California First National Bank
Operating Leases: The lessee can acquire the use of equipment for just a fraction of the useful life of the asset and delay ownership decisions for 2-5 years. At the end of the lease, the lessee decides whether to purchase, replace the equipment or keep leasing.
Capital Leases: Similar to traditional bank financing, this type of lease helps schools to maximize both cash flow and cash conservation. Title of the equipment is transferred to the lessee at the end of term.
Tax-Exempt Conduit Transactions: These can be used for equipment and soft costs (such as installation and maintenance) for qualifying schools.
Off-Balance Sheet Financing: Unlike the traditional methods of financing, operating lease obligations are not capitalized, thus potentially improving balance sheet ratios. You should discuss the potential advantages of using an operating lease with your accountant.
Municipal Lease: A municipal lease is a special type of lease entered into by a state or local government such as a county, city, town or municipal authority.
Residual Value: The value of an asset at the conclusion of a lease.
Sale and Leaseback: An arrangement where the lessor purchases equipment from the company owning and using it. The lessor then becomes the owner and leases it back to the original owner, who continues to use the equipment.
Uniform Commercial Code (UCC): A set of standardized laws adopted by a majority of states, governing commercial transactions relating to the transfer of interests in property (except real property).
Useful Life (Economic Life): The number of years that depreciable business equipment or property is expected to be in use. This may or may not correspond with the items actual physical life or economic life.
