Purchasing a new or used drill rig can be a big business investment and securing the necessary financing isn’t always an easy task. You need the equipment to build your business and make money, but you need money to get that equipment. Not everyone qualifies for a business loan, so what do you need to do to be a good financing candidate?
Just owning a business doesn’t automatically put you in the running for the best loans and financing options on the market. Here are some tips SIMCO has learned through the years of selling drilling equipment that can help you become a good financing candidate:
- PERSONAL AND BUSINESS CREDIT SCORE
While it isn’t the only factor in credit worthiness, having a decent credit score will show lenders that you are responsible and trustworthy. You can retrieve a free copy of your personal credit report from each of the three major credit bureaus once every 12 months at annualcreditreport.com/, and you can check into your business credit score here. Is your score less than stellar? There are steps you can take to make it better. Look for incorrect late payments listed for any of your accounts, make sure the balance owed for any open accounts is correct, and be sure to dispute any errors through the credit bureau reporting them.
- TIME IN BUSINESS AND CREDIT UTILIZATION
While you can’t magically add more years to your time in business, being aware that having no business credit score can affect your financing will save you some trouble and headache. Another issue that often gets businesses turned down for financing is a poor financing history. It’s recommended to have more than one or two credit cards for your business but only use 25% of the available credit on each. Never max out a card and don’t close cards that you’ve paid off fully. If you show that you have previously been given a decent amount of credit but haven’t used it all, that will show that other lenders have approved your creditworthiness.
- DOWN PAYMENT
Just as with buying a house, securing a large business loan can go much more smoothly if you can make a substantial down payment. A down payment isn’t always required and there are lenders who will finance for little to nothing down. This option often times comes with a higher interest rate, but if you don’t have the collateral or up-front cash to secure the financing for a drill rig purchase these loans can be an excellent way to build your credit and your business.
Business lenders will look at many different factors to determine if you are a good financing candidate. Finance companies will usually offer a higher interest rate, but banks have stricter qualifications and limits and can be harder to get. If you follow some of these tips, do your homework, and look for all financing options available to you, your business can find the money to continue to grow.