Lately, the kind of capital business people seek has been changing.[1] For the past 70 or so years, one of the most common ways new companies have raised capital is through venture capital.[2] In arrangements with venture capitalists, a startup receives funding or expert advice in exchange for an ownership stake.[2]
Recently, though, that’s started to change. Many startups and established companies are finding other ways to raise capital.[1] One of the most popular ways they’re doing this is with debt raises.[1] Instead of selling ownership in the company, they’re selling instruments like bonds to investors.[1] These pay interest at a fixed rate and by a specified date.[3]
Investors tend to like these debt instruments because they’re less risky. That’s especially true during a global crisis like COVID-19, where entire industries have taken a hit and it can be harder to get venture capital.[1] Bonds offer a fixed rate of interest, which must be paid back.[3] Even if a company went bankrupt, the people who purchased debt instruments would take priority over other creditors.[3] Companies including AirBnb, Skillsoft, and Udacity have raised money this way in recent months.[3]
For many smaller businesses, both of those options may be out of reach. The average entrepreneur is more likely to seek a loan from a bank, or the SBA, when they’re starting up or expanding.[4] But even for small-scale business people, there are other ways to inject new resources into a company. One of the best is equipment financing.[5]
Equipment financing is a time-honored way to breathe new life into a business.[5] At Alliance Leasing, we’ve been doing this for over three decades.[5] Equipment leasing is flexible, lets owners keep control and offers some very significant tax benefits for businesses.[6] Under the terms of the Tax Cuts and Jobs Act of 2017, companies can write off up to $1 million in financed equipment, provided it’s placed into service during the year it was purchased.[6] Used equipment is eligible, too: it doesn’t have to be new.[6][7]
Almost any business equipment is eligible for this benefit. And at Alliance, we finance up to 100%.[7] We help companies purchase everything from construction machinery to software.[7] We’ve worked with almost every industry imaginable, including healthcare, transportation and beauty/personal care.[7] Contact us today. We’d love to hear about your business plan, and help you achieve your goals.
Sources:
[1]https://news.crunchbase.com/news/startups-debt-financing-vs-vc/
[2]https://www.investopedia.com/terms/v/venturecapital.asp
[3]https://www.investopedia.com/terms/d/debtfinancing.asp
[4]https://www.sba.gov/business-guide/plan-your-business/fund-your-business