No matter your industry, or the services or products you provide, a key part of your company’s ability to be sustainable and profitable is having the right tools and equipment to get the job done. Since this holds true for virtually every enterprise, at some point your business will likely have equipment needs. When that happens, having access to financing that makes sense for your company is essential.
Unfortunately, finding the right financing can be a real struggle for companies. And that doesn’t even start to touch on the difficulties some businesses have in getting approval once they think they’ve found a path forward. While this is a frustrating situation, you may have more options than you realize.
Since a primary goal here at Team Financial Group is to help you grow your business by helping you get the equipment it needs to thrive, let’s look at financing possibilities and see what would make sense for you and your company.
Already sure you want to join the hundreds of businesses that have chosen Team Financial Group over the past two decades? Feel free to reach out and see how we can help you!
Before Evaluating Your Financing Options
Naturally, if you are in the process of exploring financing for business equipment, you’ve likely performed a fair amount of work on the front end. This typically entails steps like:
- Reviewing company goals
- Analyzing current and projected performance
- Assessing production/service capacity
- Examining existing equipment
- Researching new or used equipment availability
- Deciding whether to buy or lease
Doing all that work can take a lot of time and effort. Given that you don’t want that to go to waste, the next step is crucial – evaluating financing options.
Comparing Methods of Financing Business Equipment
Once you know exactly what you want, it’s time to create your plan for how you are going to finance the new assets. There are a handful of general options for financing the equipment you are purchasing or leasing. And as you’d expect, each has its own respective set of pros and cons.
Traditional Banks
When people think about borrowing money, traditional bank loans are typically what come to mind first. These brick-and-mortar financial institutions are usually considered to be safe options, especially compared to some online options. And they may be able to offer low rates and favorable loan terms.
One downside to taking this approach is that the standards to qualify for a loan with a bank are often quite high. Another is that the loan process itself can be lengthy and complicated, and even more so if you happen to make a mistake or accidentally miss something while filling out an application. And their inflexibility can extend to the fact they don’t devote enough effort into truly understanding the nature of businesses that are applying. That is a problem for companies with unique business structures, revenue streams, and tax situations.
While a traditional bank might be a good choice for a conventional business that has a proven track record, ample documentation, and the ability to wait long periods for possible approval and dispersal of funds, that situation certainly doesn’t apply to every company.
Credit Unions
In some regards, going to a credit union for a loan to finance business equipment can be a similar experience as going to a bank. These financial institutions are usually reputable, offer loans backed by the Small Business Administration (SBA), and may have favorable interest rates. Unlike most banks, though, credit unions normally do tend to offer a more personal touch.
Credit unions can extend that personal touch, though, because you typically need to be a member and meet certain eligibility requirements. Along with that, accessibility is commonly limited because they tend to have fewer branches than traditional banks. Also limited can be their service offerings, including types of loans offered.
If a business is able to meet a bank’s criteria and willing to undergo a similar process, a credit union could make sense for a business loan. The limited services, though, doesn’t give them as much flexibility as other available alternatives.
Online Lenders
When high qualification standards or long wait times make someone hesitant to go to a bank or credit union to find financing for business equipment, they may turn to the internet for another possible source. While online loans can appeal to those who might not have the strongest personal credit or are looking for fast funding, there are some important considerations to keep in mind.
The most obvious concern with an online lender is that you cannot walk into an office to discuss matters in person. Some individuals may feel comfortable with this kind of arrangement, but it’s more common to have greater ease when you can look into someone’s eyes. Related to the lack of a brick-and-mortar office, it can be highly difficult to develop a proper relationship with an online lender. That can affect their ability to get to know your business and offer solutions that make sense for you, not just them.
Perhaps the biggest knock against online lenders is potential security concerns. While all financial institutions in the modern world use technology and the internet to varying degrees, entering financial information online can be risky, especially when you don’t have the option of an in-person visit if a serious problem arises.
As noted, this is a possibility for companies who are only concerned with getting money fast or worried about being approved at a bank or credit union. There is certainly a higher risk factor in pursuing this avenue, however, and borrowers miss out on the benefits of a lender that has a physical office.
Others
Even though they might not have wide-ranging appeal, a couple of financing alternatives worth at least briefly mentioning are small-business grants and crowdfunding.
Small-business grants are typically offered through nonprofits, government agencies, and some corporations, and tend to be focused on specific industries or types of business owners. Because there are usually highly specific requirements to qualify, it can take a lot of time and effort to find and apply for appropriate grants. Along with that, the prospect of free financing has an obvious appeal that causes a high demand, thereby decreasing the odds for a company to receive the grant.
Unlike grants, which have existed for quite some time, crowdfunding is a very recent phenomenon. The two are similar, however, in the fact that the odds of this being a viable option for a business seeking to finance equipment are quite low. While crowdfunding could possibly work for a business that captures the public’s interest or has extremely popular products or services, this is not a realistic endeavor.
A Better Approach: Working With a Private Commercial Equipment Financing Partner
Now that we’ve seen how these options each come with various concerns—difficult approval processes, inflexibility, possible security issues, no physical offices—it’s easy to understand why finding financing that makes sense for your company could be a frustrating experience. The good news here is that you still have another choice: private commercial equipment financing.
In this case, we’re talking about working with a private lender, like Team Financial Group, who can provide you with flexible options that work for your company’s unique structure and circumstances. Even better is when you can choose a financing partner who sincerely cares about your success.
Going with a private lender is a smart approach if you don’t want to jump through hoops, only to then wait around and possibly jump through some more hoops. Instead, you can start your application and have experienced equipment financing specialists do the rest. This kind of service means that you may even receive same-day approval and funding.
Of course, that depends on circumstances, but private commercial equipment financing partners will work with you and find the right solution for your business. A couple of these solutions include equipment financing agreements and leasing services.
Equipment Financing Agreement (EFA)/$1 Buyout Lease
If you come to Team Financial Group for your financing, this is one of the possible arrangements we might recommend. In this case, there are fixed monthly payments, and at the end of the term you don’t have any further obligation. It’s a popular choice that can protect against rising interest rates and allow you to own and depreciate your equipment. This can be particularly advantageous for long-term assets that retain value.
Equipment Leasing/FMV Lease
If the equipment you need is a kind that becomes obsolete over time, you may benefit from a leasing option. Doing so can help you manage the costs that come with continually updating equipment, especially because they typically carry a lower payment. Since we’re talking about leasing, you don’t own the equipment, but you can purchase it at term end. As we talk through your specific needs and goals, you might find this to be the right option and we can then work to make it happen.
Team Financial Group Is Here for You
As an independently owned commercial equipment financing company, Team Financial Group has the flexibility to help your business, no matter the industry or stage of development. We have provided over $600 million in funds for businesses since we opened the doors back in 2001. And we’ve accomplished this by providing fast, flexible financing while applying common-sense lending principles and developing lasting relationships with our customers.
If you are seeking financing for commercial equipment of virtually any kind (manufacturing, agricultural, construction, other), we’re here for you. More than that, we’ll take time to listen to you and understand your business before helping find a solution that makes sense for you.
Now that you know our story and mission, we’d love the opportunity to hear yours. Please feel free to give us a call at 616-735-2393 or fill out our online form to see exactly what we can do to help you get the equipment your company needs to succeed.