If you’ve been asked to add a cosigner to your equipment financing application, it often means you weren’t able to qualify on your own.
That can be disappointing to hear, but it doesn’t necessarily mean financing is out of reach. Adding a qualified cosigner is one of the most common ways to strengthen an application. In many cases, it’s the difference between a decline and an approval.
What Is a Cosigner?
A cosigner is someone who agrees to share responsibility for the financing agreement alongside the primary applicant.
Because the lender evaluates each individual listed on the application, adding a qualified cosigner can make an application strong enough to receive an approval that may not have been possible otherwise.
For our foodservice equipment financing programs, a cosigner must be either your spouse or a blood relative.
Why Would a Lender Ask for a Cosigner?
Every financing application is different.
If a lender determines that you don’t qualify on your own, adding a qualified cosigner may provide another path forward. Rather than ending the conversation with a decline, the lender is offering another option that could help make the financing possible.
While not every application will qualify with a cosigner, it’s often an opportunity worth exploring.
Adding a cosigner may help:
- Turn a decline into an approval.
- Strengthen the overall application.
- Help applicants with challenged or limited credit obtain equipment financing.
- Move forward with purchasing the equipment your business needs.
What Does It Mean for the Cosigner?
Before anyone agrees to become a cosigner, it’s important they understand exactly what they’re signing.
A cosigner shares responsibility for the financing agreement. If the primary borrower is unable to make the required payments, the cosigner is also legally responsible for fulfilling the terms of the contract.
Because of that, becoming a cosigner is an important decision. We always encourage open conversations, so everyone involved understands the commitment before signing.
How the Process Works
Many people assume adding a cosigner means starting the application over.
Fortunately, that’s not the case.
If a lender determines a cosigner is needed, we’ll send the primary applicant a secure, unique link. Simply forward that link to your spouse or qualified family member, and they’ll complete their portion of the application online. Once it’s submitted, the lender reviews the updated application using information from all applicants.
Their information is automatically added to your existing application, so there’s no need to start from scratch or fill out a second application.
The process is quick, straightforward, and in most cases only takes a few minutes.
What Do Lenders Look for in a Cosigner?
Lenders evaluate cosigners the same way they evaluate any other applicant. Their credit profile, financial history, and overall ability to repay are all part of the decision.
If you’re curious about what lenders look for during the approval process, we’ve put together a more detailed guide that explains how equipment financing applications are evaluated. You can learn more here.
While every lender has its own underwriting guidelines, here are some of the factors that are commonly reviewed when evaluating a cosigner:
- Strong Credit History: lenders are not only looking at the credit score itself. The length of their credit history, how many tradelines they have had, payment history, also matter.
- Residency Status: Cosigners must be United States residents or have legal authorization to remain in the United States for the duration of the financing agreement.
- Meet Income Requirements: Cosigners may be required to provide proof of income showing they have the financial ability to support the repayment of the financing agreement.
- Relation to Applicants: Cosigners must be a spouse or blood relative.
Keep in mind that these are common underwriting considerations, not a checklist for guarenteed approval. Every lender has its own guidelines, and requirements can vary depending on the financing program and the applicant’s overall profile.
We’re Here to Help
Needing a cosigner isn’t the news most applicants hope to hear, but it also doesn’t mean financing is off the table. In many cases, it’s simply another path to getting the equipment your business needs.
At FS Foodservice Solutions, we’ll explain why a cosigner is being requested, answer any questions you or your cosigner have, and guide you through the process every step of the way.
We believe financing should be transparent and easy to understand, so you’ll always know exactly where you stand and what your options are.
If you have questions about financing your equipment and whether adding a cosigner is the right option, our team is here to help. We’ll explain your options, answer your questions, and guide you through the process with no pressure and no surprises.
Frequently Asked Questions
Can anyone be a cosigner?
No. For our equipment financing prograns, a cosigner must be either a spouse or a blood relative.
Does a cosigner need to own part of the business?
No. A cosigner does not need to have an ownership interest in the business, as long as they are a spouse or blood relative.
However, all business owners should be included on the original financing application. If an owner was left off of the application, they should be added as soon as possible.
Will a cosigner’s credit be checked?
Yes. The cosigner’s credit will be checked, but it is a soft pull, which does not impact the cosigner’s credit score. There is no obligation to move forward once we’ve presented you with your options.