Tax-exempt private activity bonds

Tax-exempt private activity bonds are tax-exempt securities issued by a governmental entity to finance qualified capital projects for use by private organizations, for example, commercial manufacturers. The governmental issuing authority acts as a conduit for the bond financing. The loan is made to the governmental entity and it, in turn, advances the funds to the private entity.

Because these bonds are issued through a governmental entity, the interest income earned by the bondholder is not subject to federal income tax. This allows savings to be passed on to the private organization in the form of a lower interest rate.

Taxable Bridge Financing

In addition to transactions that are initially funded as tax-exempt IDBs, GE Government Finance has the ability to fund transactions as taxable loans that can be converted to tax-exempt IDBs in the future. This accommodates situations where companies cannot receive state allocation until some time in the future or have a pressing need to fund a project prior to completing the IDB process. Please note that In either case, your company will assume the risk of receiving state allocation in the future.

Tax Leases

A tax lease permits the lessor to claim the tax benefits of ownership on the leased equipment and generally qualify as an "operating lease" for the lessee's financial statement accounting purposes. This structure is often used for the acquisition of equipment that will exceed the capital expenditure limitation associated with IDBs.

Taxable IDBs

Transactions that do not qualify for tax-exempt IDB financing may be closed using a similar structure with a government conduit issuer, but at taxable rates. The benefit of a taxable IDB offered by many jurisdictions is the avoidance of sales tax on equipment purchases or property tax abatement on real estate and/or equipment.

Taxable Loans

Taxable loans are used to finance used equipment or take out existing taxable mortgages (fixed or variable rate structures).

Refinancings

Existing IDBs can be refinanced by re-issuing the bonds through a governmental issuer. The process is streamlined because no state allocation is required. Bonds are refunded to take advantage of fixed rates, floating rates, change in collateral pledged or change in documentation.

True Lease

If you need equipment today but know: (a) you don't want to own it, (b) want the option to return it, (c) it will need to be updated, or (d) it won't be needed after three years, then a True Lease may be right for you. For certain asset types, we will take ownership and a residual position in the equipment. As a result, your monthly payments may be reduced due to the tax benefits that may be available to us as owner and our equity in the equipment. If you decide that you would like to purchase the equipment at the end of the lease term, you have the option to buy it at its fair market value.