When it comes to choosing the right commercial lender for your financing needs, understanding the difference between your many options is key. If you are looking to finance equipment for your business, your primary options are depository lenders, such as banks, and independent lenders like Team Financial Group.
Continue reading to learn more about the differences between banks and independent lenders and how you can decide which is the best choice for your business.
How Banks and Independent Lenders Provide Financing Solutions
In many cases, banks and independent lenders are not direct competitors. In fact, at Team Financial Group, we often meet clients via referral from banks. Many of our customers work with a bank to secure their working capital, such as lines of credit, and then partner with Team Financial Group for fixed-term financing to buy equipment.
As an independent lender, Team Financial Group can provide more financing options than our clients could get directly from a bank. Even in cases where our services overlap with those of banks, many clients choose Team Financial Group because our financing options are faster, simpler, and more convenient. Other clients use Team Financial Group rather than their bank because their financing needs don’t fit into the more rigid structure that regulations impose on banks.
Top 4 Differences Between Independent Lenders and Banks
There are a few differences between financing through an independent lender and a bank. The top differences fall into four categories of financing outlined below.
Risk Management and Collateral
Banks have more rigid lending guidelines and often have automated underwriting processes that are designed to reduce their risks. To minimize their risks even further, banks often require putting up additional collateral besides the financed assets.
Range of Accepted Assets
Banks often prefer to lend money for appreciable assets — assets like real estate that have the potential to gain value over time. Meaning they may be less interested in financing equipment with higher depreciation rates.
Independent lenders have more flexibility in the type of assets they are willing to finance. Team Financial Group specializes in providing financing for depreciating business assets such as IT equipment, which is frequently replaced due to technology updates.
Loan Offerings and Processing Speed
Banks lean more towards providing large, long-term loans and typically do not have as many options available when it comes to size, payment structure, and term. One of the biggest downsides to financing with a bank is that the approval process can last days, weeks, or even months.
Independent lenders typically have portfolios that include deals of all sizes and are almost always faster when it comes to loan approval and processing. Team Financial Group can often provide same-day processing, meaning you can get the money you need for your business when you need it.
Payments and Terms
Down payments of up to 20% are fairly standard with bank financing and are another way banks try to minimize their risks.
Because of their more flexible and hands-on risk management styles, independent lenders often do not require a down-payment at all. Team Financial Group can often provide financing without a down-payment and still offer 100% financing, with the option to extend loan terms up to 7 years if needed.
Which Commercial Lender Is Right for My Business?
Now that you understand some of the differences between banks and independent lenders, determining which type of commercial lender is right for your business comes down to three simple questions:
- How is your business and personal credit history?
- What type of loan and terms do you require?
- When do you need the loan?
Consider the information in the previous section, and then ask yourself those three questions. For many businesses, working with an independent lender like Team Financial Group is going to be your best option for getting the type of loan you need, when you need it.
Partner With Team Financial Group for a Better Experience
At Team Financial Group, our offerings are built to meet the unique needs of business owners. As an independent commercial lender, we can provide faster, more customized financing solutions — often with same-day approval. Our dedicated team works diligently with all of our clients along every step of the way to achieve the best financing option to help you grow your business.
Check out our website for more information about our financial offerings. If you have questions about which type of loan is right for your business or whether your credit is high enough for approval, fill out our online contact form or give us a call at 616-735-2393.
Want to know how we can help you move forward with your next commercial financing project? Let’s talk!
The content provided here is for informational purposes only. For financial advice, please contact our commercial financing experts.