Here are the first six things to explore in your equipment credit agreement. Who pays for the maintenance costs your equipment might need? Your lender should use a section of your equipment credit agreement to answer this question if it arises during the use and removal of your equipment. Q: Thank you, I should have funded with you a long time ago. A: Better late than never! What other transactions do you need help? Ready for launch? The application is simple! Just visit our application page, fill in your details and one of our trade finance experts will contact you to guide you through the application process and determine which option is right for you. One of the few reassuring aspects of EFA transactions, unlike leasing contracts, is that credit is inherently a « hell or a hard » obligation. Warranty exclusions, unconditional commitment language and offsetting prohibitions rarely appear in traditional credit documents. On the other hand, a protection of lessors lost in an ITA is the status of « lease-lease » under Article 2A of the PEA. It is probably a good case to leave at least one simple exclusion of liability from UCC`s warranties and declare that the transaction is exempt from set-off rights, etc., especially in the case of equipment financing by an owner of the supplier`s business or at a time when the EFA is supposed to be based on a lease form. . Now that we`ve gone through all the details you need to check before signing your equipment credit agreement, let`s summarize everything in a synthetic checklist.
This article examines these and other issues related to the transformation of leasing forms into equipment financing contracts. EFas have clear advantages over bank loans. If you receive a simple interest loan from a bank, the bank needs guarantees. Often, they apply a right of pledge to assets other than the loan guarantee. In the case of an EFA, your financing partner has an interest in the equipment itself, so you often don`t need additional guarantees – the funded equipment serves as a guarantee. Leasing documentation has traditionally focused on device security rights as well as the creditworthiness of the lessee, and it could be argued that a language requiring specific maintenance and applying restrictions on use is not necessary. While this language may be confusing for some bank advisors, careful consideration should be given to the effects of reducing the borrower`s obligations to those of a lessee. Make sure you know who will legally own the equipment you want to finance. In some cases, your lender is the formal owner of the equipment you are financing, which will have significant financial and legal implications. . . .