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Top 5 Equipment Financing Mistakes and How to Avoid Them to Grow Your Business

by Business AdviceFinancing

When your business needs new equipment, you’re probably not going to plunk down a lot of cash to purchase it outright. Instead, like many business owners, you’ll explore equipment financing options with vendors, manufacturers and traditional banks or maybe even an alternative lender like Global Financial & Leasing Services (GFLS).

How and where you secure your equipment financing can either support your business’s growth or create new challenges. Unfortunately, many equipment financing applicants make common mistakes that can cost them time, money and opportunities. At GFLS, we prioritize giving you the information you need to make informed financing decisions so that you can achieve your business goals.

Here’s a list of the top five mistakes to avoid when choosing a direct lender and obtaining equipment financing, as well as how working directly with a lender like GFLS can make all the difference in growing your business.

 

Mistake 1: Not Understanding Your Equipment Financing Options

Dealing with financing equipment can feel overwhelming. Many business owners are unaware of the variety of financing structures available and may not realize that some options could meet their needs far better than others.

Solution: Working with a full-service, direct lender like GFLS ensures you get a tailored equipment financing solution whether you need $25,000 or $5M. We look at each transaction differently and use our own capital to offer flexible solutions, specifically designed to fit your financial goals and equipment needs.

 

Mistake 2: Overlooking the Importance of a Transparent Decision-Making Process

Choosing a lender that lacks transparency can lead to funding delays and missed opportunities. Some financing providers, like traditional banks, have long and/or unpredictable decision timelines, which can stall critical business operations or put projects contracts at risk.

Solution: At GFLS, we work efficiently and openly. Every equipment financing application is handled by a direct decision-maker who communicates often and clearly, so that you understand every step of the process. We remain responsive, unlike traditional lenders who are known for being slow and their lack of or impersonal communication.

 

Mistake 3: Settling for One-Size-Fits-All Financing Solutions

Some business owners are unaware of their options and believe that one-size-fits-all financing packages will serve their unique needs. In reality, these solutions can often leave companies underfunded or saddled with inflexible repayment terms.

Solution: We know that every business is unique. The GFLS team takes a personalized approach, working to understand your challenges and goals. By offering flexible, equipment-based financing solutions, we can help even non-investment-grade companies and startups thrive, especially when traditional lenders won’t due to a less-than-perfect credit history and credit score.

 

Mistake 4: Not Considering the Impact of Impersonal “Scoring Models” on Obtaining Equipment Financing

One of the most significant mistakes is relying on lenders that use automated “Scoring Models” to make automated credit decisions. These models often use FICO scores or available credit amounts as the sole criteria for approval or rejection, offering a decision within minutes without any human review of the application. This lending practice is impersonal and shortsighted.

Solution: GFLS stands out from traditional lenders by rejecting these automated models. Instead, we take the time to learn about you and your business. We consider your past, but more importantly, we evaluate your business’s potential for future success. We understand that your past is a story of lessons learned, and we are committed to understanding your plans for growth. Our decisions are based on your ability to service your current and future debt, not just a number on a screen.

 

Mistake 5: Being Unaware of the Equipment Financing Approval Speed

Time is money, and delays in equipment financing approvals can mean missed opportunities and stagnant operations. The traditional banking process is often frustratingly slow, with extensive documentation and drawn-out decision times—meaning weeks or months.

Solution: With GFLS, you can expect a fast, efficient approval process. As a nationwide lender, we’ve refined our methods to provide quick and flexible equipment financing, helping you get the funding you need without the usual back and forth paperwork or wait times. Our goal is to ensure you can continue growing your business without interruption.

 

Avoiding these common mistakes can save your business time and money while giving you a clear path to business growth and success. At GFLS, we believe in a personalized, understanding approach to financing. We are more than just a direct lender; we are your partner. When you’re ready to explore equipment financing options, trust GFLS to look beyond the numbers and invest in your future.

Back view image of young businessman standing against business sketch

Understanding the Lifecycle of Equipment Financing

by Equipment FinancingFinancing

Understanding the Lifecycle of Equipment Financing

You know you need equipment to run and grow your business. You also know you don’t want to or can’t fund a big outlay of capital to obtain that essential business equipment. Sounds like a catch-22, right? Not necessarily. This is where equipment financing comes into play. Being approved for equipment financing allows you to get the equipment you need for a thriving business without depleting or tying up your cash reserves.

The process of financing equipment isn’t cut and dry, especially if you’ve struggled with credit approval in the past due to any number of reasons. If this sounds familiar, you’re not out of equipment financing options. While traditional lending institutions may reject your application, alternative or direct lenders, like Global Financing & Leasing Solutions (GFLS) can often approve your equipment financing. When you better understand the lifecycle of an equipment financing deal, you’re better positioned to make informed decisions and navigate the process smoothly. Here’s a closer look at the seven stages involved when working with GFLS, from your initial application to the final repayment.

  1. Initial Inquiry and Assessment

The lifecycle begins as soon as you identify the need for new equipment. This could be anything from construction machinery to medical equipment. At this point, you reach out to a direct lender, like GFLS, to explore your options. What sets GFLS apart as a direct lender is our ability to tailor solutions specifically to your needs. Unlike traditional banks, which often have rigid financing approval criteria, our team looks at each application differently. We focus on your ability to service your current and proposed debt rather than just your credit score—in other words, “your story.”

During this phase, a direct decision maker at GFLS handles the inquiry. The goal here is to understand your business’s needs and your financial situation to offer the most suitable financing options.

  1. Equipment Financing Application and Documentation

Once the preliminary assessment is complete, the next step is filling out an equipment financing application. GFLS uses our own capital, which means more flexibility and quicker decisions compared to traditional lenders and big banks. You will need to provide documentation that supports your ability to repay the financing request, such as financial statements, tax returns and details about the equipment being financed.

This stage also involves discussing the financing terms, including interest rates, repayment schedules and any collateral requirements. Since GFLS supplies fast, flexible equipment financing to non-investment grade companies, we are often able to finance business owners who might not qualify for traditional financing requests.

  1. Credit Review and Approval

The approval process is where you’ll notice GFLS is truly different from other lenders Instead of relying heavily on credit scores, the approval is based primarily on your ability to service your current and proposed debt. This approach is a miracle for business owners who have strong cash flow but may not have stellar credit.

GFLS founder & CEO, Jim Jenks, explains, “A lot of our competitors use a ‘Scoring Model.’ Through this method, they are making a credit decision—approved or rejected—on the application within minutes from the time they have received it. In most cases, there is no discussion with the applicant. That is very impersonal and highlights the lack of interest by funding source in their potential customers. We, on the other hand, don’t rely on a ‘model,’ we don’t rely on just the applicant’s FICO score or available credit amounts. We want to learn about the applicant. We want to understand what has happened in the past and what has been done to ‘course correct’ going forward. We are making our credit decisions on their potential to become successful in the future. We spend time with our applicants. They are not just a number to us.”

As a nationwide lender, GFLS has the expertise to assess a wide range of industries and business models. The credit review process is handled quickly because you’re working directly with our decision-makers, meaning you get the equipment you need, if approved, without waiting weeks or months.

  1. Agreement and Funding

Once approved, the financing agreement is drawn up. This document outlines all the terms and conditions, including the financing amount, interest rate, payment schedule and any specific covenants or requirements. At this point, you review the agreement and ask any questions you might have.

After the agreement is signed, the funds are disbursed quickly. With GFLS, there’s no waiting for third-party approvals, making the funding process faster and more efficient.

  1. Equipment Acquisition and Implementation

With the funds approved and available, you’re free to lease or purchase your new or pre-owned essential business equipment. This stage involves working with the equipment vendor and ensuring that the purchase aligns with the financing terms. Once the equipment is acquired, it’s put into operation, and you can start to benefit from the new asset, from accepting to contracts, expanding your services or offering new services and/or products.

  1. Repayment and Relationship Management 

The final stage in the lifecycle of equipment financing is repayment. Repayments are made according to the agreed-upon schedule. GFLS’s flexible repayment options are designed to fit the cash flow patterns of the business, ensuring that repayments are manageable. The phrase, “Your success is our success” is never truer than in a financing relationship.

Throughout the repayment period, GFLS continues to maintain a relationship you. Communication is the best way to handle any hiccups and adjustments if your business’s circumstances change and provides opportunities for additional financing as your business grows.

  1. Term Maturity and Renewal Options

As the equipment financing agreement approaches its contractual term, you have several options. Either pay off the remaining balance, refinance the equipment or explore additional financing for new equipment needs. GFLS’s role as a full-service lender means we can offer various options, tailored to your evolving needs.

Renewal options are particularly beneficial if you’re in an industry where you need to continuously upgrade equipment to stay competitive. By refinancing or entering into new agreements, you always have access to the latest technology without straining your capital reserves.

 

Read More: The Equipment Financing Glossary: Demystifying the Jargon for SMBs

The More You Know; the Better You’re Prepared to Get Equipment Financing

 

Understanding the lifecycle of equipment financing helps you make more informed decisions. Think of Global Financial & Leasing Services as a partner that not only provides the necessary capital but also offers a level of service and flexibility that traditional lenders simply can’t match. Whether you own a small business or a medium-sized enterprise, navigating the equipment financing lifecycle with a direct lender like GFLS can lead to more tailored solutions and a smoother overall experience. Ready to learn more or get started with an equipment financing application? Get in touch.