When your business needs new equipment, you often need it fast. But unless you’re paying cash for big items, securing an equipment loan is usually the first step.
That can bring up a big question: What do lenders actually look for in an equipment loan application?
At Team Financial Group, we can help business owners secure the equipment financing you need to grow, compete, and move forward. While every lender will have different specific requirements, there are some common factors that most look at when evaluating a loan application.
Let’s discuss the typical equipment loan requirements, how to strengthen your chances of approval, and why Team Financial Group may be a better fit for your business than traditional lenders—especially if you’re facing unique challenges or opportunities.
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Why Equipment Loan Requirements Matter
Lenders look at a variety of financial and operational indicators to determine whether a business is likely to repay the loan. But not all lenders evaluate these factors in the same way.
Traditional banks tend to rely on strict formulas and rigid credit thresholds. That can make it difficult for small or growing businesses—especially those without perfect credit histories—to get approved.
At Team Financial Group, we take a more open-minded, relationship-driven approach. We believe that businesses can have potential beyond their numbers, and we work to find creative financing solutions at times when others might say no.
Still, knowing what most lenders evaluate can help you strengthen your application and improve your chances of approval, whether you’re applying with us or anyone else.
What Lenders Typically Look for in an Equipment Loan Application
Time in Business
Most lenders prefer to work with businesses that have been operating for at least one to two years.
That said, newer businesses often aren’t automatically disqualified. For example, we’ve helped many startups and young businesses get the equipment they need to hit the ground running.
Tip: If you’re a newer business, be ready to share a clear business plan, detailed projections, and your own industry experience to build lender confidence.
RELATED: How to Create an Equipment Budget Built for Long-term Growth
Credit Score
Both your business credit score and personal credit score may come into play, especially if you’re a small business or sole proprietor.
- Traditional lenders often look for scores of 680 or higher.
- At Team Financial Group, we understand that credit is a big piece of the puzzle, but often not the only one. Depending on your score, if you have a strong cash flow or valuable equipment to use as collateral, we might still be able to help.
Tip: Always check your credit reports ahead of time so you can address any errors or prepare to explain past issues.
Business Financials
Lenders want to see that your business generates enough revenue to cover loan payments. Key documents often include:
- Profit and loss statements
- Cash flow statements
- Bank statements
- Tax returns (usually from the past 1–2 years)
We use this information to understand your financial health and determine an affordable monthly payment.
Tip: Keep your books organized and up to date. Clean, accurate financials can significantly boost your chances of approval.
Debt Service Coverage Ratio (DSCR)
This ratio shows how easily your business can repay debt using its operating income. A DSCR of 1.25 or higher is often preferred by traditional lenders, meaning you make $1.25 for every $1.00 of debt.
At Team Financial Group, we take a more holistic view. If your DSCR is lower due to temporary cash flow constraints or a recent investment in growth, we’re still happy to talk through potential options.
Equipment Details
Lenders will ask for details about the equipment you want to finance, such as:
- Type and purpose
- New or used
- Cost
- Vendor or seller information
- Expected useful life
We’ll want to understand how the equipment supports your business and generates ROI.
Tip: Include a quote or invoice from the seller, if possible. It helps speed up the process.
Down Payment (Sometimes)
Some lenders require a down payment—typically 10–20%—especially for used equipment or businesses with lower credit. But at Team Financial Group, we can sometimes offer 100% financing with no money down, depending on the deal.
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Collateral
Many equipment loans are self-collateralized, meaning the equipment you’re purchasing serves as the collateral. This reduces risk for the lender and can help you get approved with better terms.
Tip: If you’re purchasing highly specialized or niche equipment, be ready to explain its resale value or importance to your business operations.
How to Strengthen Your Equipment Loan Application
If you want to increase your chances of approval and potentially secure better rates and terms, here are a few ways to prepare:
Organize Your Financial Documents
Have the right paperwork ready so you can move your application forward quickly and show that you’re running a financially responsible business.
Show Clear ROI
Help lenders understand how this equipment will improve your business, whether it reduces costs, boosts output, or increases revenue.
Communicate Openly
If you’ve had credit issues, tax problems, or a rough patch, don’t hide it. Good lenders appreciate transparency, especially when you can show how you’ve recovered.
Choose the Right Partner
This might be the most important factor of all. The lender you choose can make or break your experience.
Why Team Financial Group Is Different
At Team Financial Group, we specialize in commercial equipment financing that has helped a wide variety of businesses. We also often do things differently than traditional lenders.
We’re Relationship-Focused
We take the time to understand your business, your goals, and your needs. We want to know what you’re aiming to achieve.
We Move Fast
Need a decision quickly? We have approved and funded some loans in less than 24 hours. When you’re ready to grow, we’re ready to move.
We Offer Flexible Terms
From seasonal payments to $0 down financing, we can tailor loans to match your cash flow and business model.
We Work with Unique Situations
Startups, private-party sales, or used equipment are not immediate deal-breakers. We’ll explore creative possibilities that may make your equipment loan work for you and us.
RELATED: 7 Equipment Financing Myths Debunked
Ready to Apply?
If you’ve reviewed the equipment loan requirements but want a financing partner with more flexibility than a bank, Team Financial Group is here to help.
You can start your application online in just a few minutes, or give us a call to talk through your options. We’re happy to answer your questions and find a solution that supports your business.
Contact us today or call 616-735-2393 to speak with an equipment financing expert.