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HOW TO TREAT TAX AS A LESSEE (USER OF ASSET)
March 9, 2018
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| Tax

All lessees, especially a business entity, must treat their taxes appropriately in its books, and this should comply with the provisions of the latest circular “Guidelines on Tax Implications of Leasing” issued by the in Federal Inland Revenue Services (FIRS) in April 2010. The following specifies how  taxes should be treated by a lessee (user of asset): Finance Lease Treatment for Lessee The Companies Income Tax Act (CIT) regards the interest portion of the periodic lease rental and other…

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MAJOR GUIDES TO PROFITABLE LEASE STRUCTURING
March 8, 2018
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| Best Practices

Structuring a lease involves determining the periodic lease payment  based on the  terms of the lease, in such a way as to cover all costs associated with the lease investment and the target rate of return, while remaining competitive in the market.  Our focus is to consider the various methods and steps involved in structuring leases of various payment configurations and terms. Major structuring issues in leasing. Every lease contract contains special features and attributes structured or built-in by…

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FG SEEKS ELAN INTERVENTION TO DEVELOP THE MINING SECTOR
March 7, 2018
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| Latest News

FG SEEKS ELAN INTERVENTION TO DEVELOP THE MINING SECTOR The Federal Government has recently contacted Equipment Leasing Association of Nigeria (ELAN), to partner with it on the implementation of Nigeria’s national economic strategic plan – the Economic Recovery and Growth Plan (ERGP). Part of this plan is the focus lab, which will be held in three focus areas: Manufacturing/ Processing, Agriculture/Transportation, and Power/Gas. The focus Labs in Manufacturing and Processing will provide a convening opportunity for the private sector…

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ELAN MOBILISES SUPPORT FOR HEALTHCARE DEVELOPMENT
March 7, 2018
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| Latest News

ELAN MOBILISES SUPPORT FOR HEALTHCARE DEVELOPMENT In its quest to further develop the healthcare sector in Nigeria as well as enhance value propositions, ELAN had entered into partnership with Swiss Biostadt Limited, one of its members and a renowned vendor of medical equipment, to promote and facilitate investment under an “Equipment Leasing Scheme”. This scheme is expected to provide medical equipment to players in the healthcare sector, to further enhance service delivery in the sector.

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BENEFITS OF VENDOR LEASING ARRANGEMENT
March 6, 2018
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| Lease Marketing

The term vendor leasing refers to any programme in which an equipment manufacturer, distributor, dealer or  makes use of leasing as a means of selling its products. Vendor leasing, sometimes called “Sales aid Leasing” can be divided into two forms: i. Captive lessors – is when the manufacturer/dealer decides to establish a wholly –owned subsidiary to offer lease finance directly to customer ii. Third-party lessor – is when the lease is handled by an independent leasing company.   Third party lease…

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WHY WOULD YOU INVEST IN LEASING BUSINESS?
March 5, 2018
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| Lease Advice

Just like there are advantages of leasing to a lessee (the user of an asset), so are there benefits of leasing to a lessor (owner of an asset).  The factors that encourage a lessor to provide leasing facilities include: Leasing widens the market for a manufacturer/dealer of equipment. Thus, a manufacturer/dealer can offer lease arrangement without necessarily investing additional capital. Lease rental income received periodically is easily predicted on which future cash flow projections can be made for planning…

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6 WAYS TO MITIGATE RISKS IN LEASING
March 2, 2018
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| Lease Advice

Lease structuring is done after the lessor has established the risk profile of a particular transaction. Sometimes the lessor might not be sufficiently certain that the lessee will meet his rentals as they fall due. To overcome this uncertainty, it may be necessary to require some form of credit enhancement. However, credit enhancement should not be the reason for entering into a lease with what otherwise would be unsatisfactory lessee. The following techniques are used to compensate for increased…

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TIPS ON ASSET MANAGEMENT (Continued)
March 1, 2018
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| Best Practices

Asset Register: maintenance of an up to date register of leased assets is very vital to the management of the lease portfolio. The asset register is better maintained by a computer program and should contain information such as name of the leased asset, serial number, tag number, location of the asset, name of lessee, servicing date, commencement date, terms of lease, cost of equipment, residual value. The purpose is to enable you to keep track of all the leased…

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TIPS ON ASSET MANAGEMENT
February 28, 2018
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| Best Practices

Apart from checking the standing of the lessee, you also have the responsibility of ensuring that the asset under lease is well managed. This is fundamental to the overall achievement of your business objective, because the lessee will only be motivated to pay if the asset under lease is in existence and functional. The fact that you have little or no control on the usage of the equipment makes this task difficult. These include: Maintenance of Lessor’s Legal Right:…

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TECHNIQUES TO HELP STRUCTURE OFF BALANCE SHEET FINANCING
February 27, 2018
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| Best Practices

In the course of your operations, if a lessee insists on off balance sheet financing, you must first of all ensure that the lease does not meet any of the 5 criteria including: i. Automatic ownership transfer ii. Bargain purchase option iii. Lease term equal to or greater that 75% of the asset’s economic life iv. Present Value of minimum lease payments equal to or greater than 90% of equipment cost v. Special purpose equipment vi. Techniques to achieve…

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