If you need new equipment for your business, equipment financing can make it easier for you to get it. This type of financing can be easier to get than other types of loans, but there are some factors that can affect the terms of your agreement. If you are seen as more of a risk, then you may be required to provide collateral or pay higher interest rates. The following are some things that can make a difference.

1. Your Credit Score

When you apply for financing, most lenders will take your credit history into account. The higher your score, the easier it will be for you to qualify for better terms. There are a few ways that you can boost your score if you are concerned about its impact on your loan opportunities. Making all of your payments on time and keeping a low debt-to-credit ratio are a couple of ways to improve your credit fairly easily.

2. How Long You’ve Been In Business

Businesses that have only been operating for a short time are seen as a more risky investment than those that have been around for a while. For this reason, it can be easier to get equipment financing if you are an established business. This does not necessarily mean that newer businesses won’t be approved, but you may receive less favorable terms on a loan.

3. Your Past Performance

If your business has been struggling, then a lender may question your ability to pay back your loan. You will be more likely to need a guarantee such as collateral if your annual revenue is low. Providing a plan for how you will use the money and how it will benefit your company can work in your favor.

4. The Type of Financing You Need

There are a couple of options to consider when you need new equipment: leases and loans. If you do not need to own the equipment, then a lease may be the better option. These are often easier to get and won’t have as many requirements as a loan. On the other hand, loans can be beneficial if you are purchasing equipment that will not become outdated quickly and that you will be using for a long time.

While a less-than-perfect credit score may not keep you from qualifying for equipment financing, it and other factors can make a difference in the terms of your loan or lease. If you do not need equipment right away, you can work on improving these before applying for financing. This can make things easier for your business down the road.