What Underwriting Really Looks At in Equipment Financing Applications

When you apply for equipment financing, you’re not just being judged on your credit score. Lenders look at a full financial picture, one that includes your business performance, the asset you’re buying, and even your industry’s risk profile.

Understanding what underwriting actually looks for can help you prepare stronger applications, avoid unnecessary declines, and negotiate better terms.

1. Personal Credit: The Foundation of Small Business Lending

Even though equipment loans are made to your business, most lenders still check personal credit for businesses with closely held ownership.

Your personal credit helps underwriters gauge how you’ve handled debt in the past. It’s a proxy for overall reliability.

• Preferred FICO: 650+ for most lenders; some go as low as 600 if other factors are strong.

• What they look for: Recent delinquencies, utilization ratios, and public records (bankruptcies, liens, judgments).

• Tip: Pay down revolving balances and avoid new inquiries 30–60 days before applying.

  
  

2. Business Credit: Paynet, D&B, and Beyond

As your business grows, underwriters rely more on business credit data, usually from Paynet, Dun & Bradstreet (D&B), and Experian Business.

Each offers a slightly different view:

• Paynet tracks your company’s past loan and lease performance, showing lenders how reliably you pay on commercial accounts.

• D&B provides a PAYDEX score (0–100) that measures payment timeliness. A score of 80 or higher usually signals strong performance.

• Experian Business blends trade lines, public filings, and industry data into a risk score similar to FICO.

  
  

Tip: Pull your D&B and Paynet reports before applying. Correct outdated or inaccurate data as it can change your approval odds overnight.

3. Business Financial Health: Cash Flow and Bank Statements

Typically, for requests of $50,000 or more underwriters will ask for 3-4 months of business bank statements to review. Even the best credit score won’t offset weak cash flow. Underwriting teams closely review your business bank statements to understand:

• Monthly deposit volume and consistency

• Average ending balance (they want to see positive cash management)

• Negative days (days with overdrafts or NSFs)

• Seasonality or volatility in revenue

  
  

Tip: Maintain clean, consistent deposits and average daily balances for at least 90 days before applying. One strong quarter can often outweigh a mediocre FICO.

4. The Asset Itself: Collateral, Age, and Value

The equipment you’re financing matters almost as much as your financials. Lenders ask: If we had to repossess this, could we resell it easily?

They evaluate:

• Asset type: Heavy equipment, trucks, CNC machines, medical devices, etc.

• Condition and age: Newer equipment retains value longer.

• Liquid resale value: Specialized or niche assets carry higher risk and may require stronger credit or more money down.

  
  

Tip: Specialized and niche assets are usually an opportunity in disguise to find a lender who prefers the equipment and industry. Working with a financing partner can help uncover who might be the best fit for your request.

5. Time in Business and Industry Type

Lenders weigh your business’s stability and industry risk heavily.

• Time in business: Most want at least 2 years, though startups can still qualify with solid personal credit and a strong down payment.

• Industry: Some sectors (construction, manufacturing, transportation) are viewed as stable. Others (restaurants, startups, retail) are higher-risk and face tighter terms.

6. Existing Debt and Global Cash Flow

For equipment financing requests over $250,000 underwriters also consider your total debt picture, not just one loan in isolation. This is usually in the form of a full financing package, which we will cover in detail in the near future.

• Global cash flow evaluates all debt obligations (both business and personal) to ensure you can handle new payments.

• Strong global cash flow (typically a ratio above 1.25x) signals you have enough income to cover expenses plus the new loan comfortably.

  
  

Tip: Consolidate or pay down smaller obligations before applying to improve your ratios.

7. Documentation and Consistency

Finally, underwriters look for clean, consistent documentation. Even strong applicants can lose approvals because statements don’t line up or ownership details aren’t clear.

Make sure:

• Your business name matches across all documents (bank statements, tax returns, equipment quote).

• Bank statements are unaltered PDFs (not screenshots).

• Ownership structure and EIN are correctly reflected on your application.

  
  

The Bottom Line

Underwriting isn’t about finding reasons to say no, it’s about verifying your ability to repay and ensuring the deal makes sense for both sides.

When you understand what’s being evaluated from personal credit to Paynet data and cash flow trends you can prepare a file that instills confidence and gets approved faster.

A good funding partner will help you anticipate these requirements, gather the right documents, and present your deal in the best light possible.

   About the Author

   Jared Holmes is the founder of Brilliance Funding Partners, where he helps business owners navigate the commercial lending landscape with confidence. With 10 years of hands-on experience in SBA lending, equipment financing, and working capital solutions, Jared focuses on asking the right questions and delivering financing strategies that make sense for each business. Connect with Jared for a personalized conversation about your options.