If you're in the market for new equipment for your business, you may wonder what financing is best for your needs. An Equipment Finance Agreement (EFA) may be one option. EFAs are loans used to purchase equipment and come with a security agreement and promissory note. We will cover some of the benefits and advantages of using an EFA to finance your new or used equipment.
What is an Equipment Finance Agreement?
An Equipment Finance Agreement (EFA) is a type of loan that creates equipment ownership instead of a lease agreement. With an EFA, you'll receive fixed monthly payments for the life of the financing term. The most significant difference between an EFA and a simple interest loan is that EFAs have finance charges instead of stated interest rates.
Benefits and Advantages of Equipment Finance Agreements
EFAs have distinct advantages compared to bank loans, such as not requiring additional collateral and having more flexible terms. Additionally, EFAs can be used to finance almost any type of equipment, from office furniture to vehicles to manufacturing machinery. And because EFAs are repaid over time, they can help preserve your business's working capital. There are six benefits and advantages of using an Equipment Finance Agreement to finance your new equipment. These include:
- Preserving cash flow: One of the main reasons business owners opt for an EFA is to preserve their cash flow. By financing the equipment, you can free up cash that can be used for other business expenses.
- Sound investment: Equipment financing is sound because it allows you to get the necessary equipment without tying up all of your capital.
- Helps keep equipment up to date: Equipment finance agreements can help you keep your equipment up to date. As your business grows, you may need to upgrade your equipment. Equipment finance agreements make it easy to do this without generating a large sum of cash all at once.
- 100 percent financing: Equipment finance agreements can provide 100 percent financing for the cost of the equipment. So you won't have to put any money down and can get the equipment you need immediately.
- Speed/flexibility/convenience: Equipment finance agreements are fast and convenient. The application process is typically quick and easy, and you can receive funding in as little as 48 hours.
- Tax advantages: The equipment finance agreement offers tax advantages under section 179, and business owners can claim bonus depreciation in the same year they acquire the equipment. You should speak with your accountant or tax advisor to see if an EFA is right for you.
Is an Equipment Finance Agreement Right for Your Business?
Equipment Finance Agreements, or EFAs, are a great option when you want to own the equipment and need financing for the total cost of the equipment. One of the most significant advantages of EFAs is their flexibility. According to the Equipment Financing and Leasing Association, 79% of companies in the United States use some form of financing when acquiring equipment. Equipment Finance Agreements are becoming increasingly popular because they offer so many benefits to businesses. If you're considering financing new or used equipment for your business, an EFA may be right for you.
An Equipment Finance Agreement can be a great way to finance new equipment for your business. EFAs have many benefits and advantages, such as not requiring additional collateral and having more flexible approval terms. Huddle Business Capital is proud to offer Equipment Finance Agreements (EFAs) to business owners in various industries. We understand that each business has unique financing needs, so we work with you to tailor an agreement that meets your specific needs and budget. Contact us today to learn more about EFAs and whether they'd fit your business well! We'd be happy to answer any questions and help you navigate the equipment financing process.
