Equipment financing with no money down has been getting a lot of attention in the last few years ever since Covid. Having the ability to purchase a piece of construction equipment without a down payment is ideal for those companies who are looking to preserve their business capital and would like to spread out the cost of the equipment over the next 2 to 5 years. Even with the ever-changing landscape in equipment financing, it’s not impossible to get approved for a zero down payment. However, you will see tougher guidelines when compared to other programs that require a down payment. This program is specifically designed for yellow iron or construction equipment. If you are in the transportation industry, we also have a zero down payment program for semi trucks.
REQUIREMENTS FOR CONSTRUCTION EQUIPMENT FINANCING
Finance amounts under $75,000
- 650 minimum credit score (no late payments)
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- Minimum 1.5 years’ time in business
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- $15,000 to $75,000 (other programs available for higher amounts)
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- Equipment sales price must comp out & be within 10% of invoice
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- Age of equipment < 20 years old max 60 month term
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- Age of equipment > 20 years old max 48 month term
Finance amounts above $75,000
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- 700 minimum credit score (no late payments)
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- Minimum 4 years’ time in business
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- $75,000 or more (Easier qualifying programs available for amounts < $75,000)
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- Equipment sales price must comp out & be within 10% of invoice
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- Age of equipment < 10 years old max 60 month term
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- New equipment 72 months max term
Please make note, these are not all the requirements but just a basic outline. If you want to learn more, you can skip ahead. Keep reading to learn about lower credit profiles and for startups, we have other programs that offer zero down payment or lower down payment options.
or Speak with an advisor 888-565-6692
We have heard from some of our relationships in the industry that the commercial lending space has been getting a little tougher, especially for those who are trying to qualify for a no down payment program. It appears that finance companies were lenient with their guidelines and qualifying requirements during Covid. One thing we’ve all learned from the past, when lending loosens the qualifying requirements, there will be an increase in defaults in the years to come. We’ve seen this time after time in the housing market, the commercial real estate market, the auto loan market and of course in equipment financing.
Let’s discuss in more detail about the qualification requirements for our “No Down Payment” program for yellow
iron.
Good credit is a must!
Just like our zero down payment program for semi trucks, credit is a huge factor for this program as well. But there are several differences with this program, and the first difference is the credit score requirement. Depending on the cost of the equipment, the applicant/business owner will need to have a minimum 650 credit score for transactions of $75,000 or less, or a minimum 700 credit score for transactions greater than $75,000. There can be absolutely no derogatory credit or late payments on your credit history. Even if there was a small 30 day late payment from 8 years ago, that will disqualify you for the no down payment program. Other programs are available if you are looking for construction equipment financing, these programs have different requirements and allow for lower credit profiles and even start-ups.
What if I have bad credit?
Similar to our other equipment financing programs that require a higher credit profile, we look at the depth of the credit, comparable debts, and revolving debt. This program will also pull the Paynet report on your business and your payment history will be reviewed. This program will not work for start-up businesses or those who have a lower credit profile. For a startup business or lower credit, we have other programs that offer reasonable terms with a down payment of around 5-10%. To learn more about those programs, you should speak to one of our advisors over a quick phone call at 888-565-6692. If you prefer to use our chat feature on our website, you can chat with a live person on our help desk located in the lower right of our webpage.
What if I have not been in business for at least 1.5 years?
You will rarely find programs that allow businesses under 2 years’ time in business, especially programs that offer a no down payment option. When it comes to commercial financing, any business that is less than 2 years in business is considered a “start-up”. As you may already know, start-up businesses have a higher chance of failure, and finance companies consider them as high-risk. That’s why you won’t find many banks who offer financing for start-ups. If you don’t have the ability to prove your company has been in business for the minimum amount of 1.5 years or 4 years, we offer other options. Those options will require a down payment, and the amount can vary depending on your situation.
Can I purchase from a private party seller?
Unfortunately, this program only allows sellers who are licensed dealers/vendors. If you are considering a private party transaction, please make sure you do your due diligence. Make sure the equipment is rightfully owned by the seller, as you may already know, most construction equipment does not have titles. This would include equipment like bulldozers, excavators, skid steers, front end loaders, etc. Dump trucks, water trucks, semi trucks for hauling heavy equipment all have titles and are easier to determine ownership. You can read more to learn about protecting yourself from buying stolen construction equipment.
Explore Your Options and Get Personalized Guidance Today!
Now that you have an idea on how our “no down payment” program works for yellow iron or construction equipment, do you have any other questions? There are more details that go into qualifying, so it’s always best to either call our office and speak to one of our advisors, or you can use our live chat help desk located in the lower corner of our webpage. Feel free to call us anytime at 888-565-6692.
Financial Disclaimer
The information provided is for educational and informational purposes only. The content on this website is not intended to be a substitute for personalized financial advice. Please consult a certified financial professional before making any investment decisions or financial plans. Any financial information presented is for general informational purposes and does not constitute financial or investment advice.
Equipment Financing with No Money Down | First Capital Business Finance
