So, you’re new to the business, and it’s time to secure your first equipment finance loan. Congratulations! But not so fast… equipment loans can be hard to get for a business that’s less than two years into operations (read more on personal loans versus commercial loans here).
There are several steps you can take to put your best foot forward for securing your first equipment finance loan, even if you’re new to the biz. Here are three things to keep in mind. 1. Business Plan
Lenders often require you to complete a startup business questionnaire to help them determine the appropriate financing program for you. Be prepared to answer the following questions:
• Why are you starting the business?
• What kind of experience do you have in the industry?
• How will you establish your customer base or bring in business?
• How will your purchased equipment support the business?
• What other equipment is still needed, and how do you plan on paying for it?
2. Bank Statements
General rule of thumb is to provide at least three months of company bank statements. With this information, underwriters are looking to see that you can support the down payment required for financing. They also want to see at least 90 days-worth of payments saved in your accounts in the event that the business doesn’t perform up to expectation. If your business is so new the bank statements do not show any cash flow, or money set aside, you can provide personal savings account information.
3. Down Payment
Be prepared to put 10% - 20% down to start your financing. If you are able, the more money you can put down up front, the lower the interest rate is likely to be. It may also help the lender disregard limited credit or industry experience.
And of course, working with a company that specializes in equipment loans will always help get you on the right track. At Priority One, we partner with a variety of different lenders to seek out the best option for your business.