Banking Relationship Paradox: Why 72% of Small Businesses Get Better Terms from Non-Bank Lenders

The Changing Lending Landscape

A comprehensive study tracked over 2,000 businesses with annual revenues between $500,000 and $10 million that sought financing in the past 18 months. While traditional banks might offer equipment financing, a closer look at the cost of capital reveals non-bank lenders are very competitive, with better services.

  • Speed to funding: Non-bank lenders averaged 7 days from application to funding, compared to 32 days for traditional banks
  • Approval rates: 67% for qualified applicants at non-bank lenders versus 41% at traditional banks
  • Documentation requirements: 78% fewer documents required by leading non-bank lenders
  • Flexible structures: 84% of non-bank lenders offered custom repayment schedules versus 23% of traditional banks

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Personal Guarantee Explained: Protecting Your Credit While Building Business Credit

When setting up your equipment finance program, most companies will sign a personal guarantee. This is standard in most small business financing and simply means you are backing the agreement personally in case the business cannot fulfill the obligation.

However, this financing will not report to your personal credit and does not impact your personal credit score—unless there is a serious default. It remains separate from your personal credit file.

The real benefit is that it will help your company build its own business credit profile, which can open the door to larger financing opportunities in the future without needing a guarantor.

FREE Check your personal credit

Your business deserves the strongest financial foundation.

Understanding Your Business Credit & Tips to Improve

Know Your Business Credit: Where to Look and What to Know, and Personal Credit for Growth!

Are you a CEO or business owner looking to secure better rates, expand your business, and strengthen your financial foundation? Understanding what creditors see on reports from agencies like PayNet, D&B, and personal credit bureaus is important to your companies success.

Watch this complimentary 20-minute Zoom session where Barbara Griffith will break down the fundamentals of business and personal credit.

  • Learn how business credit impacts funding & growth
  • Understand what lenders look for in your reports
  • Get tips to improve your credit and secure the best terms

Vendors can offer a subsidy to lower the cost of financing

money

Vendors can offer a subsidy, allowing customers to purchase equipment at a reduced finance rate.

Why is offering a subsidy effective?

  • It enhances cash flow for both the customer and the vendor.
  • A financial subsidy can set a vendor apart from competitors.
  • It fosters customer loyalty

Projects, pen on report

Section 179 Allows a Business to Expense their Equipment Purchase

As of 2024, the Section 179 deduction limit is $1,160,000. This means that businesses can deduct the full cost of qualifying equipment and software purchased or financed during the tax year.

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No Payments 3-6 Months

The decision to upgrade or purchase new equipment is critical to the success of your company’s growth. Businesses can reach a point where they have reached a stalemate and must invest in their operations for you to expand and become more profitable in the future. We have a new program ” No Payments 3-6 Months” call to discuss.

Would you like a free copy of your Dun & Bradstreet report?

Just send me an email bgriffith@sclfinance.com

In The News As We Look Forward to 2025

  • The Section 179 deduction is anticipated to remain at $1,160,000 providing a valuable tax incentive for companies investing in new equipment
  • Interest rates are projected to decrease
  • Businesses will still face challenging credit underwriting conditions, making it imperative to navigate these hurdles effectively
  • Financing will allow companies to conserve working capital and get the equipment they need to automate

Many U.S. businesses are increasingly seeking automation solutions to reduce labor costs and enhance operational efficiency in this environment.

2025

The Growth of Subscription-Based Business Models

Subscription-based business models will continue to grow in popularity as companies seek to create stable, recurring revenue streams. For credit markets, this shift means that lenders may place more emphasis on the predictable cash flows of businesses with subscription models than actual current financials.

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Warren Buffett’s Views on Small Businesses

Warren Buffett’s views on small businesses emphasize the importance of solid fundamentals, ethical leadership, long-term thinking, and financial discipline. For small business owners in 2025 and beyond.

What to Look for in a Equipment Finance Agreement

Projects, pen on report

What to look for in an Equipment Loan Agreement

What to Review

  • The term and how many advance payments are being applied to the term
  • Do you own the equipment at the end of the term
  • Is the lien on the equipment or is it a blanket lien on my business
Section 179 Tax Deduction - calculator

Section 179 Allows a Business to Expense their Equipment Purchase

As of 2024, the Section 179 deduction limit is $1,160,000. This means that businesses can deduct the full cost of qualifying equipment and software purchased or financed during the tax year.

Section 179 Free Booklet

people working at computer desks

5 Benefits of Buying New Equipment For Your Business

The decision to upgrade or purchase new equipment is critical to the success of your company’s growth. Businesses can reach a point where they have reached a stalemate and must invest in their operations for them to expand and become more profitable in the future.

Calculate Your Payment

Would you like a free copy of your Dun & Bradstreet report?

Just send me an email bgriffith@sclfinance.com

Vendors can offer a subsidy to lower cost of financing

money

Vendors can offer a subsidy, allowing customers to purchase equipment at a reduced finance rate.

Why is offering a subsidy effective?

  • It enhances cash flow for both the customer and the vendor.
  • A financial subsidy can set a vendor apart from competitors.
  • It fosters customer loyalty
financial reports

Section 179 Allows a Business to Expense their Equipment Purchase

As of 2024, the Section 179 deduction limit is $1,160,000. This means that businesses can deduct the full cost of qualifying equipment and software purchased or financed during the tax year.

Section 179 Free Booklet

computers

5 Benefits of Buying New Equipment For Your Business

The decision to upgrade or purchase new equipment is critical to the success of your company’s growth. Businesses can reach a point where they have reached a stalemate and must invest in their operations for them to expand and become more profitable in the future.

Calculate Your Payment

Would you like a free copy of your Dun & Bradstreet report?

Just send me an email: bgriffith@sclfinance.com