Banks vs Brokers vs Alt Lenders: Equipment Loan Comparison

When you're financing a truck, trailer, CNC machine, or commercial kitchen setup, choosing the right lending partner can be just as important as the equipment itself.

There are three main routes Canadian business owners typically consider:

1. Traditional banks
2. Independent finance brokers
3. Alternative or fintech lenders

Each has strengths, limitations, and ideal use cases depending on your credit profile, business age, urgency, and type of asset.

This article offers an unbiased breakdown of each path—so you can make an informed decision and avoid unnecessary delays or costs.

Why Your Financing Partner Matters

Choosing the wrong partner could mean:

• A lengthy approval process when you’re on a deadline
• Being declined due to rigid underwriting (even if your business is strong)
• Overpaying in interest or fees because better options weren’t explored

On the other hand, a well-matched partner can help you:

✅ Get approved quickly
✅ Structure terms around your cash flow
✅ Access better rates or specialized programs
✅ Finance new, used, or private-sale equipment easily

Option 1: Traditional Banks

Overview

Canada’s big banks (TD, RBC, Scotiabank, etc.) often offer equipment loans through their commercial lending divisions. They’re known for competitive interest rates and long amortization periods.

Pros:

• Lower interest rates (often 7–10%)
• Reputable and stable
• Can bundle other services (credit lines, mortgages)
• Good for long-standing clients with full banking relationships

Cons:

• Slower approval timelines (1–4 weeks)
• Strict lending criteria: 2+ years in business, strong credit, audited financials
• Rarely finance used, private-sale, or niche equipment
• Little flexibility in payment structures

Best For:

• Established companies with clean books and 2–3+ years in operation
• Equipment bought from national vendors or OEMs
• Purchases planned months in advance

Option 2: Independent Finance Brokers

Overview

Brokers like Mehmi Financial Group partner with multiple lenders and match clients to the best-fit program, similar to a mortgage broker—but for commercial equipment.

Pros:

• Access to 30+ lenders (banks, alt lenders, private funds)
• Approvals for newer businesses (6–12 months)
• Faster turnaround (24–72 hours in many cases)
• Private sale, used, or niche equipment approved more often
• Custom structures: skip payments, seasonal, blended bundles
• Guidance from a credit analyst, not a one-size-fits-all rep

Cons:

• Rates may be slightly higher than big banks
• Quality varies—some brokers are transactional vs advisory
• Brokers without in-house underwriting may just forward paperwork

Best For:

• Businesses that want fast, tailored approvals
• Entrepreneurs financing used or private-sale gear
• Companies expanding but not yet bankable
• Owners who want advice and options, not just an offer

See how Mehmi supports these scenarios at Leasing & Loans and Refinancing.

Option 3: Online / Alternative Lenders

Overview

Fintech platforms (such as Loop, Clearco, or CIKCapital) offer speed and digital convenience. Some focus on unsecured working capital, while others now offer equipment leases or term loans.

Pros:

• Fastest application process (sometimes same-day funding)
• Low documentation in many cases
• Good for low-ticket items or emergency needs
• Can work for newer businesses with limited history

Cons:

• Higher interest rates (12%–30%+)
• Shorter terms (6–24 months typical)
• Often unsecured—won’t finance equipment with collateral
• Less personalized support
• Repayment structures can be rigid or confusing

Best For:

• Emergency purchases
• Subprime credit borrowers
• Very short-term equipment usage
• Low-value equipment <$25K

Side-by-Side Comparison

When Should You Choose Each Option?

Choose a Bank if:

• Your business has 3+ years of financials and clean credit
• You’re planning a new purchase well in advance
• The equipment is new, high-value, and from a dealer
• You already have a strong relationship with your banker

Choose a Broker if:

• You need fast approval or flexible terms
• Your business is under 2 years old
• You’re buying used, niche, or private-sale equipment
• You want guidance on structure, prepayment, or tax planning
• You need to compare options—not be stuck with one lender

Choose an Alt Lender if:

• You need equipment now and have poor credit
• You’re okay with shorter terms and higher rates
• You’re financing a small-ticket item temporarily
• Other options are unavailable

Real Case Study: Mixed Strategy for a Growing Fleet

Business: Alberta-based hauler with 3 trucks
Need: Purchase 2 additional used trucks + 1 reefer trailer
Challenge: Bank denied due to private sale and age of trucks

What They Did:

• Financed the trailer through their commercial bank at 8.9%
• Financed the used trucks through a broker partner at 13.2%
• Structured skip payments over winter
• Bundled insurance and delivery costs into lease

Outcome:
Expanded to 6 units, secured 3 new regional contracts, and refinanced after 12 months of clean payments to reduce overall blended rate.

FAQs: Choosing a Financing Partner

Is it bad to apply to multiple lenders?
Not if done correctly. A broker can help you compare offers without triggering multiple credit pulls.

Are brokers more expensive than banks?
Not always. While interest may be slightly higher, brokers often save you more by structuring payments to fit your cash flow—and avoiding hidden fees.

Can I switch lenders later?
Yes. Many clients refinance into better terms after 6–12 months. See Refinancing Options to learn how.

What if I don’t qualify at a bank?
Alternative lenders or brokers can still get you approved based on revenue, collateral, or deal structure.

Final Thought

Choosing the right financing partner isn’t about chasing the lowest rate—it’s about finding the best fit for your timeline, goals, and business profile.

If you're unsure where to start or what structure makes sense for your equipment purchase, Mehmi Financial Group is here to guide you—not just sell to you.

Want to explore your options without the guesswork?
Speak to a credit analyst or use our calculator to compare payments from multiple lenders—all in one place.

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