smiling small business owner using tablet computer in a modern office, four advantages of nonbank lending

4 Advantages of Nonbank Business Lending

Securing a bank loan or financing for your business can be challenging, but options exist. Learn four advantages of nonbank business lending.

You’ve probably heard the age-old saying, “It takes money to make money,” which holds true in business. You need money to grow or expand your business, acquire assets, cover operating costs, and keep your business afloat during unexpected slow periods. However, securing a business loan or financing from a bank can be challenging due to their tightened borrowing requirements.

The U.S. Federal Reserve surveyed bank lending practices in mid-2023, revealing that “major and significant net shares of banks reported having tightened standards on loans to large and middle-market firms and small firms, respectively.”1

Many business owners have experienced the disappointment of receiving a rejection notification from their bank. But fear not! The lending landscape is rapidly evolving, thanks to nonbank lenders like Regents Capital, which understand businesses’ unique needs and challenges and offer more flexible and accessible loans and financing options. Keep reading this Regents Capital blog article to learn four advantages of nonbank business lending.

What is nonbank business lending?

As the name implies, nonbank business lending refers to loans and other financial services offered by entities (nonbank lenders) other than traditional banks. Nonbank lenders leverage technology and data analytics to streamline the borrowing process for business owners.

One key advantage offered by nonbank lenders is their ability to extend business loans and financing products to businesses that may not meet the strict criteria set by banks. Regents Capital, for example, utilizes alternative underwriting methods and considers factors beyond credit scores to offer opportunities for businesses that would otherwise be left out of the borrowing market for working capital loans, lines of credit, and other funding solutions.

Now, let’s take a look at the four key advantages of nonbank business lending.

1. Easier application process

Banks typically require lengthy applications for business loans and financing. They might ask for a business plan, a business loan proposal (this outlines the purpose of the loan and how you intend to use it), personal and business tax returns, articles of incorporation, and legal contracts/agreements, to name a few.

Nonbank lenders, on the other hand, afford you the convenience of a simple application process that requires far less documentation. At Regents Capital, you can apply for business funding online in minutes; our application asks for basic information about you and your business and other documents depending on the type of funding and the amount you are requesting. With minimal documentation requirements, you can say goodbye to the tedious paperwork associated with traditional bank loan applications.

2. Faster approval decisions

Whether you’re a small business or an established middle-market company, securing quick access to capital can be the key to seizing growth opportunities and staying ahead of the competition. That’s where nonbank loans and financing come into play.

Because less documentation is required when applying for business funding from a nonbank lender, and the borrowing requirements are less stringent than those at a traditional bank, you can expect to receive an approval decision promptly.

3. Less-stringent credit score requirements

Traditional banks often rely primarily on credit scores to determine business loan and financing eligibility. This can be a significant setback for business owners with a low credit score or limited credit history. Nonbank lenders, however, offer greater flexibility regarding credit scores.

A good credit score will boost your chances of getting your funding request approved at Regents Capital. However, we also consider other factors, such as your time in business and annual revenue. If you have a below-average credit score or limited credit history, you may still be able to obtain one of our business funding products.

4. Quicker funding turnaround times

As mentioned earlier, traditional loan and financing processes often involve lengthy paperwork and strict eligibility criteria, which can delay decision-making and funding turnaround times. However, nonbank lenders have made obtaining business funding faster and more convenient.

Let us say you apply for business funding from Regents Capital. Once you submit the required information and documentation, we will review it promptly during our regular business hours and provide you with a decision. If your application gets approved, you can expect to receive funding quickly. We can often fund specific loan and financing amounts on the same day applications are submitted and approved.

Conclusion

If you seek a loan or financing for your business and want to avoid extensive documentation, high credit score and collateral requirements, and lengthy approval processes, consider a nonbank lender like Regents Capital. We’ve helped businesses in countless industries nationwide get the funding they need, often after their loan and financing requests have been denied by a bank.

Disclaimer.

This Regents Capital blog post is purely educational and features general information and opinions. Nothing contained herein is intended to constitute advice or recommendations and should not be treated as such. Regents Capital is not affiliated with nor endorses the U.S. Federal Reserve.

Sources:

1 – https://www.federalreserve.gov/data/sloos/sloos-202307.htm

business owner looking at finances and pie charts on an office desk, how to overcome financing obstacles

How to Overcome Business Financing Obstacles

Securing business financing can be challenging. However, there are non-bank alternatives that can bridge the financial gap.

Running a business comes with a number of responsibilities. You not only have to manage day-to-day operations but also take steps to maintain the success and growth of your company. From setting actionable goals to managing employees to making strategic decisions, your duties as a business owner are diverse and demanding.

Financial management is yet another critical duty that falls on your shoulders. You must ensure your company’s finances are in order by monitoring cash flow, budgeting effectively, tracking expenses, and maximizing revenue generation opportunities. Securing financing from a traditional lender for capital equipment, technology refreshes, expansion efforts, or growth initiatives may be challenging. However, there are non-bank alternatives to consider.

In this Regents Capital blog article, we discuss signs that your company needs financing and explain how you can overcome borrowing challenges and secure the financing your business needs to thrive.

Signs that your company needs financing.

Every company is unique and has its own financial situation and growth goals. That being said, there are many common reasons why businesses need financing. Whether you run a small business or an established middle-market company, you might encounter financial gaps that need to be filled to seize growth opportunities and stay competitive. Following are signs that indicate your business needs financing.

  • You want to achieve a competitive advantage: Investing in new or upgraded equipment, vehicles, or technology can help set your company apart.
  • Your company’s profits are increasing: You may need to purchase inventory, invest in marketing, hire more employees, or expand your product or service line.
  • The market demand for your products or services is increasing: A surge in market demand for your products or services is a great sign, but it can present challenges if you lack the capital to meet your customers’ needs.
  • Cash flow issues: Your company’s growth can be hindered if it lacks funding for its daily operational costs. Moreover, insufficient cash flow can make paying bills and debts on time challenging.
  • Inadequate resources for innovation: A lack of funds can hamper your research and development efforts. This can set your company back in terms of innovation and advancement in an ever-changing business world.

By the numbers: Reasons businesses seek financing.

In a December 2023 business survey conducted by the National Federation of Independent Business (NFIB)1, 29% of small business owners said their primary purpose for seeking financing was to expand their business. 26% of owners sought financing to meet operating and inventory expenses, and 24% sought financing to replace capital assets or make repairs.

Additionally, the survey revealed some roadblocks business owners experienced when applying for financing from traditional lenders. Among business owners who borrowed money, 30% were “not satisfied” with the amount and terms offered for the financing, 18% said collateral requirements were a “significant issue,” and 32% said the paperwork requirements were either a “moderate or significant issue.”2

How to overcome business financing obstacles.

One of the main difficulties in securing financing is meeting the stringent requirements set by lenders. Traditional lenders often require extensive documentation, including financial statements/paperwork, income tax returns, and business plans. This process can be time-consuming and overwhelming for business owners who are already handling multiple tasks and responsibilities.

The good news? Non-bank lenders such as Regents Capital are viable alternatives to traditional financing products. At Regents Capital, our financing solutions have more relaxed eligibility criteria, a straightforward application process and fast funding turnaround times. This helps make it easier for you to access much-needed capital.  Regents Capital offers capital leases for equipment lease financingequipment lines of credit, and working capital loans, among others.

What’s more, Regents Capital affords you the benefits of highly personalized financing. You will work with a dedicated finance manager who will help you choose a financing solution that aligns with your company’s requirements. Our team of experienced professionals understands the various business industries and market dynamics and can confidently help you navigate product offerings.

Regents Capital is ready to help.

While securing business financing from a traditional lender can present challenges, alternative options are available to help you overcome them. And you can find them at Regents Capital. So, if you need a custom-tailored financing solution with a favorable rate and flexible repayment term, Regents Capital is ready to help.

Regents Capital takes pride in being able to assist businesses across various industries throughout the nation in obtaining the financing they require. Even if traditional lenders have turned you away with a “no,” we can step in to provide solutions. We aim to help you overcome financial hurdles by offering alternative lending options tailored to your specific needs. With our expertise and wide range of financing options, we can find creative ways to help your business secure the funding it needs for growth and success – now and into the future.

 

Disclaimer.

This Regents Capital blog post is purely educational and features general information and opinions. Nothing contained herein is intended to constitute advice or recommendations and should not be treated as such. Regents Capital is not affiliated with nor endorses the National Federation of Independent Business (NFIB).

Sources:

1 – https://www.nfib.com/content/press-release/economy/new-nfib-survey-small-business-owners-concerned-with-high-interest-rates/

2 – https://strgnfibcom.blob.core.windows.net/nfibcom/Financing-Sales-Survey.pdf

Conference room for Finance Lease

Finance Lease vs. Operating Lease: Which One Should You Choose?

If you want to get the equipment your business needs quickly, leasing is an option. But which type of lease is best for your company?

Equipment financing can be challenging when you’re running a small business. Your starting capital may not be enough to get the assets you need to outdo your competition. Seeking financing solutions to buy what your business needs can also be difficult, and complex. Fortunately, you have the option to lease instead of buy immediately.

Two of your options are finance leases and operating leases. But what’s the difference between the two?

What is a Financial Lease?

Also known as a capital lease, a financial lease involves creating a contract that entitles a business owner to rent out the temporary use of an asset, mostly equipment. This is usually done over a long period of time.

Pros

  • For accounting purposes, this lease is considered a purchase of an asset for you as a business owner. So you own it on paper, even though you still haven’t paid for it fully.
  • You take the present market value of your asset on your balance sheet. As such, you’re allowed to claim depreciation and reduce your taxable income.
  • You can reduce your taxable income further by claiming interest expense.

The advantages of a financial lease work to reduce your business taxes, and you get to own the equipment you’re paying for all these months. However, it does come with some disadvantages.

Cons

  • A capital lease agreement is classified as debt in your balance sheet. You repay through your lease payments. This increases your debt to equity ratio. Having your company operate more on debt than your wholly-owned funds might scare off your investors, as they may see it as a risky way of operating your business.
  • Another potential disadvantage of the finance lease is that your company has full responsibility for the maintenance of the equipment.
  • You’re also stuck with the pieces of equipment you rent out for the rest of your leasing term. If you’re using electronic tools, like computers, its components may be obsolete within a decade or even just a few years, leaving you at a competitive disadvantage.

What is an Operating Lease?

An operating lease allows you to rent out equipment from a lessee, but unlike a capital lease, you don’t have ownership rights to the asset. This type of lease isn’t included in the company balance sheet as well. At the end of your payment term, you can choose to buy the equipment at market value or return them to your lessor.

This type of lease is often short-term.

Pros

  • Gives you greater flexibility since it’s a short-term lease. If the equipment in your industry tends to become obsolete faster than other industries, an operating lease allows you to upgrade without the big cost.
  • Its tax benefits allow you to deduct the payments you make as an operating expense.
  • Because you’re not renting to own an asset, you’ll generally have to pay less for your monthly payments, compared to capital leasing.

An operating lease is ideal if you’re a business that needs regular upgrades to your equipment. However, it also comes with some downsides.

Cons

  • Because this type of lease allows you to upgrade whenever possible, you may find that you pay more for your equipment in the long run.
  • Although you can deduct your operating lease payments for your tax returns, you still don’t own the asset. As such, you may not be able to claim deductions for the depreciation of your equipment, unlike capital leasing.

Which Lease is the Best Option for Your Business?

Asset acquisition through leases is a practical way to run your business at a manageable cost. But consider your options carefully because finance and operating leases can be complex without factoring in your requirements and tax situation.

Consult with a Regent Capital consultant to ensure you’re getting one that’s favorable for your business.

Regent Capital is a trusted commercial finance company. We turn your real-world financing challenges into success stories and results. Call us today at (888) 901-4207 for details on how we can help your business!

True Tax Lease in a business room

True Tax Lease: How Does It Benefit Your Business?

There are multiple benefits of using a true tax lease to fund your commercial equipment needs. Regents Capital breaks it down for you.

There’s no other way around it: commercial equipment is expensive, especially for small businesses and start-ups. Purchasing equipment is not the only option, though. Equipment leasing is a more manageable way to get the equipment you need while spreading out the costs over a fixed period of time.

Leasing terms typically run from 24 to 72 months. Contracts can run for much longer, too, depending on your business needs. Either way, considering how new technologies are regularly added to commercial equipment, you do not have to worry about being stuck with obsolete equipment in the long run.

If you’re looking into equipment leasing, one of the best options is a true tax lease. And here, Regents Capital breaks down the reasons you should consider getting this type of equipment lease.

How Does a True Tax Lease Work?

A true tax lease is a multi-year equipment leasing option where the lessee gains exclusive use and possession of the equipment throughout the specified period. Ownership rights do not typically pass on to the lessee but at Regents Capital, the end-of-term buyout option is always on the table.

The name “true tax lease” stems from the fact that the lessor takes charge of all accounting requirements and tax benefits. Meanwhile, lessees pay lower upfront costs and can put monthly payments under capital or operating expenses. These payments are typically lower than non-tax leasing options.

Regents’ true tax leases include stretch, skip payment, step payment, and operating leases. Each one has multiple tax advantages. The lease period is also usually shorter than the equipment’s economic life.

Through operating leases and similar leasing options, you can get up to 100% financing for your required equipment. Soft costs like transportation and installation are also included.

How Do Businesses Benefit from a True Tax Lease?

True tax leases are a sensible option for business owners because the leased equipment doesn’t count as a company asset or liability. Yet, because the leased equipment generally counts as a rental expense, it still qualifies for tax incentives. Here are more ways businesses benefit from a true tax lease:

No Bank Restrictions

True tax leases take away the hassle of blanket liens, escalator clauses, restrictive agreements, and other restrictions that are typically linked with traditional lending institutions.

100% Financing Options

Equipment leasing doesn’t only involve the actual equipment. Businesses also have to consider soft costs like delivery and installation which can be covered by a true lease agreement.

Flexible Payment Options

Unlike with finance leases where ownership is transferred to the lessee after the lease term, the lessor retains ownership after a true tax lease. This helps keep monthly payments flexible.

Off-Balance Sheet Financing

The off-balance sheet financing option could count as operating expenses and make your payments 100% tax deductible, instead of just depreciation and interest deductions.

Secure Your Equipment Financing with a Trusted Partner

Regents Capital has direct funding capabilities that change the way businesses finance equipment. And we can provide affordable and transparent financing for your business.

Contact a Regents Agent today and learn about the financial service that works best for you.

Equipment Financing for your business

Equipment Financing: Is It Right for Your Business?

When you need special machinery but don’t have the funds for it, equipment financing is a good option. But is it always the right solution for your business?

Every business uses different types of equipment for its daily operations — from the basic devices, such as mobile phones, tablets, and laptops to more specialized machinery, like diagnostics machines, tractors, and manufacturing equipment.

Industrial machines and equipment can be costly. New or aspiring entrepreneurs rarely have a big budget for advanced equipment. Even established businesses may not have the funds to replace their machinery in case of a breakdown.

These are a few of the instances when equipment financing can help!

When to Consider Equipment Financing or Equipment Loans

Whether you need to invest in specialized vehicles or machinery or purchase computers for a growing team, you need to consider how you can afford this equipment. With an equipment financing loan, you can immediately obtain working capital to lease or buy the equipment you need. Also, you can manage your cash flow seamlessly since this type of financing enables you to spread out your payments over a longer time frame.

Any business can apply for an equipment loan. According to the Equipment Leasing and Financing Association (ELFA), 79 percent of US businesses finance their equipment through leases, loans, and other lines of credit.

Below are some of the common examples of business-related items that you can finance with equipment financing:

  • IT servers, software, and other tech equipment
  • Medical imaging equipment
  • Construction equipment
  • Restaurant equipment like ranges and ovens
  • Farming or heavy agricultural equipment
  • Trucks and other business vehicles

Considerations for Equipment Financing

Before you sign up for a loan, it’s best to know the benefits and disadvantages of applying for one.

Consider the following pros and cons of equipment financing:

  • Pros of equipment loans.
    • Spread the cost of your purchase. For any business owner, cash flow is critical. Equipment purchases, in some cases, can complicate it. With an equipment loan, however, you can spread your cost to prevent cash flow troubles. You can put a certain percent down and pay the annual interest rate within a certain period.
    • Receive funding for the purchase or lease of equipment. Even if you run a well-established business, chances are that you can run short on equipment funds. Fortunately, equipment financing can bridge that gap. Since these loans allow you to borrow money to pay for equipment, you don’t have to wait until you have the money to make important purchases, leases, or repairs.
    • Increase your business’s future sales. If you receive an equipment loan, it can improve your company’s overall productivity. Having the right machine can help you complete orders faster, which may increase the number of customers you can accommodate. In return, this will boost your bottom line.
  • Cons of equipment loans.
    • Higher rates than traditional loans. Equipment financing typically offers favorable, fixed interest rates. But if you have a good credit history, you may find lower interest rates when you take out traditional loans instead.
    • Usage is restricted to equipment. Equipment financing can only be used for the equipment you need. This means you can’t use the money to cover rent, payroll expenses, or anything else.

Regents Capital Can Find You the Perfect Equipment Loan for Your Business Needs

There are many considerations when it comes to applying for an equipment financing loan. If you need guidance on the type of loan or are actively looking for an equipment financing loan, Regents Capital Corporation is at your service.

Contact us today.