Lease vs. Bond
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You will be surprised to find out how many Municipalities don’t know much about Municipal Tax-Exempt finance and how easy it is to acquire to solve their equipment needs. They all know about the cash they don’t have in this year’s budget, or that they would have to complete a major process to obtain a Municipal Bond. Municipal leasing is easy and quick. Here is some information for you..
Lease/Purchase Agreement transactions are placed with a single investor, and generally limited to 10-12 years in length with an average maturity of about 5 years. Sizes run from around $10,000 to $millions – depending on the useful life of the asset, transaction size and essentiality of the equipment. Vehicles and office equipment are typical items being financed.
Other advantages:
- 100% Financing including delivery, installation and sales tax (where applicable).
- Cost effective – Nominal associated origination costs, if any.
- Equipment and Real Property may be financed on a Lease/Purchase Agreement.
- Flexible payments: Monthly, Quarterly, Semi-Annual, Annual or Delayed Payments.
- No Reserve Accounts are required.
- Uncomplicated documentation!
MUNICIPAL LEASE vs. BOND COMPARISON
Financing Characteristics Public Bond Direct Source Why “NO” is the
And/or Requirements Offering Financing Better Answer
Compliance with SEC YES NO Disclosure rules do not apply
Exact Rates Unknown YES NO Rates quoted before funding
Prior to Closing Rate lock option available.
Underwriter’s Fees YES NO No additional fees
Rating Agency fees YES NO No additional fees
Printing Costs YES NO No additional fees
Reserve Fund YES NO Not required
Prepayments only on Call YES NO Prepayment options
Dates throughout term.
Multiple Investors YES NO Private Placements
Semi-Annually Only YES NO Payment Schedule
Designed to meet your needs.
Time Consuming YES NO One simple process.
Documentation Process
Acquire the equipment you need without Disclosure. Beginning July 3, 1995, an amended SEC Rule 15c2-12 governing disclosure obligation of municipal securities issuers and obligor went into effect. The new Rule was designed to protect investors by ensuring adequate ongoing disclosure of information relating to the financial health of the issuer and obligor. The Rule increases the complexity of debt issuance in the public market. Direct source financing is not subject to disclosure requirements.
Hopefully this information might help you close more transactions.
