There is no single minimum credit score for equipment financing. Each lender sets its own floor, and the number moves with the equipment, the down payment, your time in business and your cash flow. Published lender guidelines tend to cluster in the 600s for standard terms, and better rates usually go to owners in the upper 600s and above. Owners below that range still get approved, often with a larger down payment, a shorter term or a higher rate. This guide explains which score lenders pull, what else they weigh, and what to do before you apply.
TL;DR
- Lenders can look at your personal FICO score, a business credit score, or both. For newer companies the owner's personal score usually carries the most weight.
- No universal cutoff exists. A higher score buys lower rates and smaller down payments, while a lower score shifts the cost to you rather than automatically ending the conversation.
- The equipment itself is collateral, so revenue, time in business, existing debt and the type of equipment can offset a weak score.
- Fix errors and late payments first, compare several offers, and use a pre-qualification that does not affect your credit.
Table of Contents
- Which credit score do equipment lenders look at?
- What credit score do you need for equipment financing?
- What about time in business?
- How often are applicants turned down?
- What if you have bad credit?
- Dealer financing, banks, online lenders and SBA loans
- Our perspective
- Get ready before you apply
- See your equipment financing options
- FAQ
- Sources
Which credit score do equipment lenders look at?
Business owners often assume there is one "business credit score" that decides everything. In practice lenders use a mix. Loan companies may use personal scores such as FICO and business scores from agencies like Experian, Dun & Bradstreet and Equifax, and depending on the business structure and the loan type they may specifically review the owner's personal credit.
The two are separate files, but they are not separate in the underwriter's mind. Experian notes that although business and personal credit are distinct, lenders often check both when a company applies for financing.
Personal score
If your company is a sole proprietorship, a young LLC or a small corporation without much trade history, your personal score is the main signal of how you handle debt. Expect a personal guarantee. Experian explains that personal credit can be affected if you guaranteed a business loan, and that guarantees are common for startup loans where the business has no established credit history. A guarantee also means a default can follow you personally, so read that clause before you sign.
Business score
Business scores such as PAYDEX, Intelliscore and the SBA's SBSS draw on vendor payment history, public records and company size. They matter more as your company ages and builds trade lines. If you want to see how each one is built, our guide to U.S. business credit scores walks through PAYDEX, Intelliscore and SBSS.
What credit score do you need for equipment financing?
Think in bands rather than a hard number. These are practical ranges, not guarantees, and every lender's program differs.
| Personal score range | What to expect | What helps |
|---|---|---|
| 700 and above | The widest choice of lenders, the lowest rates, and often little or no down payment | Clean financials and a clear business use for the equipment |
| 650 to 699 | Approval is common with a standard application, and pricing is moderate | Two years in business, steady deposits |
| 600 to 649 | Fewer lenders, higher rates, and sometimes a down payment | Strong revenue, an established vendor, newer equipment with resale value |
| Below 600 | A narrower field of specialty lenders, with larger down payments and shorter terms | Collateral, a co-signer, a lease structure, a smaller purchase |
The pattern is consistent across lenders: the score changes the price and the structure before it changes the answer. A borrower in the top band pays less for the same machine than a borrower in the bottom band, and the bottom-band borrower is more likely to be asked for cash up front.
Why equipment loans are more forgiving than many other loans
Equipment financing is secured by the equipment you are buying. If you stop paying, the lender can repossess and sell a truck, press or oven. That collateral is why lenders will often lend to scores that an unsecured loan would not approve. It is also why the type of equipment matters. A late-model excavator with a strong resale market is easier to finance than custom machinery that only your shop can use.
Why a score is not the whole decision
Lenders look past the number. Experian points out that lenders evaluate revenue consistency, existing debt and industry-specific risk alongside credit, which is a more complete picture of business health than a score alone. Two applicants with a 640 can get very different answers because one has steady monthly deposits and low debt, and the other does not.
What about time in business?
Time in business is the other filter owners hit first. Many finance companies want a business to have operated for at least 24 months, according to Kato Compact Excavator Sales representatives quoted by Equipment Finance News. That is a common preference, not a universal law. Some lenders will work with a company under two years old if the owner's personal credit is strong, there is a down payment, or the equipment is easy to resell.
If you are new, a higher personal score and a larger down payment are the two levers you control. A lease can also help, which we cover below.
How often are applicants turned down?
Denials are not rare. A Federal Reserve survey of nearly 11,000 responses showed that equipment financiers denied or only partially approved 27% of small business applicants in 2023. Partial approval is worth noticing. It means a lender may offer less money, a shorter term or a down payment requirement rather than a flat no. If you receive a counteroffer, read it before you walk away from it.
For the common reasons applications fail, see our breakdown of why small business loan applications get rejected.
What if you have bad credit?
A low score makes equipment financing more expensive, not impossible. Here are the moves that work, in the order we would try them.
- Check your reports first. Pull your personal reports and, if you have one, your business file. Disputing an error is free and can move a score faster than anything else on this list.
- Bring cash to the table. A down payment lowers the lender's loss if you default. It is the single most persuasive offset for a weak score.
- Choose the equipment carefully. Standard, widely used equipment holds value, and lenders price that in. Used equipment from a reputable dealer can also lower the amount you need to borrow.
- Shorten the term or shrink the purchase. A smaller loan over a shorter period is easier to approve, even if the monthly payment is higher.
- Consider a lease. Leasing can have different approval standards and lower upfront costs. Our comparison of equipment leasing versus a loan covers ownership, tax and end-of-term differences.
- Add a co-signer or additional collateral. A creditworthy co-signer or another asset can bridge the gap.
- Show cash flow. Several months of bank statements showing consistent deposits can matter as much as the score. Lenders also look at whether your income covers the new payment, a measure covered in our piece on debt service coverage requirements.
Stay cautious with offers that promise approval regardless of credit. Very high rates, large fees and prepayment penalties are where low-score borrowers get hurt. Compare the total cost of the loan, not just the monthly payment.
Dealer financing, banks, online lenders and SBA loans
Where you apply changes how your score is read.
- Dealer or manufacturer financing is convenient and sometimes comes with promotions. In October 2024, some lenders were offering 0% financing on new equipment to help buyers through high interest rates, according to Equipment Finance News. Those offers are typically reserved for strong credit and specific models, and they change often, so confirm what is available now.
- Banks tend to price best but want established businesses, strong scores and a longer paperwork process.
- Online lenders are usually faster and more flexible on score and time in business, with pricing that reflects the added risk. Our comparison of online lenders versus banks covers speed and trade-offs.
- SBA loans can finance equipment too, usually at lower cost and longer terms. For 7(a) loans of $500,000 or less, SBA underwriting options as of August 2023 include using an acceptable SBSS score, currently 155 and above. Credit rules for SBA loans have also changed recently; our guide to SBA loan credit scores explains what lenders want now.
Don't feel obliged to take the first financing offer in front of you. A dealer's preferred lender is one option, not the market. Getting two or three quotes shows you the real range for your credit profile, and keeping your books clean makes that comparison easier. Even basic choices such as cash versus accrual accounting affect how clear your financial statements look to a lender.
Our perspective
Most owners ask us the same thing: "Is my score good enough?" We think the better question is: "Which lenders price my profile fairly?" A 640 is a dead end at one lender and a routine file at another. The score matters less than matching the right borrower to the right lender.
That is why we built Formosity Funding as a marketplace rather than a single lender. You pre-qualify with no credit impact, you see real offers from a nationwide lender network, and a funding specialist helps you compare them instead of leaving you with a stack of terms. We have seen the same mistake repeatedly: owners apply to one lender, get a hard inquiry and a denial, and conclude they cannot be financed. Often the issue was fit, not eligibility.
Our advice is to know your numbers before you apply, decide how much cash you can put down, and compare total cost across offers. If your score is rough, fix what you can in the next 60 to 90 days and apply when the file is stronger, unless the equipment is what is holding your revenue back. In that case, a more expensive loan that puts the machine to work can still be the right call, provided the payment fits your cash flow.
— Alvin
Get ready before you apply
A tidy file speeds up approval and gives your score its best chance. Gather these items:
- Your last two to three months of business bank statements
- Basic business information: entity type, EIN and start date
- A quote or invoice for the equipment from the vendor
- Recent tax returns or financial statements, if the lender asks for them
- A short explanation of how the equipment will produce revenue
Our checklist of small business loan requirements goes through the full documents list. For tactics that work within days, see how to raise your approval odds.
See your equipment financing options
If you are ready to compare, Formosity Funding can match you with equipment financing from our lender network. Pre-qualification does not affect your credit, and a dedicated funding specialist guides you from application to funding. You can see everything we offer, including working capital, lines of credit and SBA loans, on our business funding options page.
FAQ
What is the minimum credit score for equipment financing?
There is no universal minimum. Some lenders want scores in the 600s for standard programs, while specialty lenders work with lower scores and charge more or ask for a down payment. Revenue, time in business and the equipment type can offset a lower number.
Does equipment financing check personal or business credit?
Often both. Lenders may review the owner's personal score, a business score from Experian, Dun & Bradstreet or Equifax, or a combination. Newer companies with little business credit tend to be judged mostly on the owner's personal credit, and a personal guarantee is common.
Can I get equipment financing with bad credit?
Yes, though it usually costs more. Expect a down payment, a shorter term or a higher rate. A lease, a co-signer, extra collateral and strong monthly deposits all improve your chances.
Will checking my options hurt my credit score?
It depends on the lender. A soft-pull pre-qualification does not affect your credit, while a full application typically triggers a hard inquiry. Pre-qualify first, compare offers, then submit a full application only to the lender you choose.
How long do I need to be in business?
Many lenders prefer at least two years, but it is not a rule everywhere. Newer businesses can qualify with strong personal credit, a down payment or easy-to-resell equipment.
Sources
- Equipment dealers, lenders get creative to help small businesses, Equipment Finance News
- Case, Vermeer, Toro talk financing strategies for new equipment, Equipment Finance News
- Types of Business Loans for Bad Credit, Experian
- How to Build Business Credit, Experian
- What Happens If You Default on a Business Loan, Experian
- Why Women-Owned Businesses Get Declined for Funding, Experian
- Business Loan Program Improvements, U.S. Small Business Administration