Equipment financing requirements: what lenders look at and what to have ready

Equipment financing is secured by the equipment, which usually makes it easier to qualify for than unsecured credit. The lender still needs to know the business can make the payments and that the equipment is what the invoice says it is.

What is reviewed

• Business details: legal name, entity type, time in business and industry.
• Owners: identity and personal credit for owners who will guarantee.
• Business credit and payment history, including any existing equipment financing.
• Revenue and, for larger requests, cash flow from financial statements.
• The equipment: type, age, cost, seller and serial number.

Application-only requests

At LenderCloud, requests up to $1M can usually be decided on the application alone. If we need anything else, such as bank statements or a copy of the equipment quote, the request appears in your portal with exactly what is needed.

Larger requests

Above $1M, expect to provide 2 to 3 years of business tax returns or financial statements, an interim profit and loss statement and balance sheet, and a debt schedule. Enterprise borrowers may provide audited or reviewed statements, and the lender may look at covenants in existing loan agreements.

What helps

• A clear quote or invoice that lists the equipment, serial numbers and any soft costs.
• Up-to-date business filings and licenses.
• A short explanation of how the equipment will be used and the revenue it supports.
• Any recent changes in ownership or revenue, explained up front.

Documents at funding

• The equipment invoice or bill of sale
• Proof of insurance naming the lender as loss payee
• A signed delivery and acceptance certificate
• Signer identification
• For titled vehicles: the title application or manufacturer’s certificate of origin

Having these ready shortens the time between approval and funding. Ask your insurance agent for the loss-payee certificate as soon as you know which lender you are using; it is the document that most often delays funding.

All financing is subject to credit approval and documentation.