LEVERAGED LEASE

A specific form of lease involving at least three parties: a lessor- lessee and funding source. The lessor borrows a significant portion of the equipment cost on a nonrecourse basis by assigning the future lease payment stream to the lender in return for up-front funds (the borrowing). The lessor puts up a minimal amount of its own equity funds (the difference between the equipment cost and the present value of the assigned lease payments - approximately 20 percent) and generally is entitled to the full tax benefits of equipment ownership.