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Providence
Capital’s financing options enable your state and local
government customers to choose a financing plan that is compatible
with their short or long term fiscal needs …
Covering
a variety of equipment and project applications, a financing plan can
be tailored to a municipal customer’s specific objective: |
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Finance
Lease or Capital Lease |
This type of lease
is the financing instrument most commonly employed by municipal
customers for the acquisition of standard operating equipment.
Financing terms usually range from two to five years depending
on the useful life of the asset being financed. This type
of financing plan enables a municipal entity to easily acquire
the financed equipment at the end of the lease term, if desired,
and is structured with the following end of the lease options: |
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- Replace the equipment with the latest technology (and
enter into a new lease for new or additional equipment)
- Purchase the equipment for $1.00
- Return the equipment to the Lessor
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True
Lease or Operating Lease
A true lease, or operating lease, is simply a contract to rent property
(usually equipment that is subject to technological obsolescence within
a one to three year period) for a period of time shorter than the property’s
useful life. Financing terms usually range from two to five years depending
on the useful life of the asset being financed. This type of financing
plan typically provides the lowest monthly payment, and is structured with
the following end of the lease options: |
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- Replace the equipment with the latest technology (and
enter into a new lease for new or additional equipment)
- Renew the lease at a monthly amount based on the equipment's
fair market value
- Purchase the equipment for its fair market value
- Return the equipment to the Lessor
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Tax-Exempt
Lease-Purchase Financing
This form of financing is suitable for equipment acquisitions or capital
projects that provide a direct benefit of use to the municipality, and
that the municipality intends to own at the end of a financing term. It
is usually structured as an installment loan with periodic payments divided
into equal amounts over the term of a financing contract. Financing terms
usually range from two to ten years depending on the useful life of the
asset being financed.
Non-Tax-Exempt Lease-Purchase Financing
This form of financing is suitable for equipment acquisitions or capital
projects that the municipality intends to own at the end of a financing
term, but that provide quantifiable benefits to a party other than the
municipality. Due to the nature of the benefits derived from the asset,
the interest rates charged reflect the financial and credit strength of
the municipal customer (borrower), but are calculated at taxable interest
rates. It is usually structured as an installment loan with periodic payments
divided into equal amounts over the term of a financing contract. Financing
terms usually range from two to ten years depending on the useful life
of the asset being financed.
Criteria used
to determine the qualifications of a non-tax-exempt financing
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the asset provides more than 10% of the benefit of use
to a non-governmental entity; or |
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10% or more of the funds that repay the asset’s underlying
obligation will be contributed by federal sources or a non-
governmental entity. |
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Providence Capital offers lease-finance products that can be
structured to meet your state and local government customer’s
objectives. |
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