For a new business, trying to get a bank loan can be a challenge especially without business credit history to back up your loan application. If you need equipment financing is an issue, perhaps you may consider business equipment leasing?
Who Can Lease
Both new and established businesses are eligible to apply for equipment lease financing. In fact, this financing technique has been employed by many small businesses and large corporations for a long time.
Why Lease Equipment
Rather than apply for a bank loan to buy the needed equipment, a new business owner can apply for a lease to avoid unnecessary delays with the business operations. Instead of waiting for months to get their business loan approved, leasing equipment involves a quicker and uncomplicated procedure.
Add to this, equipment lease financing is generally cheaper since it does not require a down payment. Many leasing companies offer flexible repayment terms (monthly, quarterly, bi-annual, annually) to complement the business's needs.
Indeed, equipment lease financing is recommended for smaller businesses. By leasing equipment, the business owner can use its working capital on other expenditures such as purchasing supplies, hiring workers, advertising your products and services, instead of spending the money on devices or special machines.
What kind of paperwork do you need to prepare? The specific requirements may vary from one leasing firm to the next. Still, most lessors generally require a written equipment lease proposal, the business's recent financial statements, and tax returns.
Your lease proposal must clearly present the type of business you run, your reason for getting a lease, the specific machines or devices you need, and other important information about your company that will help convince your lessor to approve your application.
Check Your Credit
Some business equipment lease providers have strict standards and may call for good to excellent credit history. Nonetheless, you can find lessors that offer leasing services even for customers with no credit history or with bad credit history.
In fact, even business owners who have a record of bankruptcy can get approved as long as the bankruptcy has been discharged. If you have bad credit, it is a good idea to include a letter explaining the details about your bankruptcy or poor credit.
Tips For Sure Approval
For new business owners, do not test the waters by submitting multiple lease applications to different companies. If a potential lessor sees too many inquiries in your report, it may raise doubt as to why other lessors are not willing to grant you a lease.
Keep in mind that not all leasing companies offer lease for new businesses. Some lessors may require applicants to be at least 2 years in operations. However, there are lease companies that do offer special lease arrangements for new businesses.
Find a leasing company that provides service to businesses in the market you belong. For example, some lessors specialize in transportation while others may specialize in medical equipment, printing equipment, baking equipment, etc. Check the prerequisites of a particular equipment lease provider so you can avoid unnecessary rejection.