For some borrowers with bad credit, equipment financing without a credit check may be a potential solution. In reality, most lenders will require a credit check to extend financing. While financing that does not require it may be difficult to find, we have compiled a list of three options for no credit check equipment financing.
We chose Smarter Finance USA as our best overall solution for bad credit equipment financing. Borrowers with at least a 550 credit score can apply online within minutes, with approvals in as little as one hour and financing as soon as the same day.
Top 3 Equipment Financing Bad Credit Options
Why No Credit Check Equipment Financing Is Hard to Find
Typically, business owners looking for no credit check equipment financing are doing so because they are concerned their personal credit is not good enough to qualify for a traditional loan. The hope is that a lender will instead lend on the strength of the business. However, a business’ finances only tell part of the story, and so lenders evaluate a borrower’s personal credit score to help determine risk.
That is not to imply that equipment financing without a credit check does not exist. There are lenders who will take on the elevated risk of writing loans without first checking the credit of applicants. The catch is that terms will be weighted significantly in favor of the lender. High finance charges and significant down payments, as well as the potential of needing to pledge additional collateral, should give most business owners pause.
Is Bad Credit Equipment Financing Affordable?
In general, interest rates for equipment loans are less than 10%. Interest rates for bad credit equipment financing can often exceed 20%. This is because most lenders recognize that a piece of equipment needs to be able to pay for itself, and if the cost of financing that equipment’s debt exceeds the margin associated with that equipment, the business will struggle to stay current on payments.
When to Use Equipment Financing
Determining whether to use equipment financing usually comes down to whether the business can afford to purchase the equipment outright, and, if so, whether the business is still better off financing the equipment. An example would be an expanding business choosing whether to buy one piece of equipment outright or finance several new pieces simultaneously.
Some situations where financing equipment makes sense are:
- Cannot afford equipment outright: Many businesses cannot afford a one-time payment to purchase equipment. In this case, it is necessary to finance the majority of the equipment in order to continue conducting business.
- Maintaining cash on hand: It can be favorable to maintain cash in the bank for emergencies, payroll, and to ensure obligations are met during seasonal dips. Banks also like to see cash on hand to cover expenses for a period of time.
- Financing expansion: A business that can finance several pieces of equipment but only pay for one out of pocket may choose financing in order to scale the organization more quickly.
- Equipment is needed temporarily: This applies mostly to leases, which can be short-term arrangements where the equipment is turned in after it is no longer needed.
- Unexpected equipment failure: Unexpected equipment failure can be catastrophic for a business that is not prepared, and equipment financing may be the only available remedy to avoid a work stoppage.
Businesses should consider a couple of key factors when determining whether to finance equipment: whether the financing is affordable and the opportunity cost associated with not financing the equipment. If a business needs to turn down a job or slow down expansion due to not being able to purchase a piece of equipment, it may face significant loss compared to financing costs.
How to Finance Equipment With Bad Credit
Many equipment financing companies, including banks and alternative lenders, have minimum credit score requirements from which they don’t typically depart. If a lender requires a credit score over 620, the lender is unlikely to deviate from that requirement and issue financing to a borrower with a credit score lower than the stated minimum.
Fortunately, there are many lenders that will work with borrowers with bad credit, including equipment leasing companies that will lease equipment to borrowers with a credit score in the low to mid-500s. Typically, lenders that are willing to work with lower credit scores will want to see minimum annual revenues between $100,000 and $250,000, and at least two years in business.
How We Evaluated Equipment Financing Companies
In order to select the top companies for equipment financing, we measured a variety of different criteria, and selected our finalists from a range of companies offering equipment leasing, equipment loans, small business term loans, and lines of credit. We selected the top three companies from a list of more than 20 different companies that offer a variety of financing options.
The criteria we used to evaluate equipment financing companies are:
- Qualification requirements: 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 the 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.
Minimum underwriting guidelines are a critical piece of the puzzle when selecting the best equipment financing companies, but are not the only criteria to consider. We included a wide range of financing options to address multiple borrowing needs while focusing primarily on companies that offer financing to subprime borrowers.
Borrowers with at least a 550 credit score can apply online within minutes with Smarter Finance USA. If approved, you can receive financing as soon as the same day on equipment leases up to $250,000.
Smarter Finance USA: Best Overall Equipment Financing for Bad Credit
Smarter Finance USA is a well-known provider of equipment financing that offers relaxed credit guidelines and flexible repayment terms. With financing available between $2,500 and $250,000 and minimum credit requirements starting at 550, Smarter Finance USA offers a solution that will fit many borrowers’ needs.
Smarter Finance USA Types of Financing Available
The types of financing offered by Smarter Finance USA are:
- Equipment leasing
- Equipment loans
- Term loans
Smarter Finance USA is primarily focused on equipment financing and also offers term loans. Among the equipment financing options offered, equipment leasing features prominently. For most borrowers with bad credit, equipment financing will be accomplished with an equipment lease.
Smarter Finance USA Qualifications
One factor that makes Smarter Finance USA a good option for businesses looking for no credit check financing is its flexible underwriting guidelines. In fact, Smarter Finance does not list a minimum credit score or time in business, and instead states it has financed borrowers with no established credit, as well as borrowers with credit scores in the low 500s. That stated, a credit check will still be required to obtain financing.
What Smarter Finance USA Is Missing
While Smarter Finance USA has published many helpful articles regarding equipment financing, borrowers looking for an online lender that offers transparent rates and pricing on its website will find it lacks critical details. This isn’t necessarily a red flag, as not all lenders list their rates and terms on their website, but borrowers should request this information early in the process to avoid surprises.
Smarter Finance USA Reviews
Most reviews for Smarter Finance USA are positive, with reviewers noting an experience marked by a low-pressure, professional approach, as well as an ability to finance deals that other lenders were not able to do. As of writing this article, no negative reviews of Smarter Finance USA were found online.
How to Apply With Smarter Finance USA
For approvals in as little as an hour and funding as soon as the same day, borrowers with at least a 550 credit score can apply with Smarter Finance USA and receive up to $250,000 in equipment financing.
US Business Funding: Best for Businesses With $250,000+ in Revenue
US Business Funding is a business loan broker that provides borrowers access to a lending marketplace. Offering a variety of different financing options, its primary focus is providing equipment financing and operating capital to small and mid-sized businesses. US Business Funding is a good fit for borrowers with bad credit if the business can show strong revenue and two years or more in operation.
US Business Funding Types of Financing Available
The types of financing offered by US Business Funding are:
- Equipment loans
- Equipment leases
- Working capital loans
- SBA loans
US Business Funding’s funding options are aimed primarily at equipment financing and working capital needs. For most borrowers financing equipment with bad credit, equipment leases will offer the highest chances of approval; however, borrowers can also explore loan options with a single initial credit application.
US Business Funding Qualifications
Business owners with a credit score as low as 500 can apply for financing with US Business Funding for an equipment lease. However, the company requires at least $250,000 in annual revenues and two years in business in order to qualify for funding. Additionally, US Business Funding will finance both new and used equipment, making this a solid option for businesses that wish to save money by purchasing secondhand equipment.
What US Business Funding Is Missing
US Business Funding is a great option for businesses that want to compare multiple lending offers, and is well-positioned to fund businesses with strong revenues and two or more years in operations. Businesses that are not able to meet these criteria will want to explore options from other providers, including Smarter Finance USA, which does not list minimum annual revenue or time in business requirements.
US Business Funding Reviews
US Business Funding enjoys generally favorable reviews, earning over 4 stars on average across online review sites. Positive reviews note a quick approval and funding process, and call out professional interactions, while some negative reviews note that marketing emails and some sales interactions may come off as aggressive.
How to Apply With US Business Funding
For fast approvals and funding as soon as the same day on equipment up to $2 million, business owners with annual revenues of $250,000 or more can apply with US Business Funding.
Guidant Financial: Best for Entrepreneurs With Eligible Retirement Funds
Guidant Financial is a financial services company specializing in Rollovers for Business Startups (ROBS) funding. With a ROBS, there is no credit check, as funding is obtained by rolling over retirement funds from an existing retirement account. Owners and entrepreneurs hoping to fund a new or existing venture may wish to explore a ROBS structure with Guidant, provided they have at least $50,000 in eligible retirement funds.
Guidant Financial Types of Financing Available
The types of financing offered by Guidant are:
- SBA loan consulting
- Unsecured credit
In addition to ROBS, Guidant also offers SBA loan consulting services, offering to guide borrowers through the SBA loan application process and mediate between borrowers and lenders in an effort to select the best funding. While Guidant is only one of many providers offering ROBS structures, it has consistently been named Fit Small Business’ Best Overall ROBS Provider.
Guidant Financial Qualifications
Qualifying for a ROBS is not based on credit. It’s not a loan, but rather an investment of one’s own retirement funds. However, there are some qualifications to meet. First, entrepreneurs will need to ensure they have at least $50,000 in eligible retirement funds available. Additionally, prospective business owners will need to work for the business on at least a part-time basis, and the business will need to be located in the U.S.
Other restrictions apply, and interested entrepreneurs will want to research the structure thoroughly as well as understand ongoing requirements unique to this type of funding. Guidant offers initial consultations to determine if ROBS is a viable structure, and also offers access to ERISA attorneys along the way to ensure compliance.
What Guidant Financial Is Missing
Guidant is highly experienced in fulfilling ROBS structures for existing business funding as well as startups, and it has a successful track record of helping entrepreneurs access funding through other programs. Where it falls short is access to funding intended specifically for equipment. For businesses that do not need high amounts of funding, or will not be using ROBS to fund, Guidant is not well-positioned to assist.
Guidant Financial Reviews
Guidant receives mixed reviews online. Positive reviews reference knowledgeable staff throughout a complicated process. Negative reviews are largely focused on the company’s 401(k) recordkeeping services, and reference poor communication and long hold times. Some reviews have been responded to by Guidant, indicating they have been unable to find a client record, or suggesting that a reviewer may have them confused with a similarly named business.
How to Apply With Guidant Financial
Entrepreneurs with at least $50,000 in rollable retirement funds can request more information from Guidant Financial, and connect with a senior financing consultant for a free consultation as quickly as the same day.
Alternatives to No Credit Check Equipment Financing
Several alternatives to equipment financing exist based on the business’ needs and qualifications. In some cases, businesses may not be able to qualify for equipment financing and may instead need to turn to some other financing methods, like invoice financing or a short-term loan. Or, a business may find that the equipment is only needed short term, in which case it may be appropriate to rent.
No Credit Check Equipment Financing Alternatives
Type of Financing
Business Line of Credit
Flexible financing for equipment and other needs
Companies with $25,000 or greater in monthly invoices
Short-term equipment needs
Business Line of Credit
Borrowers not able to qualify for another type of equipment financing may wish to consider a business line of credit. APRs on lines of credit may range between 10% and 120% on lines up to $250,000, which will vary depending on borrower and business qualifications. Because it’s a line of credit, once the draw has been paid down, it can be used again for another equipment purchase or other needs.
To find the best business line of credit, borrowers will want to consider their minimum qualifications, as well as how much they need to borrow and for how long. BlueVine, Fundbox, and Kabbage are all known for competitive business lines of credit. Among them, Fundbox is probably the best option for borrowers with bad credit, as it has no minimum credit score requirement and some of the lowest costs of capital.
For businesses that invoice as least $25,000 each month, invoice factoring is another option, and one of the only financing options where the borrower’s credit isn’t a critical consideration. Instead, invoice factoring depends on the creditworthiness of a business’s customers. Typical APRs range between 28% and 60%, and funding is often available within one to three days of being approved for financing.
Choosing the best invoice factoring company is critical, as a business is effectively turning over the collection of its invoices to the factor. Some invoice factors that borrowers should consider include Paragon Financial Group, which offers non-recourse factoring between $30,000 and $10 million, and BlueVine, which offers factoring from $5,000 to $5 million.
Depending on the length of time the equipment is needed and the type of equipment, business owners should consider whether equipment rental is the right option. While many equipment rental companies may require a soft credit check to rent equipment, it will not impact rental rates and usually does not influence whether or not the equipment will be rented.
Finding the best equipment rental company may come down to a mix of service, rates, and geography. There are several reputable nationwide equipment rental companies, among them United Rentals and Sunbelt Rentals. However, there are many more local rental companies that are worth consideration, as well as some brands that rent equipment, like Caterpillar.
How to Improve Your Equipment Financing Application
If a business can’t show strong minimum annual revenues or doesn’t have enough time in business, there are other ways to improve the chances of approval. In fact, even a business that can meet those two requirements can significantly improve the chances of approval by taking a few key steps.
Some ways to improve the approval odds for an equipment financing application are:
- Find a co-signer: Bringing on a co-signer with strong credit can give the financing company additional confidence. This tells the lender that if you don’t make the payments as agreed, someone else will.
- Provide additional collateral: Businesses with significant unleveraged assets may be able to secure financing by offering them as collateral to the lender, should the business default.
- Repair credit report inaccuracies: Borrowers should take action to repair any inaccuracies contained on their credit report, especially any late payments, reports of liens, or judgements, that aren’t accurate.
- Consider using a loan broker: Working with a business broker will allow a larger group of lenders to consider your application for equipment financing, creating better odds of approval, and allowing the borrower to choose the offer with the best terms and rates.
Soft Credit Check vs Hard Credit Check
Soft credit checks are typically associated with prequalifying for offers, and because they are not associated with a new application for credit, do not impact a borrower’s credit score. It is common for lenders to use a soft credit pull to determine what types of debt or credit a borrower might qualify for.
A hard credit check is performed when a borrower submits an application for new financing. Because a hard credit check can negatively impact a borrower’s score and report, borrowers are advised to limit new applications for credit. Working with a business loan broker is one way for a borrower to explore a variety of financing options with a soft credit pull before submitting an application for credit, which will result in a hard credit pull.
Ultimately, small business owners who are searching for no credit check equipment financing may be disappointed to learn that it is largely nonexistent. However, for borrowers with bad credit, equipment financing options do exist. The type of equipment, as well as how long it will be used, are important factors for businesses to consider when choosing how to finance equipment.
We chose Smarter Finance USA as our best overall solution for equipment financing with bad credit. Borrowers with at least a 550 credit score can apply online within minutes, with approvals in as little as one hour and financing as soon as the same day.