An equipment finance agreement (EFA) is like a loan, security agreement, and promissory note all combined into a single legal document. EFAs also contain some unique features that make them one of the most popular and versatile equipment financing solutions.
Often times EFAs are assumed to be the same as a traditional bank loan since they both look very similar to the borrower. However, EFAs were originated to be a simple process and can often be completed with just the initial application.
Both EFAs and Bank loans provide the ownership of the equipment to the borrower, allowing the equipment value to show on your companies balance sheet. Once the total payments are collected, you, the borrower, will own the equipment outright.
Traditional bank loans are broken into a separation of principal and interest, providing a stated interest rate on the note. Because equipment finance companies have a different business model than banks, the payment will reflect as finance charges which are rolled into one payment that is made monthly.
EFAs have several advantages when compared to traditional bank loans. A traditional bank loan will require collateral, reporting, and often times even restrictive covenants.
EFAs are growing in popularity by small businesses because of the ease of doing business. According to the Equipment Finance and Leasing Association, 79% of companies in the US use some form of financing when acquiring equipment. Some of the benefits of utilizing EFA financing:
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With an EFA, your amortization schedule stays the same regardless of the amount you pay each month. Your EFA will not have a stated interest rate like a traditional bank loan, and the balance won’t break down into principal/interest. Instead, your finance charges will get calculated into the series of fixed payments over the life of the loan.
No. In order for our team to review the credit we will perform a soft credit pull, which will not negatively impact your credit. If you decide to move forward with the loan, we will then perform a hard pull but only after we have reviewed the terms with you.
The process depends on how prepared you are. Sage Creek has the ability to approve and fund transactions within the same day.
Once you complete the no obligation application, we will follow up directly with you to share what the results are.
You do not have to have a business to start the process. If you are a start up or don't have a registered EIN, you can still complete our application. Without a business track record, the underlying risk will be assessed primarily on the individual borrower(s). A legal entity will need to be established prior to closing, however, the initial application can be completed prior to forming your business.
Loans should be customized to your unique situation. Once the application is completed, we will reach out and discuss what options we have that fit your growth plans.
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