Equipment Financing Solutions

Selecting the right financing product is about more than just the cost of capital. Many other factors influence how a company finances its equipment including the state of the economy, innovation needs, company liquidity, and the equipment’s planned operational use.

The team at GEF seeks to provide the product and structure that best fits your needs. We provide several product structures customized to work best for targeted business needs:

Loans

True Leases

Finance Leases

Sale Leasebacks

Medical equipment running in a hospital.

Choosing the Optimal Financing Product

We work with you to match your financial objectives with the optimal loan or lease product to support those goals. Our recommended financing product depends on various criteria including:

  • Liquidity available for downpayment
  • Depreciation and tax benefit objectives
  • Desire to own assets versus deferring ownership decisions
  • Existing bank restrictions on capital expenditures
  • Budgeting and planning requirements, e.g., fixed payments

Loans vs. Leases

Loans and leases are financing options for equipment acquisition that achieve different objectives. These products have different features related to equipment ownership, payment structure, end-of-term options, and accounting treatment, some of which are outlined below.

Ownership

  • With a loan, the borrower/business owns the equipment and assumes all of the benefits and associated risks.
  • With a lease, GEF owns the equipment and provides a base lease term tailored to your needs and the equipment’s useful life.

Payment Type

  • Loans usually have a floating interest rate and have monthly interest plus principal payments due in arrears. Some loans are also fixed rate and have equal monthly payments comprised of interest and principal – also due in arrears.
  • Leases are fixed rate in nature typically with equal monthly lease payments due in advance.

End of Term Options

  • With a loan, the business owns the equipment and completes its ownership position with a final scheduled payment.
  • A lease usually has multiple end of term options including: i) return of the equipment; ii) renewal of the lease for a mutually agreeable new term; or iii) purchase of the equipment for a defined amount or prevailing fair market value at lease end.
Person plugging ethernet cable into a server.

Lease Structures and Features

  Ownership End-of-Term Options Accounting Treatment Tax Benefits Product Usage Scenarios
True Leases GEF owns the asset Flexibility to return the asset, renew the lease, or purchase the asset True leases can be recognized as expenses however will be recognized on the balance sheet as assets and right of use liabilities GEF retains the tax benefits
  • Asset subject to technological obsolescence
  • Asset tied to specific contract or client
  • Lessee has limited liquidity
  • Lessee navigating senior creditor restrictions
  • Lessee unsure if it desires ownership at time of need
Finance Leases GEF retains purchase money security interest Bargain purchase (i.e., $1, or nominal value) Lessee recognizes interest and principal inside payments and on balance sheet as a Capital Lease Lessee retains the tax benefits
  • Lessee has limited liquidity
  • Lessee foresees ownership beyond base term
  • Lessee requires fixed payment for budgeting
Sale Leasebacks Depends on True or Finance Lease Structure
  • Flexibility found in True Lease
  • Certainty of ownership in Finance Lease
 Follows True and Finance Lease guidelines Follows True and Finance Lease guidelines
  • Maximum funding objective
  • Deferred ownership featured in True Lease
  • Most effective in complex credit situations

What Clients Say About Us

Jeff and his prior team delved deep to understand our complex acquisition. Embracing the sense of urgency, they crafted a bespoke credit product that helped get the deal over the finish line. Over the years, our business grew with corresponding profitability and as conventional financing became more available, we never forgot what Jeff’s team provided in the earlier days of our ownership weathering economic turbulence and seeking growth. Jeff and I are long-standing personal and professional friends, which speaks to our mutual emphasis on the importance of relationships.

CEO of Specialized Manufacturing Conglomerate

“We have worked with Jeff for several years and it has always been a very smooth process. Jeff was direct, quick, and courteous, always ensuring we met the goals we set out for each project. We had full transparency on the process, and he was able to find solutions to any issues which arose. Jeff was a great partner with straight and fair economics — we would work with him again in a heartbeat!”

CEO of a Leading Specialty Pet Food Manufacturer

“I have worked with Jeff since 2007 covering many equipment financing lines. Jeff and his team always have taken the time to learn our business and its requirements, and he very much understands how venture backed businesses operate and what they require. It is great to engage with a lender who is smart, honest and has your best interests in mind. Over the years, Jeff has advised me on numerous issues which don’t relate to any direct business with him because he is a long-term relationship focused person. Having Jeff on one’s team is a definite advantage.”

COO of Communications Automation Provider