Yes, you can get a lease on salon equipment with bad credit, but it may take a little work. Ideally, equipment leases and loans are a complex case. As secured loans, you might consider them to be less risky for the lenders than unsecured loans offered to businesses with poor credit. And although this might be the truth, the longer-term duration of equipment loans still mean it will be a while before your lender recoups their investment.

Owing to this, you can see many equipment loans with minimum credit score requirements in the mid-to-high 600s. This score puts them out of reach of someone who has recently faced financial hardship.

Have it in mind that even the lenders who don’t use credit ratings to rule out borrowers often still use it to segment their borrowers into different grades. The better your credit, the lower the rates you’ll qualify for. Likewise, the worse your credit, the higher your rates will probably be.

Also remember that not all financiers weight credit score the same. The degree to which the funder depends on credit will differ based on how many other sources of information they have on you regarding your fitness as a buyer. Bad credit puts a glitch to your business financial needs and also makes you run a higher risk of your application being rejected.

Ways to Get Equipment Leases & Loans If You Have Poor Credit

Successfully getting equipment financing with bad credit is quite possible, only that you may have to alter your expectations and do some extra legwork in order to get approved. Nonetheless, here are some ways you can overcome those challenges:

  1. Improve Your Credit

Have it in mind that one of the best ways to avoid having to apply for equipment financing with bad credit is to not have bad credit. Improving your credit takes time, but there are a number of different ways to go about it, including:

  • Settling outstanding debts
  • Consistently paying your bills on time
  • Ask for higher credit limits on your credit cards
  • Don’t utilize all the available credit you have
  1. Check with Online Lenders

It can be quite challenging to meet the equipment financing standards of a traditional bank when you have bad credit. However, online lenders may have more flexible lending requirements. Since these lenders may have less strict requirements, like a lower minimum credit score, they may offer less competitive rates and terms than traditional lenders.

You can usually apply online and get a quote (and potentially approval) within minutes. Howbeit, it is imperative that you double check how a pre-approval impacts your credit score. Many online lenders only perform a soft pull in the early stages, allowing you to shop around and compare offers before committing to one lender. But if they do a hard credit pull, it could impact your credit score.

  1. Offer To Make A Bigger Down Payment

Another way to make your application more attractive to lenders is to make a larger down payment. This may only work for businesses with large cash reserves. If your financier is on the fence about your application, you can sweeten the deal by offering to put more money down. In the case of a loan, it would be a larger down payment. In the case of a lease, you could offer to pay the first and/or last month’s payment in advance.

  1. Offering Additional Collateral

When applying for equipment financing with bad credit, consider offering additional collateral. Have it in mind that lenders may require a down payment of 20%. In normal situations, this down payment paired with the value of the equipment is enough collateral to satisfy the lender. However, equipment financing for bad credit may come with stricter requirements.

Some lenders may accept additional collateral such as other hard assets like real estate to help secure the loan. Carefully review your business financials to make sure you’re comfortable with your ability to repay, otherwise you may put more at risk than just the equipment you’re financing.

  1. Update Your Business Plan

Depending on the lender you apply with, you may be expected to submit a business plan as part of your application. Have it in mind that a strong business plan can highlight your business acumen and could help you demonstrate how the equipment purchase will help grow the company.

A business plan contains several elements, including an overview of the company and structure, market analysis, operations, and financial projections. Provide in-depth data to show the lender that there’s a market need for your product or services and that you’re successfully managing both operations and business cash flow. You could also include a section outlining your funding request, especially if you’re applying with a traditional bank or lender.

  1. Use a Co-signer

Also note that adding a co-signer to your equipment financing application may also help you qualify. Generally, a co-signer is someone who has a strong credit score and potentially significant assets as well. The benefit is that the lender will consider the co-signer’s credit score as well as your own.

Applicants with lower credit scores may have a better chance of being approved for equipment financing when applying with a co-signer and may even qualify for more competitive loan terms, like a lower interest rate, as well.

Howbeit, the downside is that the co-signer has equal responsibility for the equipment loan as you do. If you are late on payments or end up defaulting, that negative activity will also impact your co-signer as well. They may also be responsible for repaying the loan if you don’t.

  1. Prioritize Equipment That Holds Its Value

When it comes to financing equipment, the equipment in question matters quite a bit. Remember, the equipment is the collateral. If you’re a lender, wouldn’t it be less risky to finance an item that retains more of its value over a longer period of time? It also means you may have an easier time getting approved for, say, heavy machinery than you would an item that depreciates quickly, like a computer.

  1. Defer Buying Until Your Situation Improves

Although the newest models of a piece of equipment often come with intriguing bells and whistles, it doesn’t always pay to be an early adopter. If the older equipment you’re using right now still works or just needs minor repairs, it may be enough to carry you over the gap until your finances are in order. Besides, many times new models still have some bugs to work out.


Bad credit makes getting most kinds of financing more challenging, but it doesn’t necessarily have to stop you cold. With the right strategy and the right financier, you can get the equipment loan or lease you need to keep your business humming.

Joy Nwokoro