You’ve Been Turned Down for an Equipment Loan – What Now?

By | August 27, 2019

Very often, small and medium businesses who’ve been turned down for an equipment loan don’t know what to do next. And since I work in the equipment financing industry, let me give a few pointers on what to do for companies who were turned down.

Section 179 Still Quiet

First things first: If you were turned down by a bank, apply somewhere else.

Banks have the strictest lending criteria, and routinely turn down businesses for a variety of reasons. Some of these reasons are good ones, and others, well, let’s say we would disagree with them. So if you’ve been turned down by the bank, try our self-assessment pre-approval tool.

You’ve been turned down by others… so what to do now?

Ok, so you’ve been turned down by perhaps us, or another equipment financing company. Or our self-assessment tool said we couldn’t help you now. That’s all a part of the equipment financing business, so here are a few tips:

  1. Let time go by – Many equipment financing turn-downs are related to your time in business. Two years is a magic threshold, so if you haven’t been in business for at least two years, give it some time and apply again when you pass two years. Also, if there’s a bankruptcy anywhere in your history (personal or business), you’ll need time for that to clear as well (and it’s probably more than two years).  
  1. Make sure you can easily afford the monthly payment – Besides the time in business, your numbers tell the story. You have to show a profit and have revenues that demonstrate that you can afford the monthly payment. If you find yourself making cuts to squeeze a monthly payment into your budget, you probably aren’t ready for an equipment loan. So work to get your revenues up and your company in the black. 
  1. Get a business credit card – A business credit card is pretty easy to get (the previous two factors may not apply at all), and while the interest is probably more than you want to pay, it still might be a great way to both build your credit and also hold you over until you can satisfy the above two factors.

Getting turned down for an equipment financing loan isn’t the end of the world, and there’s a good chance a “no” today can turn into a “yes” tomorrow. But until then, I hope the tips above are helpful. 

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