In this guide
1. Time in business
Lenders see established businesses as lower risk. Businesses operating two years or more generally have the most options. Newer businesses can still qualify, but usually need stronger credit, a down payment or relevant industry experience.
2. Credit
Expect lenders to look at the owners' personal credit and, for established companies, business credit. Late payments, collections and high card balances can limit options. Check your credit report for errors before applying.
3. Revenue and bank statements
Recent business bank statements show lenders your real cash flow. They look at deposits, balances and signs of trouble such as frequent NSF (non-sufficient funds) charges. Larger requests may also need financial statements or tax returns.
4. The equipment
Because the equipment secures the financing, its type, age, condition and resale value matter. Equipment that holds its value, such as popular truck and excavator models, is generally easier to finance than highly specialized or very old equipment.
5. Down payment
A down payment shows commitment and lowers the lender's risk. Even a modest amount can improve your approval chances and terms, particularly for newer businesses or used equipment.
6. The seller and paperwork
Dealer purchases are usually the simplest. For private sales, lenders typically want a bill of sale, serial numbers, photos and proof the seller owns the equipment free and clear. In BC, that's usually confirmed with a search of the Personal Property Registry.
7. Existing debt
Lenders check what you already owe and whether your cash flow can handle another payment. If you have other equipment loans with a good payment history, that can actually help.
Your checklist
- Quote, invoice or bill of sale
- Last 3 to 6 months of business bank statements
- Business legal name, address and years in operation
- Owners' names and ID
- Financial statements or tax returns for larger amounts
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