Purchasing equipment can be very expensive, and you may not always need to own the equipment required for a project. By leasing equipment, you can save money and still have everything you need to complete the job. That said, leasing is a form of credit and, as such, requires approval. In this guide, we will explain how to get approved for equipment leasing. And offer some tips that can make the application process easy and straightforward.
Keep reading to learn:
- What equipment leasing is
- The documents required to lease equipment
- How to increase the odds of being approved
- Where you can lease equipment
- And much more
What is Equipment Leasing?
Equipment leasing is similar to financing equipment. The main difference between equipment leasing and financing, is that when leasing, it’s actually the lender who purchases the equipment. In other words, when you lease, you will own the equipment outright once the term of the lease has expired. Because the client is actually not purchasing the equipment, leasing is generally easier to get approved for than typical financing. Equipment leasing rates are still very competitive. Especially for those who are well qualified, making leasing an attractive option for those who only need the equipment for a limited time.
How to Get Approved for Equipment Leasing?
Because leasing is a form of credit, you’ll be subject to credit and background checks. This is because equipment is often very expensive, and the lender needs to be sure that you have the means to cover the cost of the equipment if it’s lost, stolen, or damaged. Not every business gets approved for leasing, but there are a few things you can do to give yourself the best chance of being approved. So, let’s go over what you can do to increase your likelihood of being approved for equipment leasing.
Ensure your credit is in good standing
First and foremost, your business will need to have a good credit score in order to be approved for equipment leasing. You won’t necessarily need perfect credit, but your credit should be good and be in good standing. If your credit isn’t good, then there are a few things you can do to improve your credit score.
How to improve your credit score to get approved for Equipment Leasing
The best way to improve your credit score rapidly is to pay off any outstanding debts you’ve incurred. If it isn’t possible to pay those debts off entirely, then ensure you make payment arrangements and stick to the agreed-upon schedule. You can consider consolidating your debts into a single payment which might make repayment easier. Also, try not to use all of your credit. A good general principle is to keep your debt utilization at or below 30% of your available credit, meaning that if you have $100,000 in credit, you shouldn’t use more than $30,000.
Have an accountant prepare your documents
When you apply for equipment leasing, you will need to submit financial statements showing that you have the means to pay for the equipment if it’s lost, stolen, or damaged. By having an accountant prepare those documents on your behalf, you can ensure that they are accurate and lend more credibility to your application.
Audited financials can help you get approved for Equipment Leasing
Likewise, by having your financial statements professionally audited, you can greatly increase your odds of being approved for equipment leasing. Generally speaking, anytime you can have a third-party objectively audit your finances, it will be to your benefit in the eyes of the lender. This is especially true if the audit was done by an established accountant or firm. So be sure to hold on to any of your company’s previous tax returns as these can be a great asset when applying for credit facilities, such as leasing or financing.
Providing the correct information and details about your business
Another important and often overlooked aspect of a leasing application is your business information. So, when applying for equipment leasing, always ensure that you provide accurate and up-to-date information, as this will be required in order to verify your company’s assets and finances.
Create a business plan with projections if the business is new
Many people assume that if their company is new, then they won’t be approved financing. This is not always the case. By preparing a detailed business plan that includes future projections, you can significantly increase your odds of being approved for equipment leasing.
Show how the new equipment will be beneficial to your business
By explaining how the equipment you intend to lease will help your business generate new or more revenue, you will be able to increase your odds of being approved for that particular equipment.
Provide Corporate or Personal Guarantees
Providing some sort of personal or corporate guarantee in writing can also work to your advantage when applying for equipment leasing. This is because the lender will have something in writing should you default on the agreement. Having another company vouch for you can also be an asset on your application.
Showcase your experience
It also helps to demonstrate your expertise in your particular industry. By preparing a list of your clients and showing the lender that you have regular customers, you can again improve your odds of being approved for equipment leasing.
Where to lease equipment in Canada?
There are many different companies that provide equipment leasing services to businesses in Canada. However, most of those lenders require all of the documents mentioned above, and possibly even more. Equipment Finance Canada is one of the most trusted sources for equipment leasing. EFC specializes in helping businesses get approved for new equipment when other lenders say no.
So, if you need to lease some new equipment for an upcoming project, or to help your business get off the ground, then be sure to get in touch with Equipment Finance Canada today. The experts at EFC will be able to help you through every step of the application process. They offer competitive rates to help your company grow and succeed.