Equipment Finance Agreement (EFA)

An Equipment Finance Agreement sits at the intersection of a loan and a lease, and for CT scanner purchases it often offers the cleanest structure of all three. You own the equipment immediately, payments are fixed over the agreed term, and there is no purchase option to exercise at the end because you already own the machine. The lender holds a security interest in the equipment as collateral, which is satisfied when the final payment is made. No residual, no buyout decision, no ambiguity about asset ownership.

EFAs are sometimes called conditional sale agreements or simply equipment contracts depending on the lender. The name varies, but the economics are the same: fixed monthly payments, immediate title, and full depreciation rights from the day the equipment is placed in service. For practices that want ownership without the documentation complexity of a traditional bank loan, an EFA is frequently the most efficient path.

How an EFA Differs from a Lease

The distinction matters most on your balance sheet and tax return. A CT scanner lease, depending on its structure, may be treated as an operating expense rather than an asset purchase. An EFA is always a purchase. The scanner goes on your books as an asset, the outstanding obligation appears as a liability, and you claim depreciation on your schedule. Under Section 179, the full purchase price (or the portion that qualifies under current IRS limits) may be deductible in the year you place the equipment in service. That deduction can meaningfully offset the first-year cost, especially for higher-priced systems.

The payment structure also differs from a lease in a subtle but important way. Lease payments can include a profit component attributable to the lessor's ownership risk. EFA payments are purely amortization of the financed amount plus interest, which is the same as a traditional loan. For borrowers who have compared total payout across structures, EFAs and loans typically come out nearly identical. The EFA is often preferred because it does not carry the word 'lease' and avoids any confusion about whether the payment is classified as rent for accounting or covenant purposes.

Practices That Benefit Most from an EFA

The EFA is particularly well-suited to imaging centers and radiology groups that track owned assets carefully, have covenants that restrict lease obligations, or operate under accounting frameworks where lease classification creates reporting complications. Hospital-owned outpatient facilities and physician-owned practices that want to keep the asset on their equipment inventory without any lease ambiguity almost universally prefer the EFA structure.

It also works well for practices acquiring used CT scanners where a traditional capital lease structure might have unfavorable end-of-term terms. Because the EFA has no residual calculation, the payment structure for used equipment is straightforward: finance the purchase price, pay it down over the term, and own the asset free and clear at the end.

Groups buying a 16-slice system for a rural site or a 32-slice unit for urgent care will find the EFA delivers predictable payments without the complexity of lease accounting. The same logic applies all the way up to high-specification platforms where asset ownership and depreciation strategy matter most.

Application and Documentation Requirements

EFA underwriting is essentially the same as loan underwriting. For transactions up to roughly $400,000, many applicants complete the process with an application and three months of business bank statements. Above that threshold, lenders typically want two years of tax returns, current profit-and-loss statements, and sometimes a personal financial statement from each guarantor.

The lender evaluates credit score, time in business, revenue consistency, and the collateral value of the specific equipment being financed. Newer systems from established manufacturers like Canon Medical or GE HealthCare support stronger advance rates because the secondary market for this equipment is active and valuations are well-established. B and C credit borrowers are reviewed on a case-by-case basis; strong cash flow and time in business can offset a weaker credit score in many situations.

Refinancing an Existing EFA

If you already have an EFA on a CT scanner and want to reduce your monthly obligation, extend your term, or pull working capital out of the equipment's equity, a refinance is possible. We handle both standard rate-and-term refinances and cash-out equipment refinances for practices that have built meaningful equity in their scanner and want to redeploy that capital into the practice.

A Sale-Leaseback Financing is a related option for practices that own equipment outright and want to convert that idle equity into operating cash. Under a sale-leaseback, you sell the scanner to the lender and immediately lease it back, preserving your use of the equipment while freeing up the capital it represents. Both refinance and sale-leaseback transactions start with a review of the scanner's current market value.