Much like other short-term loans available in the business sphere. Equipment financing can do wonders for optimizing cash flow for a business. Any business owner can appreciate the utility in having cash-on-hand to pivot and take advantage of unexpected industry boons. Without having money tied up in long-term, high-interest loans, or big, single-payment purchases. All that’s left to do now is figure out what it takes to maximize your chances of qualifying for equipment financing.
Heavy Equipment Financing Breakdown
Specifically, the parameters of equipment financing will be different for heavy equipment than for your everyday, run-of-the-mill office appliances. The former tend to be considerably more expensive, which affects the lending structure. Whereas office appliances could be bought all at once upfront. Doing so with heavy equipment would seriously hamper your cash flow. It usually isn’t profitable to try to buy stuff such as forklifts and industrial generators all at once.
Important Metrics for Obtaining Equipment Financing
The first requirement to be met is the minimum credit score allowed to reliably garner you a nod from most lending institutions. FICO 600. If you’ve also been doing business for a calendar year or more, this heightens your chances even more. The higher your FICO, the better the interest rates and overall terms of your equipment financing deal.
Another metric is a cash flow that shows you can handle the monthly cost of the heavy equipment you lease. This cash flow should be positive. However, it doesn’t need to be stellar as long as your business has the revenue to match the purchase.
If the above two requirements fail, then equipment financing is still possible if you can render a big downpayment. As you shop around for a lender, you’ll find that the industry has a good deal of flexibility as pertains to equipment loans. Interest rate differences are just as applicable, however, as with other credit options.
Contact WCK Financial to learn more about our equipment financing program.