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How Startups Can Use Equipment Financing to Scale Up

by Equipment FinancingStartups

Taking your startup to the next level involves making strategic decisions about how and when to invest in essential business equipment—equipment that can give your company an edge over competition, bring efficiencies to services or operations and more.

But for many startup owners, there isn’t a clear path to obtaining that essential equipment, especially if it’s a time sensitive purchase or lease (traditional lenders are notorious for taking weeks to months to approve equipment financing applications) or they have less-than-perfect credit (big banks often reject all but the most qualified applicants).

Having access to equipment financing is essential for startup business owners who must overcome budget constraints and/or credit blemishes to scale their operations and accelerate growth.

There is a way around these challenges, and that is to work with a story lender, like Global Financial & Leasing Services (GFLS). Unlike traditional lenders and big banks, a story lender makes credit decisions based on a comprehensive view of your financials and credit history, not just a credit score.

GFLS empowers startups, offering substantial funding ranging from $50,000 to $5,000,000. We’re a direct lender with a variety of resources at our disposal. Our network, which includes over 200 private and public banks, allows us to offer financing solutions that many traditional banks cannot. Our team understands that every startup has its unique challenges, whether it’s past bankruptcies, student loans, tax liens or less-than-perfect credit. Our approach is to work with you, not against you, in overcoming these challenges so you can use equipment financing to scale up your startup.

Equipment Financing’s Role in Taking Your Startup to the Next Level

Investing in the right equipment can drastically improve efficiency, increase production capacity or even allow your startup to expand into new markets. However, the upfront cost of such equipment can put growth out of reach or significantly delay it for many credit score-challenged startup business owners. Here’s where equipment financing comes into play, enabling startups to acquire essential business equipment without taking on immediate financial burden.

Be Strategic When Exploring Your Equipment Financing Options

Should you lease or buy? The rule of thumb when deciding between leasing versus buying your essential business equipment is that leasing usually makes more sense for high-tech or rapidly evolving equipment to avoid obsolescence, whereas purchasing may be more economical for long-term essential machinery.

Related Reading: Lease to Own vs. Loan to Buy: Making the Best Equipment Financing Decision for Your Business

Is your lender willing to be flexible? There are lenders, like GFLS, who offer customizable payment plans that can be tailored to your startup’s cash flow patterns, easing the pressure during lean periods. Our team is human, too, and we understand what it’s like to have the opportunity to scale up a business, but not necessarily the financial power to do so. At GLFS, we frequently work with startup business owners to help them scale up faster than they ever thought possible.

Preserving Your Cash by Financing Equipment is Just One Advantage

Equipment financing isn’t just about preserving cash. It can also:

  • Offer tax advantages since lease payments may be deductible as business expenses.
  • Include maintenance agreements, reducing the risk of unexpected repair costs.
  • Free up capital that can be used for other strategic investments, such as marketing or research and development.

Common Mistakes to Avoid When Considering Financing Equipment

Work with a lender, like GFLS, who is committed to helping startup business owners make decisions in the best interests of their companies. This can protect against over-leveraging yourself with excessive debt. We help you understand the complete terms of financing, including interest rates and total cost of ownership. And remember, forecasting the ROI that the new equipment will bring is essential to validate your investment.

Effective equipment financing is more than just a financial decision—it’s a strategic move that can define a startup’s short- and long-term success. By thoughtfully integrating financing into your growth strategy, you can ensure your startup remains agile and responsive to market demands.

Equipment Financing is Still About Relationships

Building a trustworthy relationship with your lender is not just about securing funds; it’s about creating a partnership that supports your business’s growth and adapts to its changing needs, both now and in the future.

We’re looking forward to building a relationship with you and meeting your financing needs. We are here to often say “yes” when others say no, offering you the financial support to move your business forward. Talk to one of our equipment financing experts and see why GFLS is a great equipment financing partner.

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Ways to Fund Equipment Purchases or Leases for Your Startup Business

by Startups

Startup companies have many financial needs, financing for equipment purchases or leases being one of them. Obtaining equipment through financing with traditional lenders is difficult. Startups usually don’t have the credit history to qualify for bank financing. Even if they do qualify, traditional lenders limit financing amounts to $25,000 to $50,000. If your startup’s essential business equipment costs more to buy or lease, then you’re back at square one trying to find another lender to make up the balance. If you don’t have A-type credit, your lending options dwindle.

Nobody launches a startup thinking it will fail. The Small Business Association’s (SBA) statistics state: 30 percent of new businesses fail during their first two years; 50 percent during their first five years; 66 percent during their first decade; and 25 percent make it past the 15-year mark. Startups that mature to established companies succeed through a combination of strategic business planning and available funding for equipment to accommodate growth.

Having essential business equipment is vital to launching and growing your company. With the right equipment you can be competitive in your industry, increase efficiency and productivity, lower your costs and even expand to new markets. So, what are the ways startup owners can fund equipment purchases or leases for their companies?

Dip into Your Company Cash Reserves

Spending your cash reserves to purchase equipment makes the transaction simple and fast. No equipment financing application, no waiting, and you own it. However, using your cash reserves can leave your business (and you) unprepared for emergency situations, economic downturns and unable to take advantage of opportunities that require cash on hand.

LEARN MORE: THINK EQUIPMENT FINANCING BEFORE DIPPING INTO CASH RESERVES

Use Your Personal Funds or Credit

Again, nobody launches a startup thinking it will fail. And, business owners will go to great lengths to avoid failure, even using their personal funds, savings and credit to support what the company needs.

You’d be hard pressed to find a business advisor who recommends putting your personal credit at stake to shore up a business. Should the business default, creditors can seize any personal assets you may have left, including your home, vehicles and more. If your personal funds have been spent on the business, that leaves you little with which to start over, personally and professionally.

Partner with a Business Equipment Financing Provider

Financing an equipment lease lets you get the equipment your startup needs, as well as makes budgeting and cash flow management easier. Your lender should take the time to understand your business and goals, yet be quick to communicate about your loan decision. As a direct lender, Global Financial & Leasing Services is able to approve credit with our in-house funds, and the typical turnaround time is 24 to 48 hours, not weeks or months.

When other lenders say no to financing essential use equipment, GFLS can often say yes, so tell us about your financing needs. Your financing application only reveals part of the bigger picture of you and your startup. Along with credit scores, GFLS believes in character and treating every applicant with respect and kindness.

GFLS offers flexibility on how much equipment financing we can approve, funding applications up to $1 million dollars. We know what it takes to be a successful startup. In fact, Jim Jenks, founder and CEO, has been a part of four different startups in his career, with GFLS being the most recent successful venture.

See what a difference applying for equipment financing with GFLS can make in getting your startup off the ground.

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This the Time to Tackle Continuity Planning for Your Business

by Business AdviceStartups

Here’s What COVID-19 has Taught Us

If this past year has taught us anything, it’s the importance of continuity planning for businesses.

COVID-19 caught everyone off-guard, including most business owners. They weren’t prepared for freight slowdowns, sick employees and limited office capacities. Many scrambled to adjust during the early days of the pandemic, and some experienced their businesses going under.

The pandemic served as a wake-up call for many business owners about the importance of developing a Business Continuity Plan (BCP). A solid BCP can help you navigate your course while enduring pandemics, natural disasters or other serious disruptions.

If you or your company’s leadership team is in the process of developing a BCP in the wake of COVID-19, consider the following key elements to ensure that you are ready for nearly anything.

Maintaining Essential Business Functions

The primary purpose of a BCP is to identify and determine how to maintain the core functions of your business. For instance, if you manufacture goods, then keeping your assembly line running will be your top concern during a crisis, and you may not be as concerned with issues like marketing.

You must take care to determine which departments and functions must be prioritized if your work is disrupted, and you must plan to keep those areas afloat. With COVID, you had to ensure that all essential employees knew their duties and had proper protective equipment while giving non-essential ones the equipment that they needed to work from home. Likewise, if a natural disaster hit, you would need to prioritize maintaining or rebuilding the core parts of your business over less essential ones.

Keeping Your Customers Happy

If disaster strikes, you will also need to be prepared to communicate with your customers about how it has impacted your business. For this, you should collaborate with your sales and/or marketing team to prepare a message that is honest and effective to maintain customer loyalty and satisfaction.

Your communication plan should always prioritize honesty and integrity. If a freak winter storm has disrupted your freight and delayed orders, then you need to tell customers that directly, and you must provide realistic timelines for fulfillment. One way to smooth over any disappointments is to offer discounts or other future benefits to clients who choose to weather the storm with you. 

Your customers make your business, and in any BCP, you must have a plan to keep them satisfied, even when your business is struggling.

Maintaining Your Financial Health

Finally, your BCP should outline how your business plans to address losses from a crisis. Some of these actions may be as simple as expanding your emergency fund, but other issues, like protecting your credit, may be more difficult.

You must create financial contingency plans that maintain the primary functions of your business while cutting costs. This may involve furloughing non-essential employees, selling assets or working with your creditors on payments.

READ MORE: What You Should and Shouldn’t Do If You Can’t Make Your Equipment Lease Payment

At its core, your BCP should consist of preventive and emergency measures to take in case of emergency without hurting your customer base or credit score. Part of building a good financial BCP is working with trusted partners like Global Financial & Leasing Services (GLFS). To learn more about how we assist businesses during trying times, contact us.

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No Startup Company is Typical

by Startups

Their Equipment Financing Partner and Credit Limit Shouldn’t be Either

Startup business financing

Startup companies are not typical. Many have different equipment financing needs than established businesses do. Yet, when it comes to approving equipment financing, traditional lenders tend not to treat startups the same as established companies. Numbers are plugged in to a financial formula and decisions are churned out based on the output. Also, banks typically have a set $25,000 – $50,000 credit limit available to startups. This puts startups and those with a less-than-stellar credit history at a disadvantage, making it less likely or nearly impossible for them to acquire the amount of funding needed to get their businesses off the ground and grow to their potential.

It’s often repeated that more than half of new businesses fail during their first year. According to the Small Business Association (SBA), this isn’t necessarily true. The SBA states that only 30 percent of new businesses fail during their first two years, 50 percent during the first five years and 66 percent during the first 10. The SBA goes on to state that only 25 percent make it to the 15+ years mark.

How would their owners having access to funding change these statistics? With the right planning, funding and flexibility, businesses have a better chance of succeeding. In terms of financing, Global Financial offers equipment financing options to help startups in every stage of development.

When Other Lenders Say No, We Often Says Yes™

For startups, a bank or bank-type financial institution’s rejection of their credit application doesn’t have to be the end of the road. When other “A-type” credit lenders won’t finance an equipment lease, Global Financial & Leasing Services (GFLS) can review the credit package using a type of metric that is different from those used by financial institutions that rely strictly on financial performance and credit history.

Financial performance-based reviews for “A-type” credit considers profit & loss (P&L) statements and balance sheets. However, GFLS is a leading provider in equipment financing for “B-type” and “C-type” credit, so our team relies on a startup’s “story” rather than its P&L statement and balance sheet to make credit decisions. Reviewing “stories” versus accounting reports is how we often say yes, when other financial institutions say no.

Giving “Credit” for a Startup’s “Story”

Working with “B-type” and “C-type” credit applications, we must make decisions based on the best business metrics we can develop for each application without the benefit of perfect credit on the startup applicant’s side. Our credit application types often don’t allow us to build a neatly wrapped package to send to the credit committee. Startup owners with less-than-perfect credit histories still can be approved for equipment financing based on their “story.”

Other “B-type” and “C-type” credit lenders use a scoring method similar to large financial institutions that lend only to “A-type” applicants. This method ranks specific items from the credit report and time in business, etc. and adds up to a final score. The application is approved or rejected based on that score, which defeats the purpose and often ends in rejecting the financing.

Our team understands that scoring applications on the same criteria that banks do will result in the same outcome for the applicant. So instead, we also look at the character of the principal(s), cash flow, collateral and more. We add good old business sense and the best analytical reasoning we can to that information and make a credit decision in 24 to 48 hours.

READ: HOW TO PACKAGE YOUR “STORY”

Typical Credit Limits are Limiting for Startups

Traditional banks that finance equipment for startups typically have a set limit under $50,000. Since many startups’ needs are not typical, this amount can fall short of what is really needed. Much like we review applicants’ “stories” to determine whether to approve funding, also we consider the startup’s need and intended use for funding rather than work from a set limit.

GFLS has more flexibility on how much equipment financing they can approve than most companies that finance startups. We can fund applications up to $1 million dollars. GFLS’s team understands what it takes to be a successful startup. Jim Jenks, founder and CEO, has been a part of four different startups in his career, with GFLS being the most recent successful venture.

If you have a compelling “story”, experience, a business plan and find your startup limited due to restricted lending amounts, see what a difference applying for equipment financing with GFLS makes.

5 Reasons Startups Turn to Global Financing & Leasing Services for Equipment Financing

by FinancingStartups

And Not the Big Banks

You, Google, Apple, Hewlett Packard, and Microsoft have something in common. No matter what your business or industry, you are a startup, just like they were. They had a disruptive idea, and you have an idea on which you can build an empire – even if your idea of an empire is to create a sustainable, profitable business in your community.

Big banks love Google, Apple, Hewlett Packard, and Microsoft. However, they aren’t fond of startups for various reasons. Link to blog above. For example, Steve Jobs and Steve Wozniak didn’t finance equipment for their new startup, Apple. A bank turned them down for a mere $15,000 loan. A computer parts store turned down an equity stake in Apple in exchange for the $15,000. The two men ended up working out purchase order financing.

We love startups because we believe they turn into small businesses that drive the American economy. More people are employed by small businesses that began as startups than global corporations employ. As a startup owner, you have ability to produce jobs in your community, which is good for everyone.

To give startups alternative equipment financing options is the reason why Global Financing & Leasing Services was founded in 2009 after the Great Recession and big banks tightened their lending to startups even more.

Rather than evaluating potential based on paperwork and applications, we go about it differently in five important ways.

  1. We look at what you DO, not just the numbers and risk behind it.
  2. We assess your equipment financing application as a whole, including you, your financial plan, reserved funds, etc. instead of denying financing based on one single aspect.
  3. We offer competitive rates for startups.
  4. We’re a small business helping other small businesses, lending $25,000 – $500,000, which is the typical range of equipment financing.
  5. We approve equipment financing faster because we are a direct funder without all the red tape that many other financial institutions have.

More importantly, we know our clients as more than a file number. You speak to decision makers and talk about your needs, which simply isn’t possible with big bank financing applications.

Apple was valued at $5,309 in 1977. In December of 1980 it went public for $1.79 billion, and the rest is history. Jobs and Wozniak would fail miserably today because big banks won’t lend to a startup on a purchase order alone. Big banks want two or three years of business history and documentation. And even if they did finance equipment for a startup, it would never happen in less than 90 days. Jobs and Wozniak would’ve lost their contract for their first order by then.

Maybe your startup is the next Apple in the world or your community. Maybe we’re the company who can finance the equipment to make that happen. Contact us to see what’s possible.

Why Is It So Hard for Startups to Get Financing?

by FinancingStartups

It’s Not You, It’s the Big Banks… Well, and a Little Bit You

Startups are caught in a notorious Catch-22. Your business is starting out and needs financing to obtain the equipment required for it to grow. However, your business can’t grow without the financing it takes to get that equipment, and big banks want proof and a long track record of growth before financing your equipment lease.

It’s not you that makes big banks fearful of funding. Prior to the Great Recession in 2008, a river of financing for startups flowed freely. Post-Great Recession, big banks decreased the number of loans to startups and small businesses for a few reasons, including less demand for them, stricter financing regulations, and higher expenses associated with servicing the financing, which cut into bank profits.

As a result, startups can suffer through years of early growing pains that last longer than necessary while their owners work hard on two fronts: getting the startup off the ground and positioning it to be attractive to banks that can finance the equipment needed for next-stage growth.

Startups Often Fall Short in the Things Big Banks Want in a Financing Customer

If you’ve tried to finance equipment for your startup through traditional big bank channels and failed, you may or may not have been given the reason why. Chances are it’s because of one or more of the following:

  • Bad credit history and poor credit score
  • Weak or unstable cash flow
  • Fewer than two to three years in business
  • Limited collateral to back a loan should it go into default
  • Absence of basic business documents, such as a business plan, financials and projections, credit reports, bank statements and tax returns, and copies of articles of incorporation, business license, contract, leases, etc.
  • Factors out of your control, like market conditions, local competition, local, state or federal regulations, and economic trends

Financing and Leasing Options When Your Startup is More Than Meets the Big Bank’s Eye

The average loan amount for a startup is less than $500,000. For big banks, that amount is not worth their while. Fortunately, there are options for startups that need funding for leasing equipment, yet lack what’s most attractive to big banks. Micro loans, crowd sourcing, and such have cropped up as alternative financing sources to the big banks.

Also, startup owners can use these early years to improve their credit scores, prove financial stability and business leadership skills, build collateral, and get their business documentation in order – all of which are smart plays to ensure your company’s sustainability and longevity whether you intend on eventually financing equipment leases through big banks or not.

Seek out equipment financing providers, like Global Financing & Leasing Services, who work specifically with startup owners facing challenges with traditional financing. We’re a private company that doesn’t answer to and are not accountable for shareholders’ profits like big banks are. We were founded in 2009 to serve small- to mid-sized businesses and startups that are shut out of traditional financing markets due to the reasons listed above. We look at more than what’s on or not on the application. We look at YOU and match equipment financing options to match your goals. More importantly, equipment leasing options that will work for you, regardless of what credit tier you find yourself.

If you’re ready to explore equipment financing options that can help your business go from startup to enterprise faster, then we should talk. Or, learn more about why startups choose Global Financing & Leasing Services to finance equipment essential to their growth.