Have you had some trouble obtaining financing for an excavator for your construction or excavation business? If so, you are simply not alone. In a response to America's housing related crisis, there has been a major credit contraction that has trickled down to every type of financing available-including financing an excavator.
There is however, good news. There are ways to get financing for your new or used excavator if you have bad credit.
First, if you have a Trans Union credit score of 600, there is a strong likelihood that you'll be able to purchase AND FINANCE an excavator from bank owned or off-lease inventory. Often times financing concessions are made by the bank or lender to enable them to quickly get the equipment off their books.
Some of the concessions they'll make includes the following:
• Lowering credit score requirements (600 at this point).
• No Bankruptcy requirements (except that it be discharged).
• No Time In Business requirements-This is huge right now! Many banks and leasing companies have either stopped lending to start-up companies or they make it very hard to qualify AND they put relatively low caps on the amount they'll lend ($25,000 is a common cap for new companies at this point).
• Reduced paperwork. Just a simple application is required AND NO financials.
• No down payment. You can typically get in with just one payment up front.
Second, there are still excavator finance options for even the lowest of credit scores (in the 500's and 400's). Now we're talking about severely damaged credit. There is not a bank in the world that will help you now, BUT IF you have secondary collateral you may be in luck.
When working with this type of severely damaged credit you'll need collateral in a 2:1 ration. For example, if your new excavator is priced at $35,000.00, you'll need additional collateral in the amount of $35,000.00. Other equipment that you may own outright (auction value is used to determine value), real estate, land, and autos valued at $10k or more are examples of commonly accepted secondary collateral.
Be realistic in your expectations. If your credit is very damaged and you're a start-up company, don't expect super low bank type rates and payments. Remember, the bank won't approve you for those low rates and payments because you simply don't qualify right now. That's OK. You will eventually.
The thing to keep in mind is that you MAY be able get the equipment to expand, grow, or start your new business. How much will you net or gross by acquiring the new equipment? Does it exceed or greatly exceed the monthly payments for the excavator? What kind of revenue will you pass up without the equipment? Think revenue over trying to get the lowest rates. It's not realistic without the whole package (2-3 year business history, good personal credit of all owners, good corporate credit, good bank statements for the business, good tax returns, etc.).
By Shawn Vaillancourt
There is however, good news. There are ways to get financing for your new or used excavator if you have bad credit.
First, if you have a Trans Union credit score of 600, there is a strong likelihood that you'll be able to purchase AND FINANCE an excavator from bank owned or off-lease inventory. Often times financing concessions are made by the bank or lender to enable them to quickly get the equipment off their books.
Some of the concessions they'll make includes the following:
• Lowering credit score requirements (600 at this point).
• No Bankruptcy requirements (except that it be discharged).
• No Time In Business requirements-This is huge right now! Many banks and leasing companies have either stopped lending to start-up companies or they make it very hard to qualify AND they put relatively low caps on the amount they'll lend ($25,000 is a common cap for new companies at this point).
• Reduced paperwork. Just a simple application is required AND NO financials.
• No down payment. You can typically get in with just one payment up front.
Second, there are still excavator finance options for even the lowest of credit scores (in the 500's and 400's). Now we're talking about severely damaged credit. There is not a bank in the world that will help you now, BUT IF you have secondary collateral you may be in luck.
When working with this type of severely damaged credit you'll need collateral in a 2:1 ration. For example, if your new excavator is priced at $35,000.00, you'll need additional collateral in the amount of $35,000.00. Other equipment that you may own outright (auction value is used to determine value), real estate, land, and autos valued at $10k or more are examples of commonly accepted secondary collateral.
Be realistic in your expectations. If your credit is very damaged and you're a start-up company, don't expect super low bank type rates and payments. Remember, the bank won't approve you for those low rates and payments because you simply don't qualify right now. That's OK. You will eventually.
The thing to keep in mind is that you MAY be able get the equipment to expand, grow, or start your new business. How much will you net or gross by acquiring the new equipment? Does it exceed or greatly exceed the monthly payments for the excavator? What kind of revenue will you pass up without the equipment? Think revenue over trying to get the lowest rates. It's not realistic without the whole package (2-3 year business history, good personal credit of all owners, good corporate credit, good bank statements for the business, good tax returns, etc.).
By Shawn Vaillancourt
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