Leases

Leases Placements

Lease Structure	Sigma Capital can provide advisory services to determine to best type of lease for you, a truly lease, capital lease, operating lease, municipal lease, etc. Sigma Capital can tailor leases for unique circumstances, and are particularly useful for energy savings or renewable energy generation equipment where a lease payments can be matched with the savings stream.
Lease Characteristics	Typical leases range in size from $1,500,000 to $25,000,000. Sigma can also assist in raising substantially more capital through syndications with other lenders. Leases are generally structured as a capital lease, with the following characteristics: $1 out, or low buyout, Term: 5-7 years, potentially longer depending on the equipment and creditworthiness of the customer Lease rate: prime plus to mid teens, depending on credit standing
Company Characteristics	In addition to superior management, portfolio companies typically have the following characteristics: Revenues of $1-50 million Current profitability Push through to end customer with substantial balance sheet
Advantages of leasing	Depending on the structure, leases can provide advantages both for the lessee & lessor: Lower cost - Leasing conserves capital. Monthly lease payments are less than monthly purchase payments or monthly depreciation plus interest expense. Flexibility - Payments can be matched to budgetary levels. Your business conditions - cash flow, equipment needs and tax situation - help define the terms of your lease. Protection against obsolescence - The lease can be structured to include upgrades and partial or complete equipment swaps either at mid-term or at lease-end Provides for off balance sheet financing - This potentially increases your borrowing capacity while easing the budgeting process and preserving key financial ratios. Protects against inflation - Aggressive fixed-rate pricing allows for protection against inflation whereas variable-rate leases let you take advantage of falling interest rates. Ability to customize payment schedules Lease payments are fixed Improved return on assets (ROA) Lease rental payments are made from pre-tax rather than after-tax earnings
True Lease	A term used when addressing the tax implications of a lease. In simple terms a lease is considered a true lease if at the end of the lease term the lessee has the option to purchase the equipment at what is defined as Fair Market Value. Conversely, if the lease agreement contains a bargain purchase option, it would be treated as an installment sale.
Operating Lease	For financial reporting purposes, FASB defines an operating lease as one that does not meet the criteria of a capital lease. This means that the asset and corresponding liability are viewed as "off balance sheet" and the entire monthly payment is expensed or treated as a budget item. As viewed by the lessor, an operating lease describes a short-term lease (compared to the asset's expected useful life) in which the total of payments received by the lessor do not cover the cost that the lessor paid to acquire the asset. At the end of an Operating lease term, the Lessee has the option either to purchase or renew at the product's then current Fair Market Value (FMV) or to return the equipment. Operating Leases are typically shorter than Capital Leases.
*Capital Lease*	Also called a finance lease, a capital lease is similar to a loan, with lessees building equity in equipment as they make each payment. Because of this, lessees account for the asset as a conditional sale and must depreciate the equipment as a capital asset. Simultaneously, the present value of the firm lease payments appear as a liability on the lessee's balance sheet. At lease termination it also provides a Fair Market Value, fixed price or a $1 purchase option for the equipment and/or software. The lease term must exceed 75% of the estimated economic life of the leased property and the present value of all the lease payments is equal to 90% or more of the cost of the leased property. Other terms used for Capital Leases are "Lease Purchase," "Finance Lease," "$1 Buyout," and "Full Payout Lease."
Municapal Lease	Due to tax-exempt status, many U.S. state universities, hospitals, city, county and state governments qualify for Municipal Leases. This status helps enable leasing companies to pass on the savings to these customers through lower monthly payments.
Upgrade Credits	Allows Lessee to earn Upgrade Credits throughout the lease based on the length of the Lease (i.e. 12 months à 30% of equipment cost.) Upgrade Credits may be used to acquire new hardware, upgrades, additional peripherals, professional services or maintenance. The monthly payment remains the same and the term is extended accordingly.