Setting a business brings along a lot challenges and as the owner, you need to be prepared to face up to them. When it comes to matters of business financing, purchasing equipment can prove to be a problem since it requires a huge sum of money. Thankfully, there is an alternative to purchasing equipment. This is known as business equipment lease financing.
Lease financing is the perfect solution because it enables a business owner to stretch the available cash fund on other aspects of managing the business instead of spending a high percentage solely on equipment.
Equipment Lease – An Alternative to Business Loans Simon Arias
True, banks provide business loans that can be used in purchasing equipment. However, getting approved for a bank loan is not always that easy. This is especially true if you are an entrepreneur who has just started your company.
Banks and commercial lending companies generally impose rigid standards in financing new businesses. Needless to say, lenders want to make sure that their customers will be able to pay back their loans according to their terms. To apply for a business loan, you must be able to submit all the necessary paperwork and provide collateral as a guaranteed for your debts. Even after completing all requirements, it might take some time before your funds get released.
On the contrary, the process of applying for a business equipment lease is more quick and easy. If you are a new business or has been in operations for less than 2 years, then equipment lease financing can be a great help for you. The important thing to remember is to find a lessor who can provide a lease program that complements your business.
Getting Approval for A Start-up or New Business Lease
What are the paperwork that you need to prepare when applying for equipment lease? The specific requirements may vary depending on the leasing company. Nevertheless, your personal financial statements, personal tax returns for the last 2 years, business plan, business summary, and lease proposal are basic requirements for many lease companies.
To ensure your approval, you must be able to show proof that you are managing a lucrative business and that you will be able to stay true to your repayment obligations. Again, having a good personal credit history is a big factor but is not always necessary since you can find leasing companies that offer lease especially for people with bad credit. If you have a history of bad credit, don’t forget to send a letter of explanation along with your lease application to give your lender background information about your credit situation.
Do not numerous requests to different equipment leasing companies at once. Always look for a leasing company that provides service to new or start up businesses. Remember, some lessors exclusively provide lease for established businesses. Submitting your application to the wrong lease provider may only cause your application to be declined which could send out the wrong impression to other potential business equipment lease providers.