Small businesses can find themselves at a point of conflict when they need to make a large purchase but paying the entire cost up front could potentially put their cash flow in jeopardy. At that point, smart business owners will often start exploring their financing options.

If you find yourself in this situation, we hope it’s because your company is enjoying success and looking to expand. At the same time, it is also quite possible that you simply need to replace equipment that has broken down or become obsolete. Either way, you probably aren’t looking forward to the expense already, but then there’s also the headache that can sometimes come with trying to find appropriate funding for your business needs.

The good news is that you may find this process much easier than expected, especially if you know a thing or two about the key differences between traditional and private financing. And if you happen to be a new entrepreneur or you have a unique situation, like perhaps an atypical income flow, you just might find that a private lender will be best suited for handling your company’s financing needs.

RELATED: Equipment Financing Options

What Are My Financing Options?

For the average small company, there are a handful of business funding options available to buy the equipment they need. Not all of them are well-suited to all types of businesses, so please consider this a starting point that may require more investigation. That said, options can include:

For nearly all businesses, it makes sense to take out a loan with the most favorable terms that their qualifications allow. Even if your business doesn’t have a high credit score, or you’re concerned that financing is too expensive, there may be some good options available for you. Private business financing often comes with more flexibility than banks and lenders that can work with you to find a solution that fits your needs.

RELATED: How Private Equipment Financing Works: 5 Myths Debunked

How Do Traditional Lenders Differ From Private Lenders?

A traditional lender, like a bank, is regulated by the federal government. Due to the strict regulations that these financial institutions must adhere to, banks tend to be rather inflexible. And they often reject new small businesses immediately for loans because of an unwillingness to assume the kind of risk they believe comes with a lack of an established history of profitability.

Private commercial lenders, on the other hand, have significantly greater flexibility and may loan to the small businesses that banks consider to be too risky. Along with flexibility, private organizations can have different application processes that can work in the favor of businesses.

While a bank has a rigid set of questions they must ask—even if the nature of one viable company is drastically different than that of another, equally viable company in a different industry—a private lender can get to know your business’s specific situation. With that information, they determine their level of confidence in your business model. And that’s why private financing companies can accept businesses that might not have the perfect established history that banks need to see.

Naturally, there is a bit of tradeoff here. Because banks are more highly selective, they often have better interest rates. But that becomes a moot point for an applicant who has been denied by their bank. Fortunately, you can find a private financing company who will work with you to find options that make sense for your business.

Let’s take a closer look at some specific areas where you find the biggest differences between banks and private lenders:

Credit Score

The basic truth of the matter here is that your credit score matters, regardless as to who your lender is. That said, banks typically have higher minimum credit score requirements. A private lender has more flexibility to possibly accept an applicant with a lower credit score, especially if there are other factors that offset this potential risk. (It is worth noting here that “lower” and “low” are not the same.)

This can be helpful for applicants who perhaps experienced an adverse event that greatly affected their credit score. While a bank might be quick to pull out the “REJECTED” rubber stamp, a private financing company is more likely to understand what happened and may still be able to work with you and potentially find a way to lend you the money you are seeking.

Interest Rates

As we had just mentioned, interest rates are a key distinction. But along with willingness to take risk (or not), another factor at play is that banks have access to funds, that they in turn issue for loans, from both using their customers’ deposits and borrowing federal funds. The access to this kind of capital contributes to lower interest rates for those who qualify for bank loans.


Bank loans are governed with layers of regulation, which makes the loan process less than expedient. If you don’t need the funding urgently, your credit is pristine, and your company has an extensive history of success, it might be worth waiting in order to get a more favorable rate. However, private lenders that keep the approval process in-house are much faster. In fact, there are times when you may find that your application was approved the same day you applied. That can be absolutely critical to keeping a business running when a machine breaks down and needs to be replaced.

RELATED: How Do Commercial Financing Partners Evaluate Loan Applications?

Repayment Structure

A traditional loan from a bank typically has no flexibility when it comes to repayment. You owe your monthly payments, every month, and missing payment too many times can put you in default. And that is the case even if your company is in an industry where cash flow can be seasonal in nature or there are extenuating circumstances. Private financiers, at their discretion, can potentially offer a more flexible arrangement or loan option, like a buyout lease.

The Team Financial Difference

At Team Financial Group, we offer private business loans with a personal touch. We invest our time in getting to know you and your business, and this allows us to better understand your unique challenges and see how we might help you find more success.

With over 20 years in operation, our team has a wealth of knowledge to guide our financing decisions. Above and beyond that, we also are happy to share our knowledge and insight to help businesses like yours grow. And clients seem to appreciate it. Joel Eerdmans—owner of JDE Concrete—said, “I most certainly view Team as if they are part of my unofficial Board of Directors” after we were able to help his company navigate equipment financing options.  The fact he considers our guidance to have been pivotal to navigating acquisitions means a lot to us.

Another client, Michael Husby, had purchased a rundown golf course that he and his wife believed had potential. To turn things around, he needed to acquire several pieces of turf equipment, and we provided Michael with competitive, flexible financing for them. We were excited to see the progress as he turned his course into one of the premier golf experiences in Northern Michigan. Michael said, “We may have never reached our goals without the help of Team Financial. They trusted our plan and provided us excellent financial counsel.”

As we’ve noted, sometimes businesses have fluctuating cash flow or lagging revenue situations due to the nature of their industry. While traditional lenders turn away good, profitable companies like these, we see the bigger picture. An example of this is American Apple, a farm-based business that just needed someone who could find a solution that worked with their finances. We even found a way that allowed them to take advantage of tax benefits.

Hopefully, you can see that we want to use our knowledge to help businesses grow. More than that, we are always willing to put in the work to identify solutions that make sense for your company. In some cases, that means offering same-day turnaround on private business loan applications. This makes Team Financial a fast, flexible option for small businesses throughout Michigan and the Midwest.

See What Else Clients Have to Say About Team Financial Group

We consider ourselves fortunate to be in a position where we’ve been able to help many small business owners in a wide array of unique situations. If you’d like to get a better look at our extensive track record and hear what others have to say about Team Financial, feel free to check out our collection of success stories.

And if a bank or other lender has already told you “No,” don’t give up. With private business loans and equipment financing, your company still has plenty of opportunities to get what you need to grow and prosper. If we happen to be the right fit for you, maybe your business will be our next client success story!

Now that you know about us, we’d love the opportunity to learn about your company and financing needs. To see what we can do for you, simply give us a call at 616-735-2393 or fill out our online form and we’ll schedule a time to talk.

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