There are 27 entries in the glossary.
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| "Application Only" Program | A streamlined credit application and review procedure that only requires the submission of a single page application with basic information about the business' principals, bank and trade references. This type of program does not require financial statements, tax returns, business plans or other more detailed disclosures. |
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| Acceptance | ("Delivery & Acceptance") - The lessee’s acknowledgement that the equipment to be leased has been received and is in satisfactory condition. For the lessee's protection, funds will not be released to your vendor until Atlas Financial has received your written "delivery and acceptance" form and been able to confirm the installation by telephone. |
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| Advance Lease Payments | Most leases call for a specific number of lease payments in advance. 1-2 payments is a typical requirement. The total number of payments during the lease is reduced by the advance payments. (Bank financing typically require much larger "down payments," typically 10-25% of the purchase price to close the loan along with "origination" and other fees. |
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| Commercial Lease | Atlas Financial's program for larger leases—typically $75,000 and up. Businesses must provide 2-3 years audited or review level financial statements or tax returns and must be under current ownership at least 2 and usually 3 years. |
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| Deferred Payment Lease | The initial lease payments are deferred 60, 90 or 120 days to accommodate cash flow/capital budgeting requirements. |
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| End Of Lease Options | These options define what will happen to the leased equipment at the end of the lease term. Typical options are: $1 Buyout, FMV, PUT, equipment return and continued leasing. |
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| Fair Market Value (FMV) Lease | Provides greater flexibility and lower monthly payments than the Finance Lease format. The FMV lease may also qualify as a tax deductible operating expenses. Key benefits include a number pre-set end-of-lease options:
1. Return the equipment with no further obligation
2. Purchase the equipment for its fair market value
3. Re-lease the equipment for its fair market value
4. Continue leasing on a month-to-month basis
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| Finance Lease | ($1 Buyout, Capital Lease or Bargain Purchase Lease) - These terms describe leases that combine lower, fixed monthly payments with the guaranteed-in-advance right to purchase the equipment at the conclusion of the lease term at a pre-determined price. These leases generally do not qualify as deductible operating expense and must be amortized and depreciated. There are, however, some significant other tax benefits under I.R.S. section 179, that may be available to your business. |
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| Insurance | Because leased equipment is technically owned by the lessor until the satisfactory conclusion of the lease term, (proof of) all risk/casualty insurance will be required showing the lessor as a "named insured." |
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| Lessee | The entity that is leasing the equipment from its owner, the lessor. |
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| Lessor | The owner of the equipment to whom lease payments are made. |
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| Master Lease | One lease (and one credit approval) for several pieces of equipment purchased at different times from one or more vendors. Once you have been approved for a Master Lease, Atlas Financial only requires brief addendums and equipment schedules for each new batch of equipment. |
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| Off-Balance Sheet Financing | Financing that does not account the lease as a debt, nor the leased equipment as an asset, to a company's balance sheet. This can be extremely important to companies with bank other lender-imposed key operating ratio requirements. Under a true lease for example, the lessee does not show the leased equipment as an asset (the lessee does not own the equipment, nor does the lease structure contemplate ownership), nor therefore, is the lessee required to report the corresponding long term liability. |
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| Operating Lease | Any lease that is not a capital or finance lease. See FMV lease (above). Also see First Capital's "Lease Types" page for a more complete discussion of this topic. |
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| Progress Payments | (Vendor Pre-Funding) - A special kind of lease for vendors who require up to 100% of the selling price prior to delivery. (Most leases are designed to fund your equipment vendors immediately after you confirm that the equipment that you ordered has been received in satisfactory order.) Some vendors, however, require that specially ordered, configured or manufactured-to-order equipment be paid for in stages ranging from small up front, order-confirmation deposits, to multiple "progress payments" as the order gets closer to shipping to full-prepayments. Atlas Financial can accommodate almost any equipment vendor's pre-payment requirement. |
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| Purchase Option | (End Of Lease Option) - These options define what will happen to the leased equipment at the end of the lease term. Typical options are: $1 Buyout, FMV, PUT, equipment return and continued leasing. |
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| PUT Option | (Purchase Upon Termination) - A specialized purchase option that requires a purchase of the equipment at the conclusion of the lease at a fixed-in-advance percentage of the original purchase price (e.g. 10%). |
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| Rate Factor | The number, when multiplied with the lease amount, which gives the monthly lease payment. The rate factor is usually expressed as a 5-digit, decimal number that represents the percentage of the lease amount to be paid each month. (for example: a rate factor of 0.02155 represents a payment of 2.155% of the equipment cost per month) |
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| Recourse | (or "vendor recourse") - Generally applies to the funding source (lessor's) right to require the manufacture or distributor take back and/or take responsibility for re-marketing equipment that is not paid for as a result of default by their customer(s), the lessee. Note: Atlas Financial does not require recourse agreements with its vendors. |
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| Residual Value | The remaining (market) value of the equipment at the end of the lease term. |
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| Sale Lease Back | A technique for re-capturing cash previously expended on equipment by selling that equipment to Atlas Financial, who in turn leases that same equipment back to the company. Atlas Financial will readily "buy back" most any equipment that has been purchased new, within the previous 90 days based on the manufacturer/dealer's original invoice(s). Older or used equipment may be subject to an independent valuation appraisal prior to funding. |
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| Seasonally Adjusted Lease Payments | Lease payments that are "adjusted" to accommodate a businesses cash flow seasonality. Payments are set lower for the businesses "slower" or "off-season" months and set slightly higher during months of the business' traditionally stronger cash flow. |
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| Security Deposit | An amount paid at the beginning of the lease that is held by the lessor until the satisfactory payment of all amounts due under the lease terms, at which time the security deposit amount is returned to the lessee. |
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| Skip Payment Leases | The lessee selects a series of months in which no-payments will be due. Many times the first 3 to 6 months of a lease can be skipped to allow the newly leased equipment to start generating cash flow. |
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| Step Payment Lease | Lease payments are stepped up (or down) to accommodate the lessee's anticipated cash flow pattern as the company begins to see its return from the acquired equipment. |
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| TRAC Lease | (Terminal Rental Adjustment Clause) - Many of the benefits of a true lease, but designed specifically for over-the-road vehicles like trucks, tractors & trailers. Special provisions of the tax code allow for pre-determined end-of-lease valuations (unlike a true or FMV lease). Generally the most aggressive pricing for specified equipment. May include FMV or continued rental options. |
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| True Lease | (Tax or Operating Lease) - A true lease, by definition, does not call for the full payout of the equipment cost during the lease term, nor does a true lease contemplate a transfer of title following the conclusion of the lease. The lessee is only "paying for the equipment during a portion of that equipment's useful life. Hence the lease payments are often treated as 100% tax deductible operating expenses. The lease generally does not appear on the balance sheet as a business asset or as a business liability. This type of lease also offers the lowest payments for a given term. A true lease may (but does not have to) include an FMV (fair market value) option which allows the lessee to purchase (take full ownership of) the equipment for its legitimate fair market value at the time the lease terminates. |
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