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Is a New Business Out of Luck for Equipment Financing?

Posted On: July 12, 2017 author Paul Kendall

When you’re just starting out with a business (any business for that matter), it will seem like it’s incredibly difficult to get equipment leasing for new businesses.

Virtually every bank and dealer out there will be wary of providing you with any kind of funding. 

You might have the best idea and may be the most suited for the job, but in their eyes all they will see is a red flag for financial risk.

In the beginning you have no track record of any kind. A track record is what most financiers will be looking for as a way to assess the risk your business has.

Is a New Business Out of Luck for Equipment Financing?

 

When you’re just starting out with a business (any business for that matter), it will seem like it’s incredibly difficult to get equipment leasing for new businesses.

Virtually every bank and dealer out there will be wary of providing you with any kind of funding.

You might have the best idea and may be the most suited for the job, but in their eyes all they will see is a red flag for financial risk.

In the beginning you have no track record of any kind. A track record is what most financiers will be looking for as a way to assess the risk your business has.

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What Qualifies As a “New Business”?

 

When you’re new to business, it may not always be clear what’s classified as new and for how long.

Generally speaking when you’re looking for equipment leasing for new businesses, most financiers of any kind will classify your business as “new” when it’s been around for less 2 years.

This might be different for other types of financing, but when it comes to equipment leasing for new businesses, you can consider yourself as a “new business” or “startup” for the first 2 years of operations.

What About My Credit Score?

 

Credit score plays a considerable role in how you get equipment leasing for new businesses.

Knowing what your credit score is ahead of time can help you to understand what kind of financial situation you’re in before you start looking for equipment leasing for new businesses.

When you’re starting out, it can be very beneficial to both you and your business to get your credit score as high as you possibly can. Aside from “time in business,” your credit score is one of the other major variables in deciding how easily you’ll get equipment leasing.

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What’s the Best Way to Get Equipment Leasing As a New Business?

 

When you’re new, there’s no denying that your options are going to be more limited than a business who has multiple years of experience and has a decent credit score.

But does that mean you’re out of luck to get equipment leasing for new businesses? Not at all. You might not meet all of the “checkboxes” to most traditional lenders, but you can still get financing.

When working with a financier who handles newer businesses or lower credit scores (or both), your financing opportunity will be customized for your situation.

Unless you have over a 700 fico score and show you make a lot on your personal tax returns you’ll at least be expected to do one of, or a combination of, the following things to secure an equipment leasing deal:

 

  • Pay first and last payment upfront.
  • Pay a deposit upfront.
  • Larger monthly payments.
  • Offer collateral.

 

Depending on where your credit score is at and how many years of operation your business has been in, you might have to combine some of the alternatives above to secure a deal.

This helps a financier reduce the overall risk associated with providing equipment leasing for new businesses.

How Important Is the Financing to Your Business?

 

Some businesses are able to get away without getting any significant upfront funding to get their business moving.

However businesses that require significant startup costs, like those in construction and farming, typically need a lot of startup funds and leases to get all of the equipment they need.

This is why equipment leasing for new businesses is so important: it gives you the resources necessary to get started and generate a profit.

Final thoughts on a new business being out of luck for equipment financing

It's possible for entrepreneurs to get all the equipment financing they need as long it makes good business sense. 

Among the financing websites on the internet that offer start up equipment financing is Trust Capital USA

Trust Capital uses a simplified application process to get you the financing that you need as fast as possible.

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