Conventional Financing Vehicles

The following is a list of general conventional financing vehicles, with brief descriptions of each: 1. A commercial loan is a formal agreement in which a lender provides a borrower with funds for a stated purpose. It is backed by the full faith and credit of the borrower. Loans may be secured by the particular asset being purchased, and/or with additional assets of the company, such as accounts receivable, property, or other tangible assets.

2. A conditional sales agreement is an agreement for the purchase of an asset in which the borrower is treated as the owner of the asset for federal income tax purposes, but does not become the legal owner of the asset until the terms and conditions of the agreement have been satisfied. This entitles the borrower to the tax benefits of ownership, such as depreciation.

3. A capital lease (lease/purchase) is a rental agreement backed by the full faith and credit of the lessee (borrower). These typically have a $1 purchase option that may be exercised by the lessee at the end of the lease term.

4. An operating lease is a lease that has the financial reporting characteristics of a usage agreement and also meets certain criteria established by the Financial Accounting Standards Board (FASB). Generally, an operating lease is not required to be shown on the balance sheet of the lessee. Operating leases also include conditions in which the lessor has taken a significant residual position in the lease pricing and, therefore, must salvage the equipment for a certain value at the end of the lease term in order to earn its rate of return.

5. A true lease is a long-term rental agreement that contains fair market value purchase options, which may be exercised by the lessee at the end of the lease term. Since it is unknown if the equipment will ultimately be purchased, rental payments are usually expensed for tax purposes.

Renewable Energy 101

Renewable Energy 101

Renewable energy is energy that is generated from sunlight, rain, tides, geothermal heat and wind. These sources are naturally and constantly replenished, which is why they are deemed as renewable. The usage of renewable energy sources is very important when considering the sustainability of the existing energy usage of the world. While there is currently an abundance of non-renewable energy sources, such as nuclear fuels, these energy sources are depleting. In addition to being a non-renewable supply, the non-renewable energy sources release emissions into the air, which has an adverse effect on the environment.

Get My Free Ebook

Post a comment