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Equipment Finance Agreements (EFAs) are an excellent way to finance your equipment purchases. EFAs can provide many of the advantages of leasing, without the issue of end-of-lease options.
In an Equipment Finance Agreement, ownership of the equipment is always in your name. The equipment is used as collateral for the loan and a UCC is filed to secure the lenders collateral. Like a lease, EFAs can be executed with very little money down. Some of the advantages of EFAs are as follows:
Equipment Finance Agreement Basics
Equipment Financing Agreements (EFA's) are essentially a loan in which the lender buys the equipment upfront and the customer pays for the equipment at a flat monthly rate for a specified number of months. At the end of the agreement term, the business owns the equipment.
- Customer owns the equipment at the end of the term (there is no end of lease option payment)
- Equipment can be depreciated on customer's balance sheet (see your tax accountant)
- Convenience and speed of aquiring equipment
- Documentation is very simple
- Preserves essential cash flow