?

Lenders that specialize in equipment financing typically want to see a minimum credit score somewhere in the range of 650 to 680. Some lenders may be willing to work with a potential borrower with a credit score of less than 650 if they can show that they can generate a large amount of revenue and if they have a good amount of time in business. To find out the likelihood of qualifying for equipment financing, review your SMBscore. At mySMBscore you can find ways to increase your chances of qualifying for business financing at a lower rate.

Where to get equipment financing?

You can find equipment financing through manufacturers, banks, credit unions, and online lenders. Most lenders will advertise rates and terms, but what you actually qualify for is another story. Take advantage of a credit monitoring platform that lets you know where you stand through the eyes of the lender. At mySMBscore you can view your business credit score and other factors that a lender will use to approve a loan. You can even access loans that are recommended for you. At the end of the day, financing is a valuable resource, but it can be costly. It’s important to always be financially aware and lock in the best financing when possible. 

How do you get equipment financing?

Before you seek equipment financing, you should determine what equipment will cost and the likelihood of qualifying for financing. Determining the equipment cost will give you insight into how much money you’ll need to borrow. The likelihood of qualifying for a loan will matter too. It also gives you insight into how much financing might cost you. Before securing the financing you should improve the health of your business finances and credit as much as possible. At mySMBscore you can access insights about how to run your business better and how lenders will view you when you apply for a loan. Using this information, you can improve how your business is run and prepare for financing. As a result, you can keep financing costs down and lock in a competitive loan. 

When you’re ready, you can shop for equipment financing offers. Some manufacturers may offer to finance, but other options include SBA loans, bank loans, or even loans from online lenders. Online lenders typically have the most lenient requirements and fastest funding times. By understanding your SMBscore you will have a more realistic idea of what a competitive loan should look like. Always be sure to check a few different offers, as even a small rate discount can make a big impact on a large loan. 

Unlock analytics that will help you lock in low-rate equipment financing. . . check your SMBscore now!

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