Master Lease Agreements (MLA) are a type of financing that provide businesses looking to make multiple equipment purchases over a period of time a way to purchase that equipment without having to go through the process of getting each equipment purchase approved. Essentially, a Master Lease Agreement allows a business to get pre-approved to buy qualifying equipment once, and the company can then go through with purchasing the equipment under the approved lease terms when and where they see fit. A Master Lease Agreement is similar to a Business Line of Credit whereas the business can use the MLA to have pre-approved terms to go shopping with. The big difference being that the MLA is specific to qualifying equipment purchases.
A Master Lease Agreement is a pre-approved agreement that may include a number of equipment schedules. Under each MLA, there is a separate equipment schedule agreement that lists equipment leased, terms of the lease, pricing of the lease per equipment schedule, and end of lease options. For example, if Acme Company gets approved for a MLA, and purchases equipment twice using the MLA, there would be two separate equipment schedules (and therefore two separate monthly payments), but only one Master Lease Agreement.
All terms of the Master Lease Agreement are applied to any equipment schedules to be purchased under the MLA. The only difference that may be allowed is a different end of lease option. Terms such as the cost of the money and the available term lengths must remain the same as the MLA in order to be applicable under that agreement.
The greatest advantage to a Master Lease Agreement is that a company does not need to renegotiate terms with the finance company each time it wants to purchase new equipment. A Master Lease Agreement expedites the process of acquiring equipment, and gives business owners additional confidence when working with their budget to invest in new equipment and technology.