Providence
Capital’s lease-financing, or extended payment, plans
offer solutions that will enable you to choose a financing
method that is compatible with your objectives, budgetary
requirements, the life-cycle of the asset being financed,
and the manner in which you and your contractors do business. Our
Plans may be suitable for a variety of equipment and project
financing applications within your airport’s operation,
and are compliant with Title 49 CFR, Part 18.36.
Tax-Exempt
Installment Purchase or Lease-Purchase Financing
This form of financing is suitable for
equipment acquisitions or capital projects that an agency
intends to own at the end of a financing term. Tax-exempt
lease purchase financings are priced with consideration
given to the tax-exempt status and creditworthiness of
the agency, and are structured with fixed, periodic payments
that are divided into principal and interest components;
payable on a monthly, quarterly, semi-annual, or annual
basis. Title to the asset passes to the agency
upon acceptance of the project, and the purchase price of the
asset is amortized over the term of the financing contract. Financing
Terms usually range from two to seven years depending on the
asset's useful life and the agency’s budget requirements.
Capital
Lease
This type of lease-financing is structured
as a finance lease which provides for the periodic use
or rental of equipment over time. This type of lease
enables an agency to easily acquire the equipment at the
end of the lease term, and is structured with the following
end of the lease options:
Replace equipment with the latest technology (and
enter into a new lease).
Purchase the equipment for $1.00
Return the equipment to the Lessor
True Lease or Operating Lease
A true lease,
or operating lease, is simply a contract to rent property
for a period of time shorter than the property’s
useful life. Unlike a tax-exempt lease, operating lease
payments are not divided into principal and interest components. An
operating lease is intended to compensate the Lessor for
use of the property, not to amortize the purchase price of
the asset. This type of lease typically provides the
lowest monthly payment, and is structured with the following
end of the lease options:
Replace equipment with the latest technology (and
enter into a new lease).
Renew at a monthly amount based on the equipment's
fair market value
Purchase the equipment at its fair market value
Return the equipment to the Lessor
Non-Tax-Exempt Lease-Purchase Financing
This
form of financing is suitable for equipment acquisitions
or capital projects that an agency intends to own at the
end of a financing term and, that: (a) have 10% or more of
the funds used to repay the obligation contributed by federal
sources or a non-governmental entity; or (b) provide more
than 10% of the benefit of use to a non-governmental entity. Non-tax-exempt
lease purchase financings are structured with fixed, periodic
payments that are divided into principal and interest components;
payable on a monthly, quarterly, semi-annual, or annual basis. Title
passes to the agency upon acceptance of the project, and
the purchase price of the asset is amortized over the term
of the financing contract. Financing Terms usually
range from two to seven years depending on the asset's useful
life and the agency’s budget requirements. Because
of the criteria previously noted, pricing on non-tax-exempt
financings are based on the financial and credit strength
of the agency.
