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LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.

Best Equipment Financing for Bad Credit

Updated on:
Content was accurate at the time of publication.

Many online lenders offer equipment financing for bad credit borrowers. However, beware of no-credit-check equipment financing since some predatory lenders can try to exploit your financial situation.

Here are the best equipment loans for bad credit, plus alternatives to equipment financing.

Why equipment financing requires a credit check

Equipment financing is a type of secured business loan since the equipment or machinery acts as collateral for the debt. If you default on your loan, the lender could seize the equipment as payment.

Because of this, equipment loans tend to place less importance on your credit score than if you were applying for an unsecured business loan. However, reputable lenders typically still run a credit check to determine your overall risk level and loan interest rate.


Beware of scams

While some lenders advertise “no credit check” business loans, these loans often come with high fees and rates. Watch out for signs of predatory lending and read small business lender reviews before proceeding.

How to get equipment financing with bad credit

Business loans for bad credit typically offer more flexible eligibility criteria. Here are the general steps you should take before getting a business loan.

1. Check your credit scores

Qualifying for equipment financing tends to be easier than other types of small business loans since the equipment serves as collateral. Some alternative lenders provide equipment loans to borrowers with credit scores as low as 500.

Check your personal credit score in advance to see where you stand. For established companies, get a copy of your business credit report.

If you have poor credit, some lenders may place a blanket lien on the loan. This means your entire business assets act as collateral.

2. Gather important documents

While business loan requirements vary by lender, here are some standard documents you may need before submitting your equipment loan application.

  • Equipment quote
  • Time in business
  • Annual revenue
  • Personal information (name, phone number, email address, SSN)
  • Business information (name, type of business, industry, business address, tax ID numbers like SSN or EIN)
  • Business plan
  • Recent bank statements
  • Business and personal tax returns

3. Boost your application

Concerned your credit score will impact your ability to get equipment financing? Here are additional steps you can take to improve your chances of approval.

  • Make a larger down payment: The standard down payment for equipment financing is 20%. However, making a larger down payment, like 30% or 40%, might increase the likelihood of approval.
  • Use your current bank: Instead of going to a new lender, first check with your existing bank. As a current customer, they know your history already. Some banks even offer loyalty perks for continuing to use their products for your business.
  • Apply with a cosigner: A creditworthy cosigner could help you gain approval and secure a more competitive rate. However, make sure your cosigner understands their legal obligation for making payments if you default.
  • Offer additional collateral: While equipment loans use the equipment as collateral, offering more collateral adds security to the loan.
  • Update your business plan: Providing a business plan is typically part of the loan application process. However, strengthening your business plan can make you a more attractive candidate to lenders.

4. Compare equipment lenders

Research the leading small business lenders to find the best deal for your needs. If you get multiple equipment loan offers, compare the following details before moving forward.

  • Interest rates: Is the business loan interest rate competitive? Variable or fixed? Be sure to calculate how much interest you will pay throughout the loan to ensure it’s worth the cost.
  • Fees: Some lenders charge origination fees, prepayment penalties and other additional costs for equipment loans. These fees might be calculated into your APR or listed separately.
  • Terms: Are repayments due daily, weekly or monthly? Review your business budget to make sure you can afford the payments.
  • Funding speed: Not all equipment loans are approved and funded at the same speed. If you need funds immediately, prioritize a lender offering quick business loans.
  • Spending limitations: You can often use general business loans, such as a working capital loan, to invest in equipment. However, some lenders may restrict how you use the loan, so double-check that you can purchase equipment with the funds.

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5 options for bad credit equipment financing

How Does LendingTree Get Paid?
LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.

How Does LendingTree Get Paid?

LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.
LenderRatingsBest forMax amountStarting interestMin. credit score
Taycor FinancialStartups$2,000,0004.99%550
National FundingHigh revenue businesses$150,000Not disclosed600
Commercial Fleet FinancingUser ratings coming soonCommercial vehicles$1,000,000Not disclosed640 is preferred
First CapitalUser ratings coming soonLarge purchases$5,000,000Not disclosed500 (also offers a “no minimum credit score” program)
Fora FinancialFast funding$1,500,000Factor rates from 1.10 to 1.40570

Learn more about how we chose our picks.

Taycor Financial: Best equipment financing for startups

If you are looking for a startup business loan with bad credit, Taycor Financial offers up to $2,000,000 in equipment financing for borrowers with scores as low as 550. You could also make no down payment with Taycor Financial’s equipment leasing program. However, you usually need to make advance first- and last-month payments when signing the lease.

Taycor Financial doesn’t set time-in-business or annual revenue requirements for equipment loans, helping new business owners access the capital they need to grow and expand their companies. Terms range from 12 to 84 months. However, the interest rates for equipment financing can go as high as 28.00%.

National Funding: Best equipment financing for high revenue businesses

With a minimum credit score of 600, National Funding is another excellent option for an equipment loan for small businesses with bad credit. Furthermore, National Funding says it emphasizes a company’s time in business more than credit history.

National Funding can help you finance new or used equipment up to $150,000. You can also consider equipment leasing with National Funding’s Lowest Payment Guarantee program.

To qualify, your business must operate for at least six months with an annual revenue of $250,000 or higher.

Commercial Fleet Financing: Best equipment financing for commercial vehicles

Commercial Fleet Financing (CFF) can fund up to $1,000,000 for commercial transportation equipment like cars, trucks and trailers. Although the preferred minimum credit score is 640, CFF states it will work with low-credit borrowers below this threshold.

CFF also offers fast funding times. Approvals take around two hours and funds hit your business bank account in as soon as 24 hours.

However, CFF doesn’t disclose minimum time in business, annual revenue requirements or expected interest rates before applying. Because of this, it’s hard to compare where CFF stands against other small business lenders.

First Capital: Best equipment financing for large purchases

If you need heavy equipment financing for your business, First Capital can help. With equipment loans of up to $5,000,000 and terms between 24 and 72 months, you can get the equipment your business needs today.

The minimum credit score is 500, although First Capital now offers a program specifically for bad-credit borrowers where you can borrow up to $3 million with no credit check.

To get a loan with bad credit with First Capital, you need four months in business and at least $8,000 in monthly gross revenue.

Fora Financial: Best equipment financing for fast funding

Fora Financial has a speedy application process, helping you access funds within 24 to 72 hours. Loan amounts range from $5,000 to $1,500,000 and can be used toward equipment repairs, upgrades, leases or other business expenses.

Term lengths are 4 to 18 months. Fora Financial doesn’t require you to provide collateral. You can even score a discount by repaying your loan early.

To qualify, you must be in business for a minimum of six months with at least $15,000 in monthly revenue and a credit score of 570.

Alternatives to equipment financing

If you can’t find a business equipment loan that suits your needs, here are some additional options to help you purchase the necessary equipment for your company.

Equipment leasing

Unlike an equipment loan, you must return the equipment at the end of the term with an equipment lease. While an equipment lease may offer lower upfront costs and monthly payments than equipment loans, your credit score still plays an essential role in securing a competitive equipment lease.

Short-term business loan

Short-term business loans provide quick access to funds. Terms range from three to 24 months with daily or weekly repayments.

Many online lenders have more lenient requirements and are willing to work with bad-credit borrowers. However, short-term loans may not provide enough to cover the purchase of heavy equipment.

Small business line of credit

A business line of credit is a revolving form of financing from which you can withdraw funds up to your credit limit as often as needed. Funds can be used for various business expenses, including equipment purchases, upgrades and repairs. You only pay interest on the amount you withdraw.


Offered by nonprofit, government and community lenders, microloans can be used to purchase low-cost equipment, typically up to $50,000. Microloans often have more flexible qualifications, making them a good option for low-income, bad-credit or minority business owners who aren’t eligible for traditional funding.

The organizations offering microloans may also provide supplemental training to help entrepreneurs succeed in their business ventures.

Small business grants

Small business grants can give you the capital your business needs to get things up and running. While finding suitable grants can take time and effort (and are often highly competitive), they typically don’t require a credit check. And unlike loans, the funds don’t need to be repaid.

Merchant cash advance

A merchant cash advance is a lump sum upfront in exchange for a portion of future sales. Your credit plays a lesser role with a merchant cash advance since lenders are more interested in your cash flow than your payment history. However, be prepared for high interest rates.

Invoice factoring or accounts receivable financing

Like a merchant cash advance, invoice factoring or accounts receivable financing relies on your businesses’ unpaid invoices for repayment. Credit is less important because lenders look at your businesses’ unpaid invoices to determine if you qualify.

Personal loans

Another option for funding your equipment expenses is to use a personal loan for business. Some lenders, such as Upstart, have credit score requirements as low as 300. Furthermore, collateral is typically not required.

However, weighing the advantages of a business loan versus personal loan is important. With a personal loan, you will likely pay higher interest rates and won’t be able to claim interest as a business expense. Furthermore, personal loan lending limits are typically lower than business loans and repayments won’t help build your business credit score.

Business credit cards

A business credit card can cover minor equipment purchases from time to time. However, it’s best to avoid racking up significant expenses on credit cards since they usually charge higher interest rates than small-business loans.

Good to excellent credit is typically needed to get a business credit card. If you have poor credit, consider a secured business credit card.

How we chose our picks

To appear on our list of best equipment loans for poor credit, lenders needed to meet the following criteria:

  • Minimum FICO Score requirement below 640
  • Funds available within one week of approval
  • Flexible repayment terms with no prepayment penalties
  • Options for newly established businesses

A no credit check loan means a lender does not review your credit history when you apply for a loan. While certain lenders will work with low-credit borrowers, most reputable lenders require credit checks for equipment financing to feel secure about your ability to repay the loan.

Some equipment financing companies may approve a credit score as low as 500. Credit history is just one piece of the lender’s decision-making process. Other factors include the size of your down payment, how long you’ve been in operation, your company’s annual revenue and any additional collateral you can offer for more security.

Keep in mind that a higher credit score can unlock better rates and more flexible repayment terms. If you have time, try boosting your credit score before applying for equipment financing.

Yes, some lenders offer equipment financing for startups. While every lender’s criteria differs, you will likely need to provide a solid business plan and meet income and credit score requirements. Note that startup business loans often come with higher interest rates.

Equipment financing and leasing seem very similar but there are a few key differences.

  • Equipment financing: Similar to a business loan, equipment financing offers a lump sum of money to purchase equipment you need for your company. You will then repay the debt with scheduled payments and accruing interest over a set period of time. Equipment loans usually require a down payment, but you can deduct depreciation as a business tax deduction.
  • Equipment leasing: Equipment leasing involves fewer upfront costs since you don’t need to provide a downpayment. You can use the equipment for a specific term, with some lenders allowing you to purchase the equipment at the end of the term.

If you expect the equipment to have a long lifespan, paying for an equipment loan could be worth the costs involved. However, leasing might be a better solution for your business if you expect to upgrade equipment frequently.

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