Taking out loans through traditional banks isn’t always an option for business owners who don’t have the best credit. Thankfully, there are plenty of alternatives. Read on to find out about ten of the most promising equipment financing providers for 2020 to find a better solution.
Equify financial is a relative newcomer to the equipment financing game. The company was started in 2011 by Dan and Farris Wilks, former entrepreneurs who have been on both sides of the lending equation. The company operates out of Fort Worth, TX, and provides loans ranging from a few thousand dollars to over $500,000.
The best thing about Equify is that business owners who work with this lender won’t have to jump through a lot of hoops or deal with automated services. Instead, they can get in touch with a real person who can help them qualify for a loan that will meet their financial needs and circumstances. Learn more over at equifyfinancial.com.
Have good credit and want to take out a lease but prefer not to deal with traditional banks when it can be avoided? Crest Capital might be a good option. The company values transparency, so it’s easy to find out what to expect.
Interest rates at Crest Capital start at 5%. The company also charges an administrative fee of $275 and offers 24-74 month leases ranging from $5k to $500k. After the terms of the lease are up, buyers have the option of purchasing the equipment for 10% of its fair market value.
This division of CIT Bank provides short-term equipment leasing and franchise funding for small businesses. Term lengths can be set from 1 to 72 months, interest rates start at 5.49%, and borrowers can lease equipment worth up to $250k. Direct Capital is known for its good customer service and works almost exclusively with small business owners, so while their lending options are limited, they’re a good bet for newer construction firms, agricultural operations, and other small businesses that need to invest in reasonably inexpensive equipment.
Apple Pie Capital
Apple Pie Capital serves a niche market. This lender only offers equipment loans to franchises with a minimum loan amount of $15k. Their interest rates are comparatively high, ranging from 7.75% to 12%, but they have more relaxed borrower qualifications than most finance companies.
Needless to say, this San Francisco-based lender isn’t right for everyone. However, franchise owners who are having trouble qualifying for loans from other lenders may want to look into Apple Pie Capital.
eLease Equipment Financing
Although eLease has been around since 2004, the company isn’t as well-known as some of the others on this list. Its financing options include both leases and equipment financing agreements that require only the first and last month’s payments as a down payment on the equipment. eLease offers financing starting at just $1,000, as well, which makes them a good choice for business owners who want to purchase inexpensive equipment that falls below most lenders’ minimum thresholds.
Be forewarned that eLease charges extremely variable interest rates. Someone with good credit may be able to obtain a loan or a lease for just 4%, which is incredibly competitive within the industry. However, a similar business owner with poor credit may be charged up to 35% in interest, so clarify the interest rate before signing on the dotted line.
OnDeck Online Equipment Financing
Unlike most of the other companies on this list, OnDeck operates exclusively online. They offer competitive terms and fees, but the company’s decision to finance borrowers with poor credit means their interest rates are higher than most. The plus sides of working with OnDeck are that they have a fast application and approval process and will work with almost any company that has been in business for over a year and makes at least $100,000 annually. The downside is that its APR rates range from 11.9% to 99.4% for terms of up to 36 months, making OnDeck one of the most expensive lenders out there.
Lendio is an aggregator that works with 75 funders to offer a variety of business loans and financing solutions, including equipment financing. Borrowers can apply for a loan through Lendio, then receive multiple offers from different financers, allowing them to compare loan terms, interest rates, and other variables without taking the time to apply to each lender directly. Only six out of ten businesses qualify for loans through Lendio, but the service is free, so there’s no harm in giving it a shot.
TCF Capital Solutions
This division of the Minnesota-based TCF National Bank specializes in equipment financing for small businesses. TCF is a more conservative lender than most, though, so business owners must meet stringent qualifications. Their businesses must have been operational for at least five years and they must have credit scores of 700 or higher. TCF’s revenue requirement varies based on how much money borrowers need, so make sure the business can prove its ability to make regular monthly payments before bothering to apply.
US Business Funding
US Business Funding offers equipment financing, administration loans, and working capital solutions to small-business owners. The lender boasts competitive rates, although their rates are better for businesses that have been around for at least two years and have a strong credit history. As with most lenders, borrowers with the highest credit scores will qualify for better rates and terms.
Currency Equipment Financing
Currency is a Los Angeles-based alternative financing platform that offers both equipment loans and leases. It has comparatively low borrower qualifications, but business owners must only be able to prove that they have been in business for at least six months, make at least $75k/year, and have credit scores of 585 or higher. The downside is that not all businesses can get loans through the Currency platform.
The Bottom Line
Applying for equipment financing can be stressful, but it’s often the most cost-effective way to grow a business. Make sure to ask about administrative and origination fees, interest rates, and loan terms in advance and keep in mind that businesses with better qualifications will almost always receive better terms and rates.