Since we are not pledging our taxing power to repay the Lessor (Lender), what will happen if we fail to appropriate for the annual lease payments in subsequent budget periods?
Non-Appropriation is one of the biggest risks the Lessor is taking. The Lessor (Lender) will file a UCC-1 to secure his position with the equipment being financed; however, failing to appropriate will damage the credit worthiness of the Lessee (Borrower). Credit Rating Agencies have taken a strong stance on this issue. Lessees who fail to appropriate for convenience or obsolescence risk a downgrade on their credit ratings. This could be very costly over the long run. Back to Top Lessee (Borrower) Questions Question: Should we request a bid before we receive the equipment? Answer: Yes, the equipment vendor has gone through a long process of bidding and approvals to be selected to supply the equipment. The Lessee (borrower) should be positioned to pay for that equipment when it is delivered and accepted by the lessee. Payment delays to vendors can damage vendor/client relationships.
Related Questions
- Since we are not pledging our taxing power to repay the Lessor (Lender), what will happen if we fail to appropriate for the annual lease payments in subsequent budget periods?
- The Lessee is not pledging its taxing power to repay the lease, what will happen if they fail to appropriate for the annual lease payment in following budget periods?
- We are not pledging our taxing power to repay the Lessor (Lender), what will happen if we fail to appropriate for the annual lease payment in following budget periods?
