Options For Bad Credit Companies Applying For Construction Equipment Loans

Options For Bad Credit Companies Applying For Construction Equipment Loans

Got bad credit but still want a construction equipment loan?

Having no credit or bad credit is a major obstacle to acquiring a loan as you will be deemed as a high-risk customer who might default and leave the lender hanging. This usually results in rejections from traditional banks.

This can prove dire for construction companies for whom possession of new or updated equipment is a necessity. Having the right equipment immediately is vital to seeing projects through.

So when your bad credit becomes the reason for your loan’s rejection, what would be the next advisable step? The answer to that question are bad credit construction equipment loans

Learn How Bad Credit Equipment Loans Can Be Available For Bad Credit Companies

If you have been turned down for a construction equipment loan or simply don’t want to end up paying high interest rates, there are alternatives that can be considered. 

Not all loan applications are solely based on the credit score and history of a business. Through bad credit equipment loan, companies with bad credit can still gain access to funds to purchase the much needed equipment.

What Is A Bad Credit Equipment Loan

A bad credit equipment loan is a flexible and secured loan for companies with poor credit scores to purchase equipment. Unlike traditional loans, applications are not judged based on a company’s credit situation or ability to repay the loan. 

Bad credit equipment loans are also available for individuals who have been denied elsewhere due to reasons such as:

  • Part IX debt agreements,
  • Credit defaults,
  • Bankruptcy,
  • Other potential credit issues.

Why Are Bad Credit Equipment Loans Available?

Bad equipment loans were created so businesses who are unable to secure funds through conventional financing may receive the capital and equipment necessary for their operations. The purpose behind its creation is to help business owners fulfill their potential.

Learning How Construction Equipment Loans Work

Construction equipment loans can be used to acquire different types of construction equipment. The amount of money you can borrow will depend on the type of equipment you want to buy and its condition. Under this kind of loan, the purchased equipment serves as the collateral in order to secure it. 

Most loans offer a fixed interest rate that fall between 8% and 30% with a set term length. These term lengths are typically dependent on different factors, including the expected life of the equipment being purchased. Monthly payments are fixed during this period are the same as well, enabling you to set clear budgets and expectations.

Can You Qualify For A Bad Credit Equipment Loan

As credit score and history are disregarded as factors for approval, almost anyone can qualify for a bad credit equipment loan. Instead, the amount of assets owned serve as the bargaining chip to determine a company’s worthiness of this kind of loan. 

If your construction company has a bad credit but possesses a certain amount of assets, this can make you eligible for a bad credit equipment loan. 


4 Options Of Companies With Bad Credit To Qualify For Construction Equipment Loans

Having the right equipment can make all the difference when bidding or doing a project. Unfortunately, most equipments needed by construction companies do not come cheap and require a big working capital. 

When this capital does not exist, the only natural solution would be to obtain a loan. But not all businesses have enough credit score to ensure an easy loan approval. Luckily, there are other options that can be explored and where the necessary funds can be obtained.

1. Cash Flow Based Financing

Cash flow-based financing is ideal for companies with reliable cash flow, despite possessing bad credit. The chance of approval is high with proof of steady revenue, with the business’ cash assets serving as collateral. 

How it works: 

Assuming that you are in need of $25,000 worth of equipment, the chances of getting a loan for it is high as long as your business’ revenue is close to the amount of money that is to be borrowed. However, it is important to note that interest rates also prove to be higher than usual due to lack of physical assets.

3. Collateral Based Financing

Another option for companies with bad credit would be to obtain collateral-based financing. This is possible for businesses that are able to make 50% down-payments or offer a collateral. In this case, the worth of the latter must be able to match the amount of money to be borrowed.

4. Story Based Financing

If your business has already succumbed to its knees and there are no assets that can be offered as collateral, then story-based financing would be the only possible route that you can take. 

Through this financing, being able to offer the lender a good reason as to why you should be allowed to borrow money is the only requirement to get approved. Most of the time, credit scores and possession of collateral are disregarded.


4. Asset-Based Financing

A business could also obtain the necessary funds needed through asset based financing. Loan applications will be approved given that the company is in possession of valuable assets, such as:

  • Accounts receivable
  • Machinery
  • Inventory
  • Equipment
  • Real estates that can be used as collateral.


This type of financing is often used by start-ups and fast growing businesses that need to support their limited capital. As funds are needed immediately, assets are often used in exchange for the needed funds. 

What To Ask Before Proceeding On Getting Construction Equipment Loans

There are many ways to obtain construction equipment loans even if you have a bad credit. The perfect choice would only depend on the situation of your business. 

However, despite being in desperate need of the funds in order to get the project started, it is crucial to be cautious. Various considerations need to be determined to ensure that you are making the right decisions.

Before closing on the deal, present the following questions to your chosen lender.

1. Default

If worst comes to worst and you will be unable to repay the loan, you should be aware of what the consequences will be. Ask your lender to be specific if ever the asset’s value was declined.

2. Collateral

Before giving up your collateral, you should ensure that you have fully understood the loan terms. Make sure to not surrender any other collateral other than the equipment itself. 

3. Trade-Ins

Ask what is the shortest time period before you can trade it in if the loan allows you to trade in the equipment to get an upgrade. Be cautious on this part. Sometimes, you may get penalized if you trade in the equipment earlier than the supposed time.


Final Thoughts On Bad Credit Companies Applying For Construction Equipment Loans

Getting construction equipment loans is tough especially if your company has bad credit. 

In this blog post, we discussed how bad credit construction equipment loans could help in this case, how it works and the qualifications in order to get approved. 

We further laid out the four different financing options that you can use to acquire a loan regardless of your company’s credit score. These are: cash-flow based financing, collateral-based financing, assets-based financing and story-based financing. 

The right choice only depends on the current situation of your business.

If you have more questions about construction equipment loans visit Trust Capital USA or call us at 866-458-4777. 


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ArticleOptions For Bad Credit Companies Applying For Construction Equipment Loans

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