lessee’s acknowledgement that the equipment
to be leased has been received and is in satisfactory
condition. For the lessee’s protection,
funds will not be released to your vendor until
First South Leasing has received your written
“delivery and acceptance” form and
been able to confirm your acceptance by telephone.
call for a specific number of lease payments in
advance. 1-2 payments is a typical requirement.
The total number of payments during the lease
are reduced by the advance payments.
A lease program
that uses a streamlined credit application and
review procedure that only requires the submission
of a single-page application with basic information
about the business’ principals, bank, and
trade references. This type of program does not
require financial statements, tax returns, business
plans, or other more detailed disclosures.
|Deferred Payment Lease
lease payments are deferred 60, 90 or 120 days
to accommodate cash flow and capital budgeting
|End of Lease
what happens to the equipment after all payments
have been made. Typical options are the $1 Buyout,
Fair Market Value (FMV), Purchase Upon Termination
(PUT), Equipment Return, and Continued Leasing.
that describes in detail the equipment being leased.
It may also state the lease term, commencement
date, repayment schedule and location of the equipment.
Value (FMV) Lease
flexibility and lower monthly payments than the
Finance Lease format. Key benefits include a number
pre-set end-of-lease options:
- Return the equipment with no further obligation,
- Purchase the equipment for its fair market
- Re-lease the equipment for its fair market
- Continue leasing on a month-to-month basis
($1 Buyout, Capital Lease or Bargain Purchase Lease)
terms describe leases that combine lower, fixed
monthly payments with the guaranteed-in-advance
right to purchase the equipment at the conclusion
of the lease term at a pre-determined price. These
leases generally do not qualify as deductible
operating expenses and must be amortized and depreciated.
There are, however, some significant other tax
benefits under I.R.S. section 179, which may be
available to your business.
equipment is technically owned by the lessor until
the satisfactory conclusion of the lease term,
proof of all risk and casualty insurance will
be required, showing the lessor as a “named
in which one party conveys the use of an asset
to another party for a specified period of time
at a predetermined payment.
The user of
the equipment being leased, and is subsequently
responsible for the payment of rental payments.
The party to
a lease agreement who has legal title to the equipment,
grants the lessee the right to use the equipment
for the lease term, and is entitled to the rental
One lease (and
one credit approval) for several pieces of equipment
purchased at different times from one or more
does not add debt to a company’s balance sheet.
Any lease that
is not a capital lease. These are generally used
to acquire off-balance sheet financing, and whereby
the Lessee anticipates returning the equipment
to the Lessor at the end of the term.
A special kind
of lease for vendors who require up to 100% of
the selling price prior to delivery.
An option to
purchase the leased equipment at the end of the
lease term at its then fair market value. This
provision is a primary determinant in differentiating
a rental plan (where lease payments are fully
deductible for tax purposes), and a financing
(Purchase Upon Termination).
option, that can be offered in conjunction with
an FMV lease that requires a purchase of the equipment
at the conclusion of the lease at a fixed-in-advance
percentage of the original purchase price.
|Rental Rate Factor
used to calculate periodic rental payments due
the lessor for the use of asset(s).
to the funding source (lessor’s) right to require
the manufacture or distributor take back and/or
take responsibility for re-marketing equipment
that is not paid for as a result of default by
their customer(s), the lessee.
(market) value of the equipment at the end of
the lease term
|Sale Lease Back
for re-capturing cash previously expended on equipment
by selling that equipment to First South Leasing
who in turn leases that same equipment back to
the company over a period of 12 to 60 months.
that are “adjusted” to accommodate
a business’ cash flow seasonality. Payments
are set lower for the business’ “slower”
or “off-season” months and set slightly
higher during months of the business’ traditionally
stronger cash flow.
An amount paid
at the beginning of the lease that is held by
the lessor until the satisfactory payment of all
amounts due under the lease terms, at which time
the security deposit amount is returned to the
selects a series of months in which no-payments
will be due.
are stepped up (or down) to accommodate the lessee’s
anticipated cash flow pattern as the company begins
to see its return from the acquired equipment.
Many of the
benefits of a true lease, but designed specifically
for over-the-road vehicles like trucks, tractors
& trailers. Special provisions of the tax
code allow for pre-determined end-of-lease valuations
(unlike a true or FMV lease). Generally the most
aggressive pricing for specified equipment. May
include FMV or continued rental options.
|True Lease (Tax or Operating
A type of transaction
that qualifies as a lease under the Internal Revenue
Code. It allows the lessor to claim ownership
and the lessee to claim rental payments as a tax