Equipment financing for bad credit is challenging; however, it allows businesses to access needed equipment that can’t be purchased outright. Borrowers can work with a co-signer, or make a larger down payment on an equipment lease or loan in order to improve their chances of being approved for funding.
We recommend Smarter Finance USA because of its straightforward approach to equipment leasing and accessible underwriting guidelines, allowing equipment financing with bad credit for borrowers with a credit score of at least 550. You can learn more about Smarter Finance USA and apply online.
Top 6 Equipment Financing Companies for Bad Credit 2019
Company | Best For |
|---|---|
(Best Overall) Equipment financing for bad credit | |
Startups with bad credit needing equipment financing | |
High risk equipment financing | |
Borrowers with bad credit needing access to working capital | |
High revenue businesses with cash flow issues | |
Established businesses that need flexible financing |
How Equipment Financing For Bad Credit Works
Financing equipment is a simple method to ensure that you can obtain the tools your business needs while avoiding large outlays of capital. In many cases, financing equipment can be a simple process; however, with bad credit, there are several difficulties that may arise.
Would-be business owners with less-than-perfect credit should know that many equipment financing companies have minimum financing guidelines that may prohibit them from lending to small business owners with subprime credit. There are several ways to get the financing you need, even with bad credit, but you should be ready to put more money down upfront and will need to pay more attention to the type of equipment you’re financing as well.
When to Use Equipment Financing With Bad Credit
Choosing whether or not to finance your equipment is an important business decision, and can help you build credit and improve your financial situation. In order to make the right decision, you will want to weigh the benefits of equipment financing such low monthly payments against the disadvantages, like higher cost of ownership.
Some of the reasons for your business to finance equipment are:
- Improve cash flow: You might have the money to buy the equipment now, but financing it allows you to use that money for payroll and other critical expenses.
- Build credit: Financing your equipment instead of paying cash gives your business a critical opportunity to build credit.
- Get the equipment sooner: If an important piece of equipment fails, you may not have the cash to replace it right away, so equipment financing can help you bridge the gap.
Knowing when to finance equipment, especially if you have bad credit, will help you to make sound financial decisions for your business. Even if you have the money to buy equipment outright, borrowing allows you to cover your other obligations like payroll and lease payments. Equipment financing may also be the right decision if you don’t have the cash to purchase right now, and risk missing out on revenue the equipment generates.
How We Evaluated Equipment Loans for Bad Credit
In order to choose the best companies for equipment financing with bad credit, we measured a variety of different criteria, selecting from a range of companies offering equipment leasing, equipment loans, small business term loans and lines of credit. We selected the top six companies from a list of over 20 different companies that offer equipment financing options for those with subprime credit.
Some of the criteria we used to select the six best companies offering equipment financing for bad credit:
- Underwriting guidelines: Each provider’s minimum underwriting guidelines were assessed, and providers with strict guidelines were excluded.
- Type of funding: The type of funding such as equipment leasing, equipment loans, and term loans, and the scenarios addressed like short-term needs and working capital.
- Minimum revenue: Whether the provider required minimum revenue, and how that impacted total funding, was analyzed.
- Repayment terms: The frequency and type of repayment terms were factored in, with weight given to lenders with greatest flexibility.
- Cost of financing: The overall cost of financing, including prepayment penalties and additional fees, was considered, and lenders with unreasonable costs were excluded.
- Customer reviews: The online reputation for each lender was considered, and we excluded lenders with overwhelmingly negative reviews, where another more highly regarded option was available.
Understanding minimum underwriting guidelines is critical, and more so when selecting the best equipment financing companies for bad credit, but it is not the only criteria to keep in mind. In addition to excluding companies with strict lending guidelines, we also evaluated the type of funding available and its applicability to equipment financing.
Based on our criteria, the best equipment financing option for business owners with bad credit is Smarter Finance USA. Smarter Finance USA offering equipment leasing to borrowers with at least a 550 credit score. Visit their website to get prequalified in minutes and receive funding as quickly as the same day.
Smarter Finance USA: Overall Best Bad Credit Equipment Financing
Borrowers looking for equipment leasing or other financing with bad credit have likely come across Smarter Finance USA in their search. They make our list due to an upfront approach to a sometimes murky financing product as well as their relaxed credit guidelines. Borrowers who need between $2,500 to $250,000 with at least a 550 credit score, as well as access to additional working capital, should consider Smarter Finance USA.
Smarter Finance USA Equipment Lease Costs
Typical costs on an equipment lease from Smarter Finance USA are:
- Interest rate: 6% – 30%
- Prepayment penalty: Varies depending on lease type
- Additional fees: Additional fees, including lease origination fees, will vary by lease
Like many equipment leasing companies, Smarter Finance USA does not share its interest rates and other fees online. It has shared that its rates for well-qualified borrowers are “close to bank rates” and that borrowers with challenged credit should expect higher interest rates, ranging from 15% to 30%, along with a larger down payment, which can be up to 50% in some cases.
Smarter Finance USA Equipment Lease Terms
The terms for an equipment lease from Smarter Finance USA are:
- Funding amount: $2,500 – $250,000
- Term length: 12 – 84 months
- Repayment frequency: Weekly and monthly programs available
Offering flexible and simple equipment lease terms, Smarter Finance USA will fund leases for as little as $2,500 all the way up to $250,000 through an application only lease, meaning no additional documentation is required. Term lengths range between one to seven years and a variety of creative repayment options are available, including deferred and seasonal payments.
Smarter Finance USA Equipment Lease Qualifications
Minimum qualifications for an equipment lease from Smarter Finance USA are:
- Personal credit: 550+ ADD
- Time in business: Startups OK
- Annual revenue: N/A
- Collateral: Equipment being financed acts as collateral; UCC filing may apply
- Personal guarantee: Yes, from owners with 20% or greater stake
Although Smarter Finance USA stops short of setting a minimum personal credit score in their online documentation, they have shared that, on average, a minimum credit score of 550 is necessary in order to obtain funding. Unlike many other equipment financing companies, Smarter Finance USA will work with startups, and does not set a minimum annual revenue, choosing instead to base credit decisions on the larger financial picture.
Additional Financing Provided by Smarter Finance USA
The types of financing available from Smarter Finance USA are:
- Equipment leasing
- Equipment loans
- Term loans
Smarter Finance USA offers a variety of equipment financing options, including equipment leasing, equipment loans for bad credit, and term loans. For term loans, borrowers must have at least two months in business. Approvals are available for good, fair, and challenged credit.
What Smarter Finance USA is Missing
While Smarter Finance USA offers a tremendous amount of background on qualifying for equipment financing and working capital loans, they do not publish rates or minimum qualifications on their websites. Borrowers should seek to understand rates and borrowing costs early on. With flexible credit guidelines and creative repayment options, Smarter Finance USA is in a good position to help your business successfully obtain the equipment you need.
Smarter Finance USA Reviews
Smarter Finance USA enjoys generally positive reviews from customers, as well as an A+ rating from the Better Business Bureau, with no customer complaints recorded. On Google, they have a 4.7-star rating as of writing this article, with positive reviewers remarking on their professionalism, transparency, and tenacity in getting tough deals done.
How to Apply with Smarter Finance USA
Businesses can get approved in as little as one hour through Smarter Finance USA for up to $250,000 with only an application, and receive funding as quickly as the same day.
eLease: Best for Startups with Bad Credit
eLease is an alternative lender that offers equipment financing programs and working capital loans. It makes our list for the variety of leases it offers as well as its willingness to work with borrowers with less than perfect credit. Borrowers who are unable to meet the minimum qualifications for other lenders, as well as those who need access to working capital, should consider eLease.
eLease Equipment Financing Agreement Costs
Typical costs on an equipment financing agreement from eLease are:
- Interest rate: 5% – 35%
- Prepayment penalty: May vary
- Additional fees: Administrative fee
eLease’s interest rates will be similar to bank rates, and typically will start around 6% for well-qualified borrowers. If you’re borrowing with poor credit, expect interest rates to start at 15% and perhaps go as high as 35%, depending on the amount of money you are able to put down. Down payments will typically range from 10% to as high as 50%, depending on the borrower’s qualifications.
eLease Equipment Financing Agreement Terms
The terms for an equipment financing agreement from eLease are:
- Funding amount: $3,000 – $500,000
- Term length: 24 – 60 months
- Repayment frequency: Monthly
The minimum funding amount for an equipment financing agreement is $3,000 and goes up to $500,000. eLease states that soft costs such as delivery and installation can be rolled into the equipment financing. Terms range from two to five years, with repayment due monthly. Businesses looking for shorter terms may want to consider a provider like Smarter Finance USA, which offers terms starting at one year.
eLease Equipment Financing Agreement Qualifications
Minimum qualifications for an equipment finance agreement from eLease are:
- Personal credit: No minimum
- Time in business: Startups OK
- Annual revenue: No minimum
- Collateral: Equipment being financed acts as collateral; UCC filing may apply
- Personal guarantee: Yes
eLease does not list a minimum credit score requirement, saying it will consider all credit profiles. It stops short of promising to finance all borrowers; however, by omitting a minimum credit score it is likely to have more flexible lending guidelines. Startups are OK, so businesses that don’t have one to two years in operations should consider eLease for their equipment financing needs.
Additional Financing Provided by eLease
eLease offers equipment leasing, equipment financing agreements, equipment loans for bad credit, and working capital loans. Equipment financing agreements are essentially a hybrid between a lease and a loan, with the contract resembling a lease while the borrower is considered the owner of the equipment, similar to a loan.
The types of financing available from eLease are:
- Equipment financing agreements
- Equipment leasing
- Equipment loans
- Working capital loans
What eLease is Missing
eLease offers ostensibly competitive rates and some of the most flexible underwriting guidelines of the companies on our list, making them a top contender for borrowers with bad credit. One area they fall short is in length of repayment terms offered. Borrowers hoping to stretch financing out to get the lowest payments possible may want to consider another lender with terms longer than five years.
eLease Reviews
In general, eLease has a very light online presence, and borrowers may want to be wary of this. Existing reviews online are generally positive, but contain very little detail. eLease has an A+ rating according to the Better Business Bureau, with one customer complaint alleging delays on eLease’s end causing a deal to fall through. The complaint is listed as resolved.
How to Apply with eLease
Businesses needing between $3,000 to $500,000 in equipment financing can apply with eLease online to receive approval within one hour and funding as soon as the same day.
BlueVine: Best for High Risk Equipment
Some businesses may not be interested in equipment leasing for a variety of reasons, ranging from not being able to qualify to needing equipment that is considered “high-risk” and not fundable by some lenders. BlueVine offers competitive rates, flexible funding options, and reasonable credit guidelines, making it a great option for newer businesses that can’t qualify for term loans or other financing from traditional lenders.
BlueVine Term Loan Costs
Typical costs on a term loan from BlueVine are:
- Interest rate: 5% – 30%
- Prepayment penalty: No
- Additional fees: No
With fixed weekly rates ranging from 5% to 30%, BlueVine’s rates appear to be competitive in the alternative lender term loan space. Although BlueVine does not assess any prepayment penalty if a loan is paid off early, the full interest on the loan will still be due, making this a less attractive proposition. BlueVine does not charge any origination or other fees when making their loans.
BlueVine Term Loan Terms
The terms for a term loan from BlueVine are:
- Funding amount: $5,000 – $250,000
- Term length: 6-12 months
- Repayment frequency: Weekly
BlueVine term loans start at $5,000 and go up to $250,000 for either a six-month or twelve-month term. Once the borrower has repaid at least 50% of the original loan, additional funds may be borrowed. Repayments are made weekly for the length of the term.
BlueVine Term Loan Qualifications
Minimum qualifications for a term loan from BlueVine are:
- Personal credit: 600+
- Time in business: Six months
- Annual revenue: At least $100,000
- Collateral: UCC lien filing
- Personal guarantee: Yes
Borrowers with at least a 600 personal credit score, six months in business, and an annual revenue of $100,000 or greater can apply for a term loan with BlueVine. While BlueVine loans aren’t collateralized by specific assets, they do file a blanket UCC lien on business assets, which grants access to assets in the event of default. BlueVine requires a personal guarantee from all business partners with 20% or greater ownership in the company.
Additional Financing Provided by BlueVine
The types of financing available from BlueVine are:
- Line of credit
- Term loan
- Invoice factoring
BlueVine offers several different financing options, including business lines of credit and term loans, as well as invoice factoring. Invoice factoring can be an effective fit for businesses that need short-term access to capital, and have incoming invoices.
What BlueVine is Missing
BlueVine shines with simple, straightforward terms, quick funding, and flexible credit guidelines. However, its loan terms are short and its interest rates, which are charged weekly, can be high, especially for businesses with poor credit. Borrowers seeking access to flexible financing for equipment purchases and working capital may also want to consider OnDeck for longer terms.
BlueVine Reviews
Although BlueVine has only been around for about six years, it has racked up considerable experience serving small business owners with over $2 billion deployed to over 15,000 small businesses in that time. It enjoys a positive rating overall online, with 4.2 stars averaged on Google at the time of writing this article and an A+ rating from the BBB with three resolved complaints.
Customers who had a positive experience with BlueVine mentioned their excellent customer service, usefulness for short-term funding needs, and prompt and streamlined funding process. Although negative reviews are few, some reviewers cited unprofessional interactions when falling behind on payments, as well as some frustration with high interest rates.
How to Apply with BlueVine
Applying for a short-term loan up to $250,000 is simple. New users can visit BlueVine to fill out an application online, or apply using their QuickBooks online credentials, to receive same-day approvals and funding in as little as 24 hours.
OnDeck: Best Equipment Financing Company for Bad Credit for Working Capital
Borrowers with bad credit looking for flexible equipment and working capital financing may be looking for longer terms, which is where OnDeck shines. A relative veteran in non-bank online lending, OnDeck has been around since 2006 and offers direct lending to small businesses through term loans and lines of credit.
OnDeck Term Loan Costs
Typical costs on a term loan from OnDeck are:
- Interest rate: 9.9%+, average according to OnDeck is 48.7%
- Prepayment penalty: No; however, borrowers will pay the total interest due either way
- Additional fees: Origination fee up to 5%
OnDeck advertises its term loans with a starting annualized interest rate of 9.9%. As with all things finance, it’s important to read the fine print (when it’s available). In this case, OnDeck indicates that the average annualized interest rate for its term loan is 49.2% (as of writing this article) or about 25.6% simple interest rate. Borrowers can save on interest by paying off the loan early, which is not the case with all lenders.
On the subject of interest rates, it should also be noted that OnDeck’s rate excludes additional fees such as origination fees. Indeed OnDeck does charge an origination fee of up to 5%. Although this is an expensive method of borrowing money, subprime borrowers should expect to encounter higher lending costs, particularly with an unsecured term loan such as this.
OnDeck Term Loan Terms
The terms for a term loan from OnDeck are:
- Funding amount: $5,000 – $500,000
- Term length: Three to 36 months
- Repayment frequency: Daily or weekly
OnDeck offers term loans for as little as $5,000 and as much as $500,000 although the amount borrowers will be eligible for will depend greatly upon their personal and business qualifications. Terms can be as short as three months and as long as 36, making this an option to consider for borrowers who need a larger loan and want to spread out the payments a bit further.
As with many alternative loans of this nature, repayment frequency is scheduled either daily or weekly, which will vary based on your individual situation. Payments are deducted directly from your business checking account.
Minimum qualifications for a term loan from OnDeck are:
OnDeck Term Loan Qualifications
- Personal credit: 500+
- Time in business: One year
- Annual revenue: $100,000
- Collateral: UCC lien filing
- Personal guarantee: Yes
One of the most compelling factors weighing in OnDeck’s favor is its minimum criteria for lending. Businesses with at least one year of operations and annual revenue of $100,000 or more can qualify with a personal credit score of just 500. That’s the lowest eligible credit score on this list, so borrowers in the 500’s will want to give OnDeck a long look.
OnDeck may secure business assets, including a specific asset or assets, using a UCC lien. In most cases, OnDeck will require a personal guarantee from any partners with 20% or greater ownership in the business.
Additional Financing Provided by OnDeck
The types of financing available from OnDeck are:
- Term loans
- Lines of credit
OnDeck specializes in two types of business funding, term loans and revolving lines of credit. OnDeck’s term loan allows for access to a lump sum for equipment purchase, with scheduled payments until the loan is paid off.
What OnDeck is Missing
OnDeck is a competitive option for credit challenged business owners, and offers flexible terms for funding up to half a million dollars. They do not offer equipment loans, though the funds can be used to purchase equipment. Corresponding rates will likely be higher than comparable asset-based lending. Business owners with at least a 600 credit score may wish to consider an equipment lease in order to potentially reduce the costs of borrowing.
OnDeck Reviews
Reviews for OnDeck are very positive, and the company has an A+ rating and 3.5 stars from BBB. Business owners who had a positive experience with the lender mention the speed of funding, the professionalism of representatives, and the simplicity of the application process. OnDeck does have some detractors, and some reviewers have mentioned that the business can resort to aggressive tactics if you fall behind on your payments or attempt to modify your loan.
How to Apply with OnDeck
If you have at least a 500 credit score, a year in business, and $100,000 in revenue, you can apply online with OnDeck easily, with instant approvals available and funding in as little as 24 hours.
Paragon Financial: Best Equipment Financing Company for Bad Credit for Businesses with Cash Flow Problems
Paragon Financial Group is an alternative lender offering non-recourse invoice factoring. Paragon stands out from the crowd of invoice factoring companies by offering credit protection for unpaid invoices due to bankruptcy or other financial insolvency. Businesses that need a short-term loan to help finance equipment, and have at least $30,000 in monthly account receivables, should consider invoice factoring with Paragon Financial.
Paragon Financial Costs
Typical invoice factoring costs from Paragon Financial are:
- Factoring fee: 0.9% – 2.5%
- Prepayment penalty: No
- Additional fees: No
Paragon Financial charges a straightforward factoring fee of between 0.9% to 2.5% on factored invoices, which is applied for every 30 days that an invoice goes unpaid. In theory, that means that your actual interest on an invoice could be as low as 0.9%, although if you’re factoring invoices you likely aren’t receiving payments within that time frame in the first place, so the actual interest rate will vary.
Paragon Financial Terms
Invoice factoring terms from Paragon Financial are:
- Funding amount: 80% – 90% of your invoices, up to $10 million.
- Term length: Up to 12 months
- Repayment frequency: N/A
Paragon will fund up to 90% of a factored invoice, depending on the industry, from $30,000 up to $10 million. Once the invoice is paid, Paragon returns the remaining percentage, less the factoring fee. Invoice factoring is not a loan, so there is no typical repayment structure. Invoices may remain outstanding up to 12 months, although it’s unclear what happens if an invoice exceeds this period of time.
Paragon Financial Qualifications
Minimum qualifications for invoice factoring from Paragon Financial are:
- Personal credit: N/A
- Time in business: Startups OK
- Annual revenue: $360,000
- Collateral: Factored invoices act as collateral
- Personal guarantee: Yes
Rather than scrutinizing the personal and business credit of the business requesting invoice factoring, Paragon will analyze the credit ratings of companies that owe on factored invoices individually, and make its decision based on the financial strength and cash flow of those companies. For this reason, Paragon is a good resource for startups and business owners that don’t have otherwise strong credit.
What Paragon Financial is Missing
With competitive factoring rates and credit protection that shields your business from suffering if a customer becomes insolvent, Paragon represents a great option for businesses with strong cash flow. Like most invoice factoring companies, Paragon Financial does not service business to consumer (B2C) invoices, so B2C companies will need to explore other equipment financing options.
Paragon Financial Reviews
Reviews for Paragon Financial are generally positive, with the company netting over 4 stars across most review sites and an A+ from the BBB. Businesses that have left positive feedback for Paragon note long-term relationships and their satisfaction with the company’s customer service, with several reviewers specifically mentioning their relationship manager. A few negative reviews exist, including one existing customer who was dissatisfied that they were not able to help with factoring new invoices.
How to Apply with Paragon Financial
Businesses with at least $30,000 in monthly revenues seeking invoice factoring can apply with Paragon Financial Group by visiting its website, with approvals and funding available as soon as the same day.
Balboa Capital: Best Established Businesses with Bad Credit
Balboa Capital is worth consideration based on Its ability to work with companies with only one year in business, and its low minimum credit requirements, combined with a variety of different financing options. Business owners with a personal credit score of 600 or better and a year in business should consider Balboa Capital. Businesses that need access to working capital in addition to equipment financing should also give Balboa consideration.
Balboa Capital Rates and Fees
Typical costs on an equipment lease from Balboa Capital are:
- Interest rate: 5.5% – 30%
- Prepayment penalty: Yes
- Additional fees: No
Most business owners should expect an interest rate between 5.5% to 15%, although with poor credit, rates can very likely climb into the mid-20s, and may require a large down payment, of between 15% – 50% of the cost of the equipment. Balboa Capital may charge a prepayment penalty for some lending options, although it is not clear if this applies to its equipment leases.
Balboa Capital Terms
The terms for an equipment lease from Balboa Capital are:
- Funding amount: $3,000 – $250,000
- Term length: Two to six years
- Repayment frequency: Monthly
Balboa offers several application-only financing and flexible lease repayment options, including seasonal and deferred payments on equipment leases ranging between $3,000 to $250,000. Equipment lease terms may range between two and six years, with the maximum term varying based on the useful life of the equipment.
Balboa Capital Qualifications
Minimum qualifications for an equipment lease from Balboa Capital are:
- Personal credit: 600+
- Time in business: One year
- Annual revenue: $100,000
- Collateral: UCC lien filing
- Personal guarantee: Yes
Established businesses with less than perfect credit will find Balboa’s minimum credit guidelines refreshing. While Balboa doesn’t list a minimum, a score of 600 or better is recommended. Balboa requires at least one year in business, and will want to see at least $100,000 in annual revenues. A UCC lien filing on business assets may be required, and owners will need to sign a personal guarantee.
Additional Financing Provided by Balboa Capital
The types of financing available from Balboa Capital are:
- Equipment leasing
- Equipment loans
- Term loans
- Merchant cash advance
- Line of credit
Several distinct types of financing are offered by Balboa Capital: equipment leasing, term loans, lines of credit, and merchant cash advance (MCA). Most businesses looking for equipment financing will receive the best rates from Balboa with an equipment lease, and may wish to also consider equipment loans for bad credit.
What Balboa Capital is Missing
Balboa Capital offers flexible equipment leasing options for business owners with less than perfect credit, making them an excellent option for bad credit equipment financing. Only businesses with existing revenues of at least $100,000 will be considered for financing, meaning startups should consider another option, including taking a look at equipment financing options with Smarter Finance USA.
Balboa Capital Reviews
Online reviews for Balboa Capital are generally mixed, with the company earning an A rating from the BBB, and around 3 stars on average across review sites. Positive reviewers described the financing process as easy, and called the company responsive and professional. Negative reviewers pointed to aggressive sales tactics as well as the importance of closely reviewing the fine print.
How to Apply with Balboa Capital
Business owners wishing to apply for a flexible equipment lease with Balboa Capital can start by requesting a lease quote or filling out an online application with instant approvals available and funding as soon as the same day.
Bottom Line
Any of the six options we have discussed here are good options you can use to finance equipment with bad credit. If an equipment lease is a good fit for your needs and you have at least a 550 personal credit score, we recommend Smarter Finance USA. If you need to finance high-risk equipment or need access to working capital, however, we recommend BlueVine.
Smarter Finance USA is our top choice for equipment financing with bad credit. If you need access to flexible equipment leasing options, you can finance up to $250,000 with Smarter Finance USA application only. Unlike some other providers, Smarter Finance USA will work with you even if you have no business history.
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