# Equipment Financing Glossary Canonical URL: https://fundmyequipment.com/learn/equipment-financing-glossary/ Last modified: 2026-05-29T19:39:17+00:00 Type: efin_guide ## Summary Equipment Financing Glossary. Comprehensive guide covering the topic in depth, with worked examples, current data, and cross-references. ## Content This guide is a quick-reference overview of equipment financing terminology. For complete definitions of each term, see the main glossary. Loan structure terms EFA (Equipment Finance Agreement): Hybrid lease-loan treated as a purchase for tax Operating Lease: True lease where lessor retains residual risk Capital Lease: Lease treated as a purchase for accounting and tax FMV Lease: Lease with fair market value buyout $1 Buyout Lease: Lease with token end-of-term buyout TRAC Lease: Trucking-specific lease with negotiated residual Credit and underwriting terms APR: Annual Percentage Rate; the interest rate LTV: Loan-to-Value; loan amount as percentage of equipment value DSCR: Debt Service Coverage Ratio; cash flow รท debt payments FICO: Personal credit score PG: Personal Guarantee; owner liability for business loan EBITDA: Earnings before interest, taxes, depreciation, amortization Soft pull / hard pull: Credit inquiry types Tax terms Section 179: First-year expensing of qualifying equipment Bonus depreciation: Additional first-year deduction MACRS: IRS depreciation system ASC 842: Lease accounting standard Section 1031: Like-kind exchange (no longer applies to personal property) Security and lien terms UCC-1: Lender's financing statement filing UCC-3: Amendment, continuation, or termination PMSI: Purchase Money Security Interest Subordination: One lender stepping back in priority Cross-collateralization: Multiple loans secured by combined collateral Blanket lien: UCC-1 covering all equipment Payment structure terms Amortization: Principal repayment schedule Balloon payment: Large lump sum at end of term Skip payment: Payments skipped during off-season Step payment: Payments that ramp up over time Deferred payment: Payments delayed to start later Prepayment penalty: Fee for early payoff Industry body terms ELFA: Equipment Leasing and Finance Association NEFA: National Equipment Finance Association AACFB: American Association of Commercial Finance Brokers SBA: Small Business Administration USDA: US Department of Agriculture CFPB: Consumer Financial Protection Bureau FMCSA: Federal Motor Carrier Safety Administration Process terms Prequalification: Soft-pull preliminary estimate Preapproval: Hard-pull conditional commitment App-only: One-page application without full financials Full-doc: Application with bank statements + tax returns Pay on funding: Lender wires when documents perfected Pay on delivery: Lender wires after physical delivery For deep dives on any term, see the complete glossary with full definitions and cross-references.