Business operators can find themselves in the position of having a poor credit profile or general credit issues for many reasons and often for reasons outside of their control or fault. But in the wake of the unprecedented 2020 economic situation as a result of the coronavirus pandemic, it is highly likely that many more than usual will be experiencing difficulties.
While the much-anticipated post-JobKeeper ‘cliff’ did not eventuate, that is not to say that individual businesses have exited the COVID-19 crisis unscathed. Despite the general and widespread government support and stimulus measures, not every business in Australia benefited and with Victoria having to endure a fourth COVID-19 lockdown, the outcome for some operators, at minimum, will be having credit issues. Issues that can be a major obstacle to achieving cost-effective finance to purchase new equipment.
With the highly advantageous budget tax-deductible measures on offer, EOFY equipment deals available and a historic cheap interest rate equipment loans borrowing scene, the inability to take advantage of these opportunities can be very frustrating for businesses with bad credit. But there are potential channels for businesses with bad credit to secure the equipment funding they require and still take advantage of the tax and other benefits available.
Equipment Finance Lender Selection is Key
The key to achieving good equipment finance deals for bad credit businesses is the approach taken to the loan sourcing process. Not all people are aware that each time an application for finance is made, the lender reports that application to the credit reporting agencies, even if not approved or proceeded with. Multiple applications for finance can reflect poorly on a credit profile as it can appear as desperation. Those with bad credit, that need to apply to a large number of finance companies in the source for a loan, can actually be doing further harm to their already poor credit profile.
A solution to this situation is to utilise a third party, broker-style lender such as Jade Equipment Finance to handle the entire finance sourcing process. Using our lender service circumvents that negative outcome as enquiries, quote requests and applications made by brokers do not get reported in the same manner as individual applications.
That’s just the start of the good news. We also provide positives in presenting a large number of finance options through a wide range of our lenders. While banks are not known for extending bad credit finance, non-bank lenders are more flexible and open to discuss and negotiate such deals.
We are accredited with non-bank lenders that do extend bad credit equipment finance and can approach them on your behalf to source a suitable deal.
It’s also worth noting that our lenders do take into account the reasons why the bad credit situation has been caused. The reasons can vary and they can make a difference to being approved or not for finance. Applicants can assist the process by clearly and in detail, documenting the reasons as to why they have credit issues.
Bad Credit Equipment Finance Products: Budget Benefits
Bad credit finance is not a loan product or facility as such but a category description of the loan applicant. If a business with bad credit is approved by one of our lenders for finance, they can in most instances, select the most suitable finance product for their business.
In regard to equipment finance, our loan products include:
- Bad Credit Equipment Chattel Mortgage
- Bad Credit Commercial Equipment Leasing
- Equipment Rental with Bad Credit
- Equipment Hire Purchase for Businesses with Bad Credit
This allows the business to realise the relevant tax and other benefits pertaining to that particular loan product. This is relevant in regard to the current business tax breaks offered through the Federal Budget in respect to accelerated asset depreciation.
Through a Chattel Mortgage finance deal, a business with bad credit can fully depreciate the cost of the equipment in the year of purchase, subject to meeting ATO rulings. This can represent a significant deduction that may reduce the income tax obligation for that year.
In addition, the business may also be in a position to take advantage of the loss carry-back measure which is also currently available.
Bad Credit Finance Expectations: Interest Rates
It is widely known that interest rates on equipment finance are currently at very low rates. The rates advertised by ourselves and other lenders, however, primarily relate to applicants with a good credit profile and for new goods. It would be expected that individual lenders would assess a bad credit applicant at a higher risk and as such a higher interest rate may be attached to the loan. In addition, special conditions may be included such as additional security provided or a lower loan amount is approved. Feel free to use our online equipment finance interest rates comparison tool.
Despite the negatives attached to these expectations, it does not preclude a workable outcome from being achieved. Our Jade consultants work hard to negotiate the lowest interest rate for all customers and the most favourable loan terms and conditions.
Achieving a Workable Outcome for Equipment Finance
Businesses with bad credit do have options and possibilities to achieve cost-effective equipment finance. Options that may allow them to take advantage of discounts in EOFY sales, budget tax measures and the current low-interest rate climate to invest in equipment to grow their business. Our free and online equipment loan repayment calculator can assist you in sourcing the best deal. The key is don’t give up, give us a call and discuss the possibilities.
Contact 1300 000 003 for a confidential discussion about the finance options for your business.
DISCLAIMER: IF MISINTERPRETATIONS, MISREPRESENTATION OR ERRORS EXIST IN THIS ARTICLE, NO LIABILITY IS ACCEPTED. THE INFORMATION IS PROVIDED ONLY FOR GENERAL PURPOSES AND NOT IN ANY MANNER INTENDED AS THE ONLY SOURCE FOR MAKING FINANCIAL DECISIONS. THOSE THAT CONSIDER THEY REQUIRE ADDITIONAL GUIDANCE OR ADVICE SHOULD REFER TO AN INDEPENDENT FINANCIAL ADVISOR.