Heavy equipment financing bad credit: does it exist? Absolutely, and here are the best equipment lenders for good & bad credit.

Most companies, at some point or another, need equipment to start their business or want to upgrade their equipment in order to keep producing the quality of product or services that will keep them in business (or grow!).

However, when it comes to upgrading or buying your first piece of heavy equipment, few people often have the cash on hand needed to do so all at once.

In that situation, equipment financing is often the only option available.

Most people balk at the idea of financing and when the economy is in less than perfect condition, it can be a step that entails a great deal of worry.

This article is put in place to help with some of the unknown and misunderstood factors that can surround heavy equipment financing.

You may find that equipment leasing is a better option than purchasing, depending on what you personal circumstances are, and we will take a look at everything surrounding the both options to help you make a better informed decision.

Note:  We know equipment values. That’s all we do! Come see us if your lender requires an equipment appraisal or if you need to sell a piece of equipment.

How Does Heavy Equipment Financing Work Anyway?

There are a variety of options available to you when looking to finance equipment – we’ll help you navigate.

If you/your company has good credit, a loan can be secured for up to 100% of the cost on terms of roughly seven years to pay back.

Interest rates are lower than they have been in years, and many of the heavy equipment loans for these companies will take only the equipment as collateral for the loan.

More commonly, however, lenders will need a 20% down payment and will finance the remaining 80%, while you own the equipment from the start. With these types of loans, the collateral is, again, the equipment itself.

How Does Heavy Equipment Financing Work?

Choosing a seasoned loan specialist will also open doors to other lenders that can really expand the possibilities as well.

This makes it a lot easier to find a loan that suits your needs perfectly, no matter what they are. You may even be able to finance the costs of installation and freight as well, depending on what your loan expert is able to find for you.

Replacing old equipment, updating out of date equipment and adding to your current equipment stock are all good reasons to choose to finance.

Excellent credit is almost always necessary in order to secure a loan for heavy equipment, especially if you are in business for yourself. However, bad credit certainly does not negate financing as an option for your business (see below for companies that provide options for heavy equipment financing bad credit).

You may want to make note of the fact that having a bankruptcy on file can lessen your chances of getting a loan, as can the fact that your business is less than a year old or if you are unable to process customer payments via credit card.

How Does Equipment Lease Financing Work?

Leasing (renting, essentially) might be a better option if your company has no capital and it gives you a bit more flexibility than financing (purchasing) the equipment outright.

When leasing, you are generally not asked for a down payment, but if you are, it isn’t nearly as much as you would put down for a regular loan.

How Does Equipment Lease Financing Work?

Leasing usually allows you to finance 100% of the cost of the equipment, plus 20-25% more for expenditures such as taxes and delivery, also known as “soft costs”.

At the end of the lease, you then have the option to return the equipment or to purchase it for a small price if the principal has been completely paid off.

How Does Installment Equipment Financing Work?

Installment financing is, in essence, a type of lease sale. Financing takes place as a rent to own type agreement between two parties, with ownership of the equipment transferring to you after all payments have been satisfied.

Tax deductions for installment financing works the same as in leasing, however, equipment leasing takes twice as long to write off an asset.

How Does Installment Equipment Financing Work?

When leasing equipment, the depreciation is claimed by the lessor, while in installment financing, the depreciation is claimed by the user.

Installment leasing is done in short term increments for items such as small machinery and and moving vehicles, and there is also reduced initial cash outlays, as compared with leasing.

Heavy Equipment Leasing Vs. Heavy Equipment Loans

As you have seen in the previous paragraphs, there is a bit of a difference between getting a traditional loan for the purchase of heavy equipment and leasing it.

With a traditional loan, you will need to choose a bank, a private lender or some other well known entity with a history in good standing of offering loans for heavy equipment.

Heavy Equipment Leasing Vs Heavy Equipment Loans

You will need to have certain factors in place like:

  • Good credit history
  • A down payment
  • Ability to process credit cards for your paying customers
  • No bankruptcies on file.

If choosing to lease equipment, a many of these don’t factor in.

You usually don’t need a down payment, but you do usually have to return the equipment at the end of the lease.

There is an option in place for the purchase of the equipment at the end of the lease, however, once the principal has been paid off. This can become a real possibility if the addition of the equipment has a favorable outcome on your business during the terms of the lease.

Where To Find Heavy Equipment Financing

There are a couple of different ways to be financed once you have decided which route to go. The main two sources for this kind of financing are traditional lending and online or alternative lending.

Traditional lending offers the lowest interest rates available, some of which will be as low as 3 percent.

Where To Find Heavy Equipment Financing?

However, to get such a rate, your credit has to be impeccable.

You may be able to get around great credit by talking to your current lender, or one that you have business history with. They may be more apt to know of your situation, your payment habits and the overall outcome of lending you money.

Alternative lending may be one of the only options you have if you have any bad credit in your history, and you usually get approved and get your money much faster than with a traditional loan.

The downside of these loans is that the interest rate is much higher, usually topping out at between 20-30 percent.

Lenders that Offer Heavy Equipment Financing

(in no particular order)

1. StreetShares

StreetShares is a lender that generally provides loans from $2,000 to $100,000 with an APR of 9-40%.

Heavy Equipment Financing - StreetShares

Their loan terms, or the time you have to pay back the money borrowed, is from three to 36 months and you will usually have your money is one to five days from the time your loan is approved.

To qualify for a loan with StreetShares, you must meet the following criteria:

  • Personal credit score should be 600+
  • You must have been in business for over one year
  • You must have $25,000 in annual revenue
  • You must have no bankruptcies in the past three years
  • You must have no current tax liens or collections
  • You must not live in North or South Dakota, as StreetShares cannot lend in those two states.

2. OnDeck

OnDeck is another lender that gives loans from $5,000 to $500,000 with interest rates ranging from 9-98 percent.

Heavy Equipment Financing - OnDeck

Loan terms are three to 36 months, with your making payments on a daily or weekly arrangement. You can get your money in as little as twenty-four hours, however, it generally takes a few days.

In order to qualify for a loan with OnDeck, you must meet the following criteria:

  • Personal credit score should be 500+
  • You must have been in business for over one year
  • You must have $100,000 in annual revenue
  • You must have no bankruptcies in the past two years
  • You must provide personal guarantee

3. SmartBiz

SmartBiz offers loans from $30,000 to $350,000 with an APR of 7-8%, and you can take as long as ten years to pay the money back.

Heavy Equipment Financing - SmartBiz

You can sometimes receive your money in seven days, but the typical turnaround time is several weeks.

To qualify for a loan with SmartBiz, you must meet the following criteria:

  • Personal credit score should be 600-650+, depending on the amount of the loan
  • You must have been in business for over two years
  • You must have $50,000 in annual revenue
  • You must have no outstanding tax liens
  • You must have no bankruptcies or foreclosures in the last three years
  • You must have no recent charge-off’s or settlements
  • You must be current on government related loans
  • You must provide personal guarantee

4. Funding Circle

Funding Circle is a lender that offers loans from $25,000 to $500,000 with an APR of 7-36%.

The loan term is one to five years and you can expect to get your money in about ten days.

In order to secure a loan from Funding Circle, you must meet the following criteria:

  • Personal credit score must be 620+
  • You must have been in business for over two years
  • No minimum annual revenue is required
  • You must not have any bankruptcies in the past seven years
  • You must provide personal guarantee

5. Fundation

Fundation offers fixed rate loans from $20,000 to $500,000 with an APR of 7.99 to 29.99.

Heavy Equipment Financing - Fundation

It only takes about ten minutes to apply and you will know whether or not you’re approved in about 24 hours.

To qualify for a loan from Fundation, you must meet the following criteria:

  • You have have been in business for over two years
  • You must have at least three employees
  • You must have an annual revenue of $100,000
  • You must have good personal credit

6. Kabbage

Kabbage offers loans from $2,000 to $100,000 and you have between six and twelve months to pay back the amount you have borrowed.

Heavy Equipment Financing - Kabbage

Instead of having an interest rate, you must pay fees each month, from 1-12%.

It only takes a few minutes to apply for Kabbage and once you are approved, you have instant access to your money. Kabbage doesn’t consider credit, so it also makes our heavy equipment financing bad credit section below.

7. Accion

Accion is a nonprofit lender offering loans from $10,000 to $100,000 with an average APR of 10.99.

Heavy Equipment Financing - Accion

Applications are only filled out online and it can take up to a month to get an approval. The amount you can borrow, as well as the minimum requirements for doing so, vary by state.

Some of the most common requirement for securing a loan through Accion are:

  • Personal credit score must be 575+
  • You must provide proof of income
  • You must provide proof of sufficient cash flow

8. Crest Capital

Crest Capital, our personal pick, offers loans up to $1,000,000 and they have a wide range of terms, some of which include $1 purchase agreements, 10% purchase options, FMV (fair market value) leases, guaranteed purchase agreements as well as operating leases.

Heavy Equipment Financing - Crest Capital

You may not even need to show financial documents if you are borrowing less than $250,000 and your approval can come in as little as four hours.

In order to qualify for a loan with Crest capital, you must meet the following criteria:

  • Personal credit score must be 650+
  • You must have been in business for two years

Heavy Equipment Financing Bad Credit Lenders

(in no particular order)

You may be thinking that you are unable to secure a loan because your credit isn’t good enough, but that would be a false assumption. There are some specific lenders who reach out to those with bad credit and you may definitely want to look into the possibilities.

Bad credit is defined by FICO as:

…a credit score between 300 and 629 and it is usually a red flag for lenders who then see you as high risk.

They know that at some point in the past, you have either fallen on hard time or mismanaged your funds.

Alternative lenders, however, look to the strengths in your business and the upside found in your operating history rather than putting all the emphasis on your credit score. However, if you do find that you need alternative lending to secure financing, make sure you weigh all the options, looks at interest rates carefully and review the terms of the loan in great detail. Just because one facet of the loan looks good doesn’t mean that it is the overall best choice for your personal situation!

Some other things that make it a little easier to get financing when you have bad credit include getting a cosigner, offering a nice collateral, making a sizable down payment and showing strong revenue and profits for your business, which may make lenders a bit more lenient on credit history. It can also be helpful to know that it is easier to finance heavy machinery and trucks, more than anything else, when you have bad credit.

1. Kabbage

Kabbage, as listed above, also offers loans for customers with less than perfect credit, with interest rates from 32-108% with no personal credit score limit. Again, as with most loans secured by someone with bad credit, interest rates are always going to be much higher.

Heavy Equipment Financing - Kabbage

With Kabbage, you can sign up in mere minutes, have a nearly instant result and and you can link many of the services you use to run your business such as PayPal, Ebay, Etsy, Amazon and more.

2. Bluevine

Bluevine is a lender that requires a credit score of 530 or more and has interest rates from 17-60%.

Heavy Equipment Financing - Blue Vine

You can get approved by BlueVine in about twenty-four hours, draw your funds whenever you might need them and your credit replenishes with every payment that you make.

3. Smarter Finance USA

Smarter Finance USA works with an array of private sources, looking for the best possible financing for your situation.

Heavy Equipment Financing - Smarter Finance USA

Smarter Finance assists in finding loans for people with no credit, credit scores that fall below 500 and even those who have experienced bankruptcies and tax liens.

4. Allstate Capital

Allstate Capital can assist those with bad credit and can sometimes even help those who have been turned down for leases.

Heavy Equipment Financing - AllState Capital

They help those with bankruptcies, revolving debt, foreclosures, liens and even judgments, helping you to get the equipment you need in order to make money. It’s even possible to build your credit back up through making payments.

5. First Capital Business Finance

First Capital Business Finance offers loans for a vast array of heavy equipment and machinery and have a history of working with those who have less than perfect credit.

Heavy Equipment Financing - First Capital Business Finance

With a special program for companies who have been in business for more than five years, First Capital Business Finance can assist those with bankruptcy, repossessions and even tax liens.

6. Capital Solutions

Capital Solutions is a lending company that specializes in truck financing and works with those who have bad credit in order to help them get their business back on track.

Heavy Equipment Financing Bad Credit - Capital Solutions

Using a collateral based approach, they can help to overcome such credit obstacles as low credit, bankruptcies, repossessions, tax liens, high debt to income ratios and more.

7. WG Financing

WG Financing happily works with those who have a low credit score.

Heavy Equipment Financing Bad Credit - WG Financing

With a 75% approval rating, WG Financing works to get you approved within 48 hours for loans of up to $1,000,000 with no extra collateral needed.

Higher interest rates and liens on financed equipment are some of the things you might have to deal with, however.

8. National Business Capital

National Business Capital has a two minute application process with approvals in about 24 hours.

Heavy Equipment Financing Bad Credit - National Business Capital

They offer flexible terms and repayment options from one to five years, with affordable monthly payments.

With a 90% approval rate, they are happy to assist, even with leasing options, for just about any type of machinery you might find yourself in need of.

9. Small Business Funding

Small Business Funding thinks that you should be able to finance the equipment you need, even if you have less than perfect credit, especially if that score is related to personal matters instead of business.

Heavy Equipment Financing Bad Credit - Small Business Funding

Applying with Small Business Funding is quick and easy, approval can happen in just 24 hours and funding can reach you in ten days.

While this is a good option to go with, the overall loan will be more expensive and the repayment terms will be shorter, to offset the risk to the lenders.

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