When is an escrow agreement used with leasing?

With longer lead times often experienced with equipment delivery, an escrow agreement provides the benefit of locking into current interest rates while the equipment is being manufactured.  It is also beneficial when the manufacturer/dealer requires progress payments while the equipment is being manufactured.

Recent Questions

What is the benefit of becoming a Sourcewell member?

Sourcewell membership is free for all government agencies, public and private schools/colleges, tribal governments, and nonprofit organizations.

Once you receive your member number, you can purchase on any Sourcewell awarded contract, including competitively-bid financing through NCL Government Capital.

How do I utilize my Sourcewell membership to take advantage of financing through NCL Government Capital?

  1. Find a Vendor: Sourcewell has hundreds of awarded vendor contracts across multiple industries. You can search their site by product type or filter construction contracts by state and county.
  2. Obtain a Quote: After finding what you need through Sourcewell, you can quickly contact the vendor for a quote that includes flexible financing through NCL Government Capital.
  3. Complete Your Purchase: The NCL team will work with your preferred vendor to create the terms, structure, and payment schedule that fits your budget so you can take delivery right away.

What is a non-appropriation clause?

Every agency is required to budget expenditures for the next fiscal year. In the event the agency does not include the lease payments in the budget, the agency can elect to return the equipment and cancel the lease without penalty.

Why is a non-appropriation clause necessary?

Non-appropriation is what differentiates a lease from a loan. Most agencies are allowed to enter into a lease without voter approval. A loan or bond may require voter approval.

What is a Tax-Exempt Municipal Lease Purchase (TELP)?

A Tax-Exempt Municipal Lease is similar to a loan with the exception of the non-appropriation clause. The agency takes ownership of the equipment (or project) from day one, and NCL Government Capital is a secured party. There are no end of lease options to buy, renew or return equipment. The agency owns the equipment free and clear upon NCL’s receipt of the last payment.

Why would an agency choose to non-appropriate for lease payments?

There are a variety of reasons an agency may choose to non-appropriate. One of the common reasons is that the agency determines the leased equipment is no longer essential, therefore choosing not to budget for future payments.