Credit reports are notorious for being inaccurate, so address any errors you find. If you do settle a debt, make sure you negotiate that it will be reported as "paid as agreed" and not settled for less than the full amount. Get it in writing from the debtor or collection agency that they will do so. Sometimes it is not possible, but try any way.
Keep some money in your business checking account. I see too many applicants that drain their business accounts. The balance of your business bank account demonstrates that you have the ability to make a payment. When I am considering a $50,000 equipment lease, I like to see at least an average of $7,000 or more in the bank. I can approve leases with lower balances, but then the payment goes up because that element is missing. Smaller leases, say $25,000, obviously can get by with a lower average balance.
Don't be afraid to show a profit in your business. I know we are all trying to beat the taxman, but if you need to show financial statements or tax returns, little or no profit will result in a turn down. A lot of carwash operators pay for supplies with cash or credit cards. More and more vendors want instant payment. If you can, establish some open accounts with terms and pay them like clockwork. Make sure these are companies or businesses that will provide a credit rating when asked.
Jim Phelps is president and owner of Capital Equipment Leasing Inc., in Beaverton, OR. He has more than 25 years experience in the equipment leasing industry. Phelps began his leasing career in the carwash industry. He can be reached at [email protected] or at 800-269-7810.