If your business has never financed a piece of equipment before, the first conversation with a financing provider can feel like the hardest step. The good news is that it does not take a stack of paperwork to start, just a clear picture of what you are buying and why.
A forklift and pallet racking can help a growing wholesale distributor move inventory more efficiently and make better use of warehouse space. Before choosing equipment or signing an agreement, it helps to know what a financing provider may ask, what information to gather, and how to compare the options.
A clear picture of the purchase, the business, and the equipment’s purpose is a strong starting point. Here’s how to prepare.
1. Describe the equipment and the purchase
Start with the basics: What do you plan to buy, who is selling it, and how much does it cost? For a forklift and racking, share what you know about the forklift’s make, model, condition, and whether it is new or used. For the racking, outline the planned scope and cost.
Ask the vendor for a written, itemized quote. It should identify the equipment and seller and show the price. If the total also includes delivery, installation, or other related costs, ask for those to be listed separately. That helps the financing provider understand the full project and assess which costs may be included.
Soft costs typically include expenses such as freight, delivery, concrete work, electrical installation, and equipment installation, costs that do not independently represent equipment collateral. A typical guideline is approximately 20% of the equipment cost, and some financing sources accommodate up to 25%. These figures are guidelines, not universal program limits. Higher soft-cost amounts depend on the financing source, the strength of the borrower, the transaction structure, and approval. Confirm with the financing source which costs can be included before you finalize your budget.
It’s also useful to know:
- Whether you have paid a deposit or made another payment.
- How much you are requesting to finance.
- When the equipment is expected to be available.
- Whether you are considering other equipment or vendors.
If the warehouse setup is still being finalized, say so. You can ask what details are needed to review the purchase before committing to an order.
2. Explain why the equipment makes sense for the business
A financing provider may want to understand how the purchase fits the business and its plans. For example, will the forklift help staff handle more pallets, reduce reliance on rented equipment, or support higher inventory volume? Will racking make better use of existing warehouse space?
Be specific, but realistic. You don’t need a complex forecast for an introductory conversation. Explain what is changing in the business, what the equipment will help you do, and how you expect it to support operations. If the purchase depends on a new warehouse, customer contract, or increase in order volume, mention that context.
This is also a good time to distinguish a necessary purchase from a convenient one. Consider how often the equipment will be used, whether it fits your current space and workflow, and whether expected business cash flow can support the cost.
3. Have a basic business and financial picture ready
The information requested varies by financing provider, transaction, and business profile. You may not need everything for the first call, but being able to discuss the following helps move the conversation along:
- Business basics: Legal business name, time in business, industry, ownership, and warehouse location.
- Recent business activity: Approximate revenue, how consistently sales come in, and whether the business is growing or seasonal.
- Cash flow and obligations: Existing loans or other regular debt payments, plus any major changes that could affect cash flow.
- Records, if requested: Recent business bank statements, current financial statements, and tax returns may be requested during review.
For a newer business, be prepared to discuss the owners’ relevant experience, how the business is funded, and what supports the warehouse expansion. A provider may also ask about owners’ credit or request a personal guarantee, depending on the business and the financing option.
Be open about irregularities that may appear in records, such as a one-time deposit, transfer between accounts, or unusual expense. A brief explanation can help clarify what the numbers show.
Here is some good news: you may not need as much documentation as you expect. At Simplified Capital, we normally request a completed credit application, the most recent three months of business bank statements, and an equipment quote. We collect bank statements proactively because they help evaluate business cash flow and are frequently requested later in underwriting. For qualified applicants, application-only Equipment Financing up to $500,000 generally does not require business financial statements or tax returns, though documentation varies by the financing source and applicant, and higher limits are available for qualifying, well-established, financially strong businesses.
4. Ask how much cash may be needed up front
Do not assume that every equipment purchase requires a traditional down payment. Programs generally do not require one for appropriately qualified borrowers, and financing without a down payment is often achievable for businesses with supportive credit and reasonable bank balances. Down payments tend to appear in certain circumstances, such as used heavy equipment purchased through a dealer, higher-risk credit or transaction situations, or a business owner’s choice to reduce the amount financed. Whether that applies to your purchase depends on the business, the equipment, and the financing provider’s review.
Ask whether the proposal includes any up-front payment, and what it means. In particular, an advance payment is a scheduled financing payment collected at or near the beginning of the agreement, rather than a separate contribution toward the equipment’s purchase price. Ask how any payment will be applied and whether there are other costs due before funding.
A clear quote and an honest conversation about available cash help the provider assess the request. Avoid committing to a purchase based on an assumed down payment or approval.
5. Understand what happens at the end of the term
A rate or scheduled payment does not tell the whole story. Before comparing proposals, understand the full term and what you may owe or need to decide at the end.
Ask whether completing the scheduled payments gives your business ownership of the equipment, whether there is a purchase option or additional amount due, or whether another end-of-term choice applies. Ask for those obligations in writing. Also clarify whether the scheduled payment includes all relevant costs and whether early payoff terms matter to your plans.
These details are especially important when comparing two offers that appear similar month to month. A lower payment may involve a different term or end-of-term obligation. Compare the overall agreement, not just the rate or scheduled payment.
6. Know what the process usually looks like
The first conversation is generally about understanding the request: what you’re buying, the amount, the vendor, the business, and how the equipment will be used. From there, the provider can explain what information is needed to evaluate available options.
If you decide to proceed, you may be asked to complete an application and provide supporting documents. The financing provider reviews the request and may ask follow-up questions or additional information. If an option is offered, review the complete terms, including payment schedule, up-front costs, collateral, any personal guarantee, and end-of-term obligations, before accepting.
Some businesses also receive a preapproval before selecting equipment. Once a specific item is identified, the equipment and the final transaction remain subject to the financing source’s review and approval. A preapproval is a useful planning tool, but it is not completed funding.
Approval and funding timelines vary. Vendor paperwork, equipment details, documentation, and the financing provider’s review can all affect timing. If you have a target delivery date, mention it early and ask what needs to happen to meet it.
A practical checklist for your first conversation
Before you call, gather whatever you already have:
- An itemized quote for the forklift and racking.
- The amount you expect to finance and any deposit paid.
- A short description of your business and warehouse plans.
- A simple explanation of how the equipment will support operations.
- A general picture of recent revenue, cash flow, and existing debt.
- Questions about up-front payments, guarantees, total obligations, and end-of-term choices.
If the purchase is part of a broader operating need, such as covering inventory or payroll during the expansion, discuss that separately. Equipment Financing is intended for an equipment purchase, while Working Capital may be relevant to eligible business expenses. The right fit depends on the use of funds and the business’s circumstances.
Simplified Capital is an independent commercial finance company, not a direct lender. Financing partners make underwriting and approval decisions. We work with businesses across a wide range of industries and credit types, in traditional and non-traditional financing situations, and we can help you understand what a strong first request looks like before you commit to a purchase.
To talk through your first equipment purchase, call (866) 810-1305, email info@simplifiedcapital.com, or fill out the contact form at https://www.simplifiedcapital.com/contact/.
Simplified Capital has provided commercial financing solutions to businesses nationwide since 2002 and maintains an A+ rating with the Better Business Bureau.