Small lease for the small business - EFA
Why do I like the small lease for the small business? Today’s economy is all about impressive big numbers. Everywhere you turn there is always someone throwing around a big number. What I think some people forget is that a lot of smaller #’s create those bigger numbers.
We funded a transaction for an entrepreneur today who had been using an old telephone system for over 2 years that was completed outdated. Like most business owners, he was concerned about cash flow. We financed his $3,595.00 system the same day with payment of $126.00 per month on our Equipment Finance Agreement program.
The business was very small but had big plans and I like to think we are part of his future success.
The Definition of the Equipment Finance Agreement
An EFA is a fixed-term obligation with equal monthly payments, where the borrower is the owner of the equipment and the lender has a security interest in the equipment. The borrower deducts as a business expense both the depreciation on the equipment and the interest portion of the monthly payment. A lessor may use an EFA, and act as the lender, when the borrower has already taken delivery of, and has paid for, the equipment.
We started offering EFAs in 2005 and we have had tremendous success with them over the last 2 years. I consider the EFA as a $1.00 lease on steroids because it is giving you the same tax benefits as a normal lease but has more flexibly to pay it off early. When we finance equipment for our office we use this type of financing.
Let us know if you have any questions on this type of agreement.
