In business, having the right tools can make or break your operations. Whether you’re running a construction crew, managing a small manufacturing facility, or launching a new startup, the right equipment keeps the gears turning and your services flowing. But when your credit score isn’t ideal, securing financing for those essential assets can feel like hitting a brick wall.
The good news? You’re not out of luck. Businesses with bad credit still have paths to secure equipment financing, even in a competitive lending environment. From seeking out alternative lenders to pledging collateral, there are actionable ways to improve your chances and move your business forward.
Can You Get Equipment Financing with Bad Credit?
The short answer is yes, but it requires a bit more preparation and flexibility.
Traditional banks usually see bad credit as a red flag. If your personal or business credit score falls below 650, you may struggle to qualify for standard financing. Banks typically prefer borrowers with a long credit history, a solid track record of on-time payments, and strong financials.
However, many non-traditional lenders and financing companies — especially those that specialize in equipment financing for startups or small businesses — understand that credit scores don’t tell the whole story. They look at your entire business picture, including:
- Time in business
- Monthly revenue
- Industry experience
- Cash flow
- The type and value of equipment you’re purchasing
Even if your credit isn’t perfect, demonstrating consistent income or offering collateral can go a long way toward getting approved.
In many cases, lenders are more comfortable financing equipment purchases than unsecured loans because the asset (the equipment itself) can serve as collateral. If you’re purchasing something with tangible value — like a truck, CNC machine, or backhoe — the lender knows it can recoup some losses if you default.
Alternative Financing Options for Businesses with Low Credit
If your bank says no, don’t walk away — look at alternative options designed with businesses like yours in mind. These lenders often work with clients who have less-than-stellar credit and need practical solutions fast.
- Sub-Prime Lending
Subprime lending is a useful option for customers who either don’t have time to wait for their credit to improve or simply don’t meet the requirements of traditional lenders. While it often requires larger down payments—typically 20–40%—and shorter terms of 24–36 months, it can help you secure the equipment you need without tying up all your cash upfront.
- Asset-Based Lending
If your business owns valuable assets — vehicles, machinery, inventory, or even receivables — you can use them as collateral. Asset-based lenders focus on what you can pledge, not what your credit report says.
- Merchant Cash Advances (MCAs)
While not a form of equipment financing per se, an MCA gives you a lump sum in exchange for a portion of your future sales. It’s a quick solution if your business has strong daily credit card sales or cash flow. But be cautious: fees and interest can be high.
- Invoice Financing
If you’re waiting on customers to pay invoices, invoice financing lets you borrow against those accounts receivable. It frees up cash to use toward equipment purchases or leases.
- Personal Loans or Co-Signers
In some cases, business owners can qualify for personal loans if their personal finances are stronger than the company’s. You may also consider bringing on a co-signer with good credit to strengthen your application.
Steps to Improve Your Credit Score for Future Financing
While there are financing options available now, taking steps to clean up your credit can expand your borrowing power in the future. Improving your credit doesn’t happen overnight, but consistent effort can lead to real results.
- Pay Bills on Time, Every Time
Payment history is one of the biggest factors in your credit score. Even one late payment can hurt, especially if it’s reported to credit bureaus. Automate payments if possible and prioritize clearing any past-due balances.
- Reduce Outstanding Debt
High balances relative to your credit limits can drag down your score. Aim to pay down credit cards and lines of credit, keeping balances below 30% of the limit when possible.
- Dispute Inaccuracies
Credit reports aren’t always accurate. Errors, outdated information, or fraudulent accounts can weigh down your score unfairly. Review your business and personal credit reports regularly and dispute any mistakes you find.
- Establish a Business Credit Profile
Many small businesses rely solely on the owner’s personal credit. Over time, build your business credit by:
- Applying for a DUNS number (from Dun & Bradstreet)
- Opening trade credit accounts with suppliers
- Ensuring consistent reporting of payments to business credit bureaus
- Use Secured Credit to Rebuild Trust
Secured credit cards or secured business loans require a cash deposit, but can help you rebuild your credit score if used responsibly. These tools give lenders confidence and give you a path to better terms over time.
How to Find Lenders Who Work with Bad Credit Applicants
Choosing the right lender is key to securing equipment financing when your credit isn’t ideal. Not all lenders are created equal — some are flexible and experienced with businesses in your situation, while others stick strictly to traditional approval models.
Here’s how to find lenders who are a good fit:
- Search for Industry-Specific Lenders
Some lenders specialize in your industry — construction, transportation, manufacturing, etc. They understand your operations and may be more comfortable with the risks involved, even with lower credit.
- Look for Equipment Financing Specialists
Avoid generalist lenders who offer a wide range of loan types but lack deep experience in asset-based lending. Companies that focus specifically on equipment financing often have more flexible terms and processes tailored to business needs.
- Ask About Credit Score Minimums
Don’t waste time applying with lenders who won’t consider scores below a certain threshold. Ask upfront if there’s a minimum score required and what other factors they weigh in their decisions.
- Check for Collateral-Based Financing
If a lender offers financing secured by the equipment itself, that’s a good sign. They may be more interested in the asset value than your credit report.
- Read the Fine Print
Some financing options come with high interest rates or tricky terms. Be clear about:
- Total cost of the loan
- Prepayment penalties
- Fees
- Default consequences
If something feels off, walk away. There are trustworthy lenders out there who value long-term relationships with small businesses.
Why Work with Champion Equipment Finance?
At Champion Equipment Finance, we believe your business deserves access to the tools it needs, regardless of your credit score.
We specialize in customized financing solutions for startups, small businesses, and growing operations across industries. With over two decades of experience, we understand that every business has a story. We take the time to understand yours.
Here’s why clients trust us:
- Flexible loan structures — choose higher payments for quicker payoffs or lower payments for manageable cash flow
- Financing for a wide range of business assets — from heavy machinery and trucks to IT equipment and software
- Personalized service — real humans who will discuss your needs and help design a loan that fits
- Fast approvals — we know time is money, and we don’t waste either
Whether you’re replacing aging equipment, expanding operations, or launching a new venture, we can help you get the financing you need — even with bad credit.
Don’t Let Credit Hold You Back
Your credit score is important, but it’s not the only thing that defines your business’s potential. With the right strategy, partnerships, and persistence, you can get the equipment you need to grow and compete, even if your credit history isn’t perfect.
From improving your financial profile to finding the right lender, there are real, actionable steps you can take today. Equipment financing for startups and established businesses alike is within reach, and we’re here to help you take the next step.
Ready to take the next step in your business journey?
Contact us today. Let’s discuss your goals and business, and how we can tailor a financing solution that puts the right equipment in your hands and puts your business on the path to growth.
