-
Under 700 FICO EQUIPMENT FINANCING
Can i get approved for equipment financing if I have under 700 credit score. I have a hard worker and my own construction business. I have 630 credit score. I owned one apartment building before in 2005 and foreclose in Chicago but do not have bankruptcy. I helped build a new house, and did many construction of houses. I have experience with condos and lofts in Chicago and downtown since 1994, What do I need to get financing for equipment. I need bobcat, trailer, enclosed and open trailer, Ford 350 utility pick up truck, tractor, snow plow for winter, and other tools and machinery for me and my brothers to run our concrete, construction, landscaping, and snow plow business in Chicago. A loan officer told me about http://www.lendingnetwork.org.
Hector Munoz
-
2 Replies
-
Based on the data you gave, here is a diagnosis of your situation and what you may require for equipment financing:
FICO Score:
It falls short of 700 but not too bad. The 630 credit score might make financing difficult, but it is possible.
Lenders are often willing to fund equipment purchases with scores above 600, especially when other strong factors are involved.
Business Experience:
You have been in construction since 1994, which is a huge positive.
Working on different types of projects, such as houses, condos, and lofts, will further strengthen your application.
Current Business:
Being an owner of a construction company plays into your favor when applying for equipment loans.
Past Financial History:
Although the 2005 foreclosure could be seen as a red flag, its relatively old age means it may not have much weight against you.
The absence of bankruptcy is a good thing.
Equipment Needs:
The list of specific equipment (bobcats, trailers, trucks, tractors, snow plows, etc.) demonstrates clear use in business activities.
How to improve your chances of approval
Business Plan: Draft a detailed business plan showing how the equipment will be deployed and how revenue will be earned to grow the company.
Financial Statements: Gather recent financial statements from the business and tax returns.
Cash Flow Projections: Show how the loan will be repaid by indicating projected cash inflows from operations over time.
Down Payment: Be prepared to make a large down payment, as lower credit scores pose higher risks to lenders.
Collateral: Consider providing additional forms of collateral if available or requested by underwriters reviewing the application package
Personal Guarantee: Offer a personal guarantee if required by the lender during the underwriting process
Co-signer: Find someone with better credit than yourself who can co-sign on this loan agreement. This makes it less riskier than giving money alone because now they would also be held accountable should anything happen where one party fails to pay back the agreement terms.
Alternative Lenders: Shop around different financial institutions such as credit unions, community banks, etc, which may offer more flexible terms when it comes time for funding approval decisions.
Lease Options: Consider leasing the equipment if buying presents too many obstacles due to strict underwriting guidelines associated with lower scores on this type of financing option request that was made.
Improve Credit Score: Take some time to work on building up your personal FICO score so that the next time around, lenders will offer better terms. They look at higher scores more favorably than lower ones because they are usually considered high-risk individuals.
Document Your Experience: Provide detailed information about your previous projects and the construction company’s current operations and structure. With your experience and specific business needs, you will receive financing, especially if you have a strong cash flow. It would help if you talked with a financial advisor or broker specializing in equipment loans for construction companies like yours.
-
Equipment Financing and Leasing with No Money Down
Equipment financing and leasing with no money down is an eye-catching scheme for businesses wishing to procure vital equipment without making an upfront capital investment. This financial tactic lets companies keep the necessary tools and machinery for operation and expansion while saving their cash flow.
Understanding Equipment Financing and Leasing
Equipment Financing
Definition: Equipment financing refers to gaining a loan used specifically for purchasing equipment, which acts as collateral until it is paid off; thus, the lender retains a security interest over such items.
Ownership: The borrower becomes the owner of all the equipment from its inception but makes monthly installments to repay the debt.
Terms: Generally, loans last between two and seven years, depending on the kind of machines being financed and the different lenders’ policies.
Equipment Leasing
Definition: This concept is quite similar to renting because one gets into possession through making regular payments over some time frame without necessarily owning them at any point in time after that – it could be said that they are only borrowed temporarily;
Types of leases:
Operating Lease: This is a short-term lease in which the lessor remains the rightful owner throughout; the lessee can return or upgrade this item when the agreement period elapses.
Finance Lease (Capital Lease): This is a long-term rental agreement that functions more like borrowing money from a bank via loan facilities; here, enterprises have options whether or not to buy out the leased property at the end date, usually paying a small amount known as a “bargain purchase option.”
Flexibility: With technological advancements happening very frequently nowadays, a car might become outdated within just a few months after purchase, but if you lease, there will always be a chance for upgrading whenever needed, so flexibility becomes a key advantage under such circumstances, too.
Benefits of No Money Down Options
Preserving Cash Flow
Liquidity: Keeping reserves untouched thanks to the absence of an initial deposit required when going in for a contract may turn out to be an extremely important factor aimed towards meeting day-to-day needs as well as covering unexpected expenses that could arise from time to time;
Investment Opportunities: Businesses can channel saved funds into other areas, such as human resource development, marketing, or increasing stock levels.
Access to Equipment
Immediate Use: Immediate possession is guaranteed once terms are agreed upon; therefore, there is no need to wait until enough money has been set aside as a down payment before being allowed to take home needed assets;
Competitive Edge: If only one company within an industry uses the latest technologies while others continue using outdated ones, it automatically gains a competitive advantage over its rivals by working smarter, not harder. This improves efficiency levels, leading to higher productivity rates.
Tax Benefits
Deductions: Usually, lease payments and interest paid on loans taken qualify as deductible expenses, which implies that they might end up reducing taxable income considerably for most enterprises involved in such transactions;
Section 179 Deduction: This allows firms purchasing financed equipment to benefit from deducting the whole purchase price immediately instead of spreading it over several years, thereby giving them immediate relief on their tax obligations.
Potential Drawbacks
Higher Costs
Interest Rates: Normally, lenders charge higher interest rates whenever there is no upfront payment made since this move helps them offset risks associated with lending money without getting anything tangible return initially;
Total Payments: Eventually, financial costs incurred while financing or leasing without providing cash at the beginning could exceed those incurred when some portion had been paid upfront. A capital contribution may be required because the interest charged will always accrue on the remaining balance.
Qualification Criteria
Credit Requirements: Strict credit criteria must be met by businesses seeking no money down financing options, thus making it difficult for new ventures lacking strong financial backing to meet such demands from potential creditors who might be willing to lend without security against default risk;
Lender Terms: In addition to the usual conditions imposed by lenders, additional requirements may also need to be satisfied before approval is granted. These include but are not limited to, personal guarantees, certain individuals acting as co-signatories on the enterprise’s behalf, or even sharing profits generated by leased equipment.
Key Considerations
Assess Your Business Needs
Evaluate Equipment Necessity: Determine whether these machines are necessary for the smooth running of daily activities within your organization, considering the cost associated with acquiring them against the benefits derived there;
Future Growth: Find out how much impact investing in such items will have on future growth prospects and revenue potential over time compared to other alternative investments available at the present moment.
Compare Financing and Leasing Options
Terms and Conditions: Carefully analyze various terms interest rates together with policies set by different lenders offering equipment finance schemes or leasing services so that you can make informed decisions based on the best deals available.
Total Cost of Ownership: Calculate total expenses incurred under different scenarios where all relevant costs associated with ownership have been considered, i.e., the financing versus leasing option must be selected, which is cheaper in the long run.
Find Someone Who Knows
Money Person: Ask a money person or tax man about each option’s money and tax benefits.
Lawyer: Have a lawyer look at the lease and loan agreements to ensure you know what’s happening. Equipment leasing and financing without any cash upfront can be great for businesses needing necessary equipment while preserving liquidity. Nevertheless, companies must know the risks, rewards, and costs before considering such an offer. Therefore, by doing extensive research based on this issue and seeking advice from professionals in the field, enterprises can make decisions geared towards attaining their operational and financial objectives.