# Bad Credit Equipment Financing (Below 600)

Canonical URL: https://fundmyequipment.com/learn/credit-tier/bad-credit/
Last modified: 2026-05-29T19:39:17+00:00
Type: efin_credit_tier

## Summary

Equipment financing for bad credit (FICO below 600). Sub-prime specialty lenders, significant down payments, alternate documentation.

## Content

Bad credit (FICO under 600) requires specialty sub-prime equipment lenders. Approvals are limited and conditional, but equipment-as-collateral makes equipment financing more accessible than other sub-prime credit products.

What to expect

Typical APR20-25%
Typical term24-36 months
Down payment20-30%
Time to fund5-10 business days


Required compensating factors
Bad-credit equipment financing typically requires several of these:

2+ years in business
$40K+/month in business deposits
25%+ cash down payment
Equipment with strong, easily-valued resale market
Clean 6 months of bank statements (no NSF/overdrafts, no MCA debt)
Equipment use case clearly tied to revenue generation


What disqualifies
Even with the above, some red flags disqualify most bad-credit programs:

Active tax liens (must be in formal payment plan or settled)
Recent bankruptcy (most lenders require 2+ years post-discharge)
Recent equipment repossession (3+ years for most programs)
Active judgments
Multiple MCA advances on the books
Industry restrictions (cannabis, firearms, adult, gambling have specialty lenders only)


Compare APR not factor rate
Some bad-credit "equipment financing" offers are actually merchant cash advances at 40-100% APR equivalent. Always insist on APR pricing. A reputable bad-credit equipment lender quotes 20-25% APR with monthly payments over 24-36 months.

Rebuild strategy
If you need equipment now and are working through bad credit:

Take the equipment loan if the math works for your business
Pay on time, every month
Pay down revolving balances
Avoid new credit inquiries
Build business credit (Paydex score) via net-30 vendor accounts
At month 12-18, refinance into sub-prime or fair-credit tier (much lower rate)


Apply at /apply/ for routing to bad-credit-specialty lenders.