Equipment Funding Ltd.

Equipment Financing for All Businesses and their Needs

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Finance options can be classified as Lease Agreements and as Equipment Finance Agreements (EFA). The EFA has the title of equipment with the borrower with the lender as secured lien holder of equipment. The Borrower gets the depreication and interest expense. The Lease Agreement has various classifications for use in different situations. Selecting the right option can optimize the use of capital as well have an impact on the balance sheet. Equipment Funding Ltd. has the ability provide the financing that meets your needs. With over $200 Billion dollars in leasing in 2002, it is important to explore an understand this options. A brief summary of type of Lease follows.

Operating Lease - a "off balance sheet" lease that contain criteria established by FASB(Financial Accounting Standard Board) that allows the lease not to appear on the financial statement of the lesseee. Payments are accounted as true rental payments. The criteria for qualifying are:
*Title of asset not automatically transfered to lessee at end of lease term.
*No provsion for a bargain purchase option.
*Lease in non-cancelable for its term andd that term is less than 75% of the economic life of the asset.
*The minimum lease payments when discounted by the interest rate implicit in the lease is less than 90% of the asset's fair value.

Master Lease - generally used when a credit line is obtained. It details the terms and conditions. It identifies the parties a involved and their responsibilities. Separate schedules to the lease are prepared with selection of assets. The schedules outline the specific terms: payment, frequency of payment, advance requirements and location of equipment.

Finance Lease - most common contract in the small ticket market. It is a net lease, meaining the lessee is responsible for all applicable taxes, license and insurance. It is non-cancelable.

Capital Lease - a lease type that is treated as a purchase on the lessee's books. They are identified by the following characteristics:

* The lease term is equip to or greater than 75% of the
estimated useful life of the leased asset.
* Title to the asset may be obtained for a bargain option
at end of term or transferred automatically.
* The presetn value of the lease payments are equal to
or greater than 90% of the estimated fair market value
of acquired asset.

True Lease - a lease type that qualifies as a lease under the guidelines established by the Internal Revenue Code.

Sales-Leaseback - is used when the asset that is owned is sold to the lessor and then leased back to the lessee. It is usually used to obtain additional cash that is tied up in the asset, or when other means of financing were not available at the initial acquisition. In most cases the lessee will be responsible for inclusion of sales tax on this transaction.

Trac-Lease - is tax oriented and used exclusively transportation/vehicle leases. TRAC derives its name from the contract clause "terminal rental adjustment". The residual value is adjusted based on condition and usage of the vehicle.

Remember, select your equipment and your financing carefully. As with any contract, you are committed for the entire term. By selecting Equipment Funding Ltd., you are selecting a partner that will work for you.