Leasing Specialists in Pittsburgh

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.

 

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