A nonservice lease is an equipment lease under which the lessee is responsible for the maintenance, insurance and taxes as well as all other costs incurred in operating the equipme…
What is a minimum lease payment? What is a rental?
A periodic payment made by the lessee to the lessor during the lease term for use of the leased asset, usually monthly or quarterly, is a lease payment. The periodic payment made…
What is a master equipment lease agreement?
Many equipment lease transactions use a master lease to cover terms and conditions of all of the individual lease transactions to be entered into between the parties. A master lea…
What is a loan sale?
A loan sale is the transfer of the ownership and control rights of a loan from the seller to the buyer without recourse, guarantee, insurance or other credit enhancement, with the…
What is a loan participation?
A participation is a funding arrangement whereby a participant (buyer) provides to the loan originator and grantor (lender of record, existing lender) funding (a deposit) for the l…
What is a loan modification?
Loan modification involves an amendment to the terms of an outstanding loan, typically involving a change in the interest, principal and/or term of the loan. One or more of the fo…
What is a liquidation? What is a dissolution?
Liquidation is the bankruptcy process in which a liquidator assembles and sells a debtor’s assets and distributes the sale proceeds to creditors in accordance with the priority rul…
What is a leveraged lease?
A leveraged lease is a noncancellable long-term big-ticket finance lease that relies on long-term debt provided to the lessor for the leased asset’s refinancing, it involving the l…
What is a lessor’s investment in a lease?
The sum of the undiscounted minimum lease payments (MLPs) to be made on a finance lease plus any unguaranteed residual value (URV) accruing to the lessor is the gross investment in…
What is a leasing company?
A financial institution predominantly engaged in the business of originating and underwriting lease transactions is a leasing company. Leasing companies come in the form of bank l…
What is a lease underwriter?
A lease underwriter is a lessor, typically the lease originator, that assumes the risk of a lease and assures and arranges the transaction. Lease underwriters commonly originate l…
What is a lease proposal?
Instead of a lease application, a request for proposal (RFP) outlining the need of prospective lessees for the financing of mid- and big-ticket assets is prepared and sent to prosp…
What is a lease master trust?
A master trust is an investment structure that allows for the holding and management of a portfolio of assets and a dynamic collateral profile allowing for the addition of new coll…
What is a lease funder?
A lease funder is any party other than the lessor that provides funding to the lease originator either as a lease purchaser purchasing legal title and the risks, rewards and contro…
What is a lease commitment letter?
A document prepared by a prospective lessor and presented to a prospective lessee that sets forth the lessor’s commitment to provide the proposed lease is a commitment letter. A c…
What is a lease broker? What is a packager?
A lease broker is an individual or firm that arranges lease transactions, commonly involving commercial and industrial equipment, as agent between lessees and lessors – without par…
What is a lease assignment agreement?
An assignment is the transfer of some or all of the rights in a contractual arrangement and/or an asset to another party, where the obligors under the arrangement are bound to perf…
What is a lease application?
The form provided by a prospective lessor that, often combined with a credit application, is filled out and returned by the prospective lessee to provide the lessor with basic info…
What is a guarantee?
A guarantee is personal security in the form of an agreement provided by a third party, typically a parent company, to a creditor to assume a debtor’s obligation in the event the d…
What is a grace period? What is a debt waiver?
A given period of time during which a lender does not require payment on a loan and principal and interest does not come due for payment is a grace period. Grace periods are commo…
What is a functional currency?
For the consolidation of the financial statements of a multinational corporation with one or more subsidiaries operating in a currency different to that of the parent company, a pr…
What is a debt-equity swap (DES)?
A debt-equity swap (DES) is a debt restructuring in which a creditor provides new equity capital in the debtor in exchange for cancellation of outstanding debt it is owed, thus imp…
What is a debt-debt swap (DDS)?
A debt-debt swap (DDS) is a debt restructuring by which: Old debt is novated between the same debtor and creditor, with amended terms and conditions and/or a new principal amount;…
What is a debt-asset swap (DAS)?
A debt-asset swap (DAS) is a debtor’s transfer to a creditor of third-party receivables, real estate, or other assets to satisfy a debt. Debt-asset swaps frequently occur as debto…
What is a debt participant?
A third-party institutional investor (insurance company, pension fund) unaffiliated with the lessor or lessee that lends the long-term debt funding in a leveraged lease on a nonrec…