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Business Finance

Equipment Finance Agreement (EFA)

An Equipment Finance Agreement (EFA) is a version of a standard loan. This type of contract is popular because it's familiar and easy to understand. An EFA allows you to depreciate your equipment over 2-5 years while writing off the interest paid within a given tax year. An EFA allows you to take advantage of the IRS's depreciation schedule.

Equipment Leases

Lease to own (Capital Lease):A $1.00 buy-out lease, which allows you to pay for the equipment over the lease term, after which the title passes for nominal consideration. This type of lease may not be directly expensed for tax purposes, requiring you to capitalize and depreciate the equipment over it's guideline life.

10% Purchase Upon Termination Lease (PUT): The 10% Purchase Option Termination Lease (PUT) provides lower payments over the term, but requires a 10% last payment (10% of the original cost of equipment). Title passes after payment of the PUT.

TRAC Lease (vehicles): A TRAC lease may be written on titled equipment such as trucks and trailers and other motorized, self propelled equipment like farm tractors, combines, golf carts, backhoes and forklifts. With a TRAC lease the lender retains the depreciation and provides a lower rate depending on the time of year. Banks are calendar year tax payers and the rate tends to be lower at the end of the calendar year.

PRO Lease (Tax lease for equipment): Considered a "true lease", the lender keeps the depreciation and provides a lower finance rate to the Lessee. New and used equipment can be financed, based on MACRS life of the equipment and time of the year it's placed in service. A Pro Lease or Tax Lease requires an FMV (Fair Market Value) purchase option at the end of the term with at least  90 days notice from the Lessee that they intend to exercise the purchase option. If no notice is given to the Lessor, the lease will be extended for an additional 12 months at a lower payment.

We can process your lease applications for requests of $20,000.00 or above for both Commercical and Municipal transactions.