A Leading Provider in Equipment Financing

Should You Finance a Lease or Raise Equity to Acquire New Equipment?

For startups, equipment acquisition is necessary to get the business off the ground. For established companies, acquiring equipment is a means to grow and expand. Debt is a four-letter word for many business owners. Therefore, many believe raising equity to acquire equipment is better than taking on debt, even though debt comes with a specified interest rate and payoff date. Just because it’s believed, doesn’t make it so.

Taking on debt in the form of an equipment lease is far different than maxing out personal credit cards for frivolous purchases. Financing an equipment lease can be a wise business decision under the right circumstances, especially if your company has a steady flow of receivables that you can count on to keep up with lease payments and other expenses. A conversation with your accountant or a report from your accounting software can give you a clearer look at your income versus expenses, as well as any other upcoming, non-recurring ones for which you must plan.

Compared to raising equity to fund an equipment purchase or lease, financing offers several benefits.

Perhaps Most Importantly, a Lender Won’t Tell You How to Run Your Business 

Chances are you have heard horror stories of equity investors believing their equity buys them a say in how the business is run. The more equity they hold, the bigger their control and influence regardless of whether their equity investment secured them a seat on the board of directors, ownership in the company or a “my money, my business” say in the business during family dinners.

A lender, like Global Financial & Leasing Services, keeps our proverbial nose out of your business. Make your payments (hopefully the equipment you’re financing will bring revenue to do just that) and our involvement ends there.

Equity is the Most Expensive Form of Capital

Equity is most expensive form of capital because it has an indefinite term and is paid in a portion of your profits each year with no cap on the amount that may be paid out. On the other hand, financing equipment with debt has defined terms, including the amount you pay (payment and payoff) and a date when those payments end. Equity takes a percentage of your profits, and the amount paid out to equity holders increases as your company’s revenues grow. The more successful your company becomes, the larger the profits and the more you pay out for that equity stake. As such, a $100,000 piece of equipment may end up costing you hundreds of thousands of dollars.

What that looks like in real life.

If you take a $100,000 five-year loan at 20% APR, that original $100,000 borrowed for the equipment costs you $158,963 when paid off in full. But if you raise $100,000 in equity at a $500,000 company valuation (selling 20% of your equity), then get acquired and in that acquisition, you net $1M, the 20% equity stakeholder(s) would receive $200,000 from the acquisition, plus any distributions of profits that have been paid out over the years and prior to the acquisition.

In a nutshell, you obtain the same amount of capital to fund an equipment purchase at the same time, but that $100,000 in equipment costs you, under the terms above, $158,963, where that same $100,000 from an equity investor costs you more than $200,000 in our example.

There are Tax Benefits to Financing Equipment

Fine print: we are not tax experts. That said, there are tax benefits to financing your equipment lease. With a capital lease you can deduct the full purchase price of the equipment in the tax year it is placed into use. This can equal a sizable deduction on your taxable income. An operating lease allows you to deduct your monthly lease payments as an operating expense for the term of the lease, lowering your taxable income.

READ: Who Finances Heavy Equipment Leases?

Raising Equity Can Require Schmoozing

Whether pitching the idea of raising equity for your company to a private investor, an equity firm, a friend or your brother-in-law, the process takes time—weeks, months, even years, depending on the source and circumstances. Dinner, coffee, drinks, meetings, gathering up documentation, fine-tuning your pitch, answering questions… all are time consuming—time that you could be spending on your business.

Once the equity is raised, there will be more time involved to keep your investor(s) updated on the company’s (and their investment’s) progress.

Global Financial & Leasing Services can often make a lending decision on your equipment lease in as few as 24 hours from the time we receive your application. Time is of the essence when it comes to acquiring equipment. You might have a job that hinges on it or found a great deal that won’t last on the exact model you need.

How you fund equipment acquisition is an important business decision with the potential to alter your company’s course. Understand all your equipment financing options and don’t be afraid to take on debt when it serves you, your customers and your business well.

People Are Talking . . .

Office Manager, Podiatrist

I sincerely appreciate your response on this holiday weekend. You’re a true professional and your dedication with assisting clients has always been honorable. May the remainder of your weekend be enjoyable!
Global Financial and Leasing Client Testimonials
2019-03-20T07:21:41-07:00
I sincerely appreciate your response on this holiday weekend. You’re a true professional and your dedication with assisting clients has always been honorable. May the remainder of your weekend be enjoyable!

Taylor M., General Financial

Your company has helped touch the hearts of both new, and returning mutual clients across the US. Jerald Collens continues to show excellence in his career, and still goes out of his way to make himself available at all times to satisfy our demanding clients needs. We are proud to have a funding partner in our industry that is dedicated to finding a way to say “yes” to every single clients unique circumstances, when other funding sources typically say “no”.
Global Financial and Leasing Client Testimonials
2019-03-20T07:41:17-07:00
Your company has helped touch the hearts of both new, and returning mutual clients across the US. Jerald Collens continues to show excellence in his career, and still goes out of his way to make himself available at all times to satisfy our demanding clients needs. We are proud to have a funding partner in our industry that is dedicated to finding a way to say “yes” to every single clients unique circumstances, when other funding sources typically say “no”.

Malcolm, President Specialty Contracting Company

Judi, thanks for your support. We are building something here and having folks like yourself on our side makes all the difference!
Global Financial and Leasing Client Testimonials
2019-03-20T07:22:06-07:00
Judi, thanks for your support. We are building something here and having folks like yourself on our side makes all the difference!

T. Poague

Been with these guys for over a year they helped me get my business started it hasn’t went as planned but these guys have worked with me in every way possible my hats off to to mr Ira ,Mrs Judi and mr Sean guarantee I will use them for any of my business financing if possible Great folks

Global Financial and Leasing Client Testimonials
2019-06-27T06:11:01-07:00
Been with these guys for over a year they helped me get my business started it hasn’t went as planned but these guys have worked with me in every way possible my hats off to to mr Ira ,Mrs Judi and mr Sean guarantee I will use them for any of my business financing if possible Great folks

IT/Telecom Vendor Sales Rep

Judi, the thanks is all yours!! You made this happen very smoothly. I am your loyal customer from here on.
Global Financial and Leasing Client Testimonials
2019-03-20T07:22:31-07:00
Judi, the thanks is all yours!! You made this happen very smoothly. I am your loyal customer from here on.

R. Lowery

Had a great experience with Patrick. He was very knowledgable with regard to our specific needs! Thank you!

Global Financial and Leasing Client Testimonials
2019-06-27T06:12:47-07:00
Had a great experience with Patrick. He was very knowledgable with regard to our specific needs! Thank you!

JH, Medical Vendor Rep

Thank you, Judi, you are the best ... So understanding of the complexities of this crazy industry and compassionate enough to work with people in difficult circumstances, there is a special place in heaven for you and Jim.

Global Financial and Leasing Client Testimonials
2019-03-20T07:26:35-07:00
Thank you, Judi, you are the best ... So understanding of the complexities of this crazy industry and compassionate enough to work with people in difficult circumstances, there is a special place in heaven for you and Jim.

Byron Waters

Great folks over at Global. Julian and his Team have helped us out several times always an easy process

Global Financial and Leasing Client Testimonials
2019-06-27T06:13:06-07:00
Great folks over at Global. Julian and his Team have helped us out several times always an easy process

CP – Medical Vendor

I want to thank you both so much for doing a wonderful job with my customers. You truly go the extra mile to assist them with their financing needs.
Global Financial and Leasing Client Testimonials
2019-03-20T07:32:35-07:00
I want to thank you both so much for doing a wonderful job with my customers. You truly go the extra mile to assist them with their financing needs.

Alyson

Very good people.

Global Financial and Leasing Client Testimonials
2019-06-27T06:13:28-07:00
Very good people.

SS, Medical Vendor

I certainly appreciate all the effort and hard work that you put into our customers. Your dynamics show us even when the financial situations are shaky that you still come through with positive outcome. Thank you so much for your hard work!
Global Financial and Leasing Client Testimonials
2019-03-20T07:32:54-07:00
I certainly appreciate all the effort and hard work that you put into our customers. Your dynamics show us even when the financial situations are shaky that you still come through with positive outcome. Thank you so much for your hard work!

Michael B.

Not be any happier with this company.

Global Financial and Leasing Client Testimonials
2019-06-27T06:40:57-07:00
Not be any happier with this company.

President, Plumbing Company

Just wanted to thank you again! I just picked up five new vehicles from a lease I acquired from your friend! I am so excited! Again I cannot thank you enough for all that you have done for me!
Global Financial and Leasing Client Testimonials
2019-03-20T07:37:24-07:00
Just wanted to thank you again! I just picked up five new vehicles from a lease I acquired from your friend! I am so excited! Again I cannot thank you enough for all that you have done for me!

Hollie Aneshansley

Amazing opportunity these wonderful people gave me♡

Global Financial and Leasing Client Testimonials
2019-06-27T06:41:30-07:00
Amazing opportunity these wonderful people gave me♡

President, Plumbing Company

Just wanted to thank you again! I just picked up five new vehicles from a lease I acquired from your friend! I am so excited! Again I cannot thank you enough for all that you have done for me!
Global Financial and Leasing Client Testimonials
2019-03-20T07:37:57-07:00
Just wanted to thank you again! I just picked up five new vehicles from a lease I acquired from your friend! I am so excited! Again I cannot thank you enough for all that you have done for me!

Shaun Land

Great organization to work with. Very friendly staff and a good business partner.

Global Financial and Leasing Client Testimonials
2019-06-27T06:41:50-07:00
Great organization to work with. Very friendly staff and a good business partner.

J, Medical Vendor

It was the best quarter in my 4+ years at XXX!! You guys were a BIG part of it!! Thank You!!!
Global Financial and Leasing Client Testimonials
2019-03-20T07:38:11-07:00
It was the best quarter in my 4+ years at XXX!! You guys were a BIG part of it!! Thank You!!!

I Was Able To Open Business!

Global Financial is the best finance company I have ever dealt with. They are easy to work with and answer all questions you may have. They have made it possible for me to build my business with as little money out of pocket as possible. Without Global Financial, I wouldn't have been able to even open my apparel printing business. I would recommend this company to all business with financing needs. They are definitely my go to finance company any time I need to buy business equipment. I currently have 2 leases with them and have a long history working with them. They are great!

Global Financial and Leasing Client Testimonials
2020-06-25T12:51:44-07:00
Global Financial is the best finance company I have ever dealt with. They are easy to work with and answer all questions you may have. They have made it possible for me to build my business with as little money out of pocket as possible. Without Global Financial, I wouldn't have been able to even open my apparel printing business. I would recommend this company to all business with financing needs. They are definitely my go to finance company any time I need to buy business equipment. I currently have 2 leases with them and have a long history working with them. They are great!

R. Morris, CFO & Treasurer SerenaGroup, Inc.

Global provided our company with financing resources when every other firm said no. Both Jim and Judi Jenks have been supportive beyond any experience I’ve had with other financing firms, their professionalism and “going the extra mile” for their client was the norm, not the exception. I highly recommend Global for your financing needs as you will be dealing with people who truly practice what they preach.
Global Financial and Leasing Client Testimonials
2019-03-20T07:38:25-07:00
Global provided our company with financing resources when every other firm said no. Both Jim and Judi Jenks have been supportive beyond any experience I’ve had with other financing firms, their professionalism and “going the extra mile” for their client was the norm, not the exception. I highly recommend Global for your financing needs as you will be dealing with people who truly practice what they preach.

M.C., President Wound Care Management Company

GFRS has allowed our business the growth we needed and given us an exceptional partner we can count on. Other leasing firms were merely interested in looking for certain numbers to meet in the short term. J.D. Jenks, CEO, understood our business model, why we needed what we needed.
Global Financial and Leasing Client Testimonials
2019-03-20T07:38:42-07:00
GFRS has allowed our business the growth we needed and given us an exceptional partner we can count on. Other leasing firms were merely interested in looking for certain numbers to meet in the short term. J.D. Jenks, CEO, understood our business model, why we needed what we needed.
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Global Financial and Leasing Client Testimonials