The eligibility requirements for equipment financing in 2024 typically include :
- Credit Score : A minimum credit score is often required, with many lenders looking for scores around 625 or higher.
- Time in Business : Generally, businesses should be operational for at least one year to qualify for equipment financing.
- Annual Revenue : Lenders may require a minimum annual revenue, often around $100,000.
- Equipment Valuation : For new equipment, banks usually accept the sale price as the market valuation, lending up to 80% of that amount after applying a discount rate.
- Debt Service Coverage : Lenders will assess your ability to cover loan payments through direct debt service coverage calculations.
It’s important to note that startups can still access equipment loans but may need to demonstrate sufficient cash flow or provide a larger down payment. Additionally, some lenders offer flexible financing plans, including options like 100% financing, deferred payments, and seasonal payment programs to accommodate various business needs.
Before applying, it’s advisable to prequalify with lenders to understand the loan amounts, rates, and terms you may be eligible for. This process usually involves a soft credit inquiry, which doesn’t impact your credit score. Always consider any additional fees and evaluate the lender’s customer support options as part of your decision-making process.