Financial Lease
Finance lease, also known as Full Payout Lease, is a type of lease wherein the lessor transfers substantially all the risks and rewards related to the asset to the lessee. Generally, the ownership is transferred to the lessee at the end of the economic life of the asset. Lease term is spread over the major part of the asset life. Here, a lessor is only a financier.
Operating Lease
On the contrary, in operating lease, risk and rewards are not transferred completely to the lessee. The term of a lease is small compared to the financial lease. The lessor depends on many different lessees for recovering his cost. Ownership along with its risks and rewards lies with the lessor. Here, a lessor is not only acting as a financier but he also provides additional services required in the course of using the asset or equipment
Direct Lease
A direct lease is a simple lease where the asset is either owned by the lessor or he acquires it. In this case, there is three different parties viz. asset supplier, lessor, and lessee and it is called tripartite lease. Here, equipment supplier and lessor are two different parties
Sale & Lease Back
On the other hand, in the arrangement of sale and lease back, the lessee sells his asset or equipment to the lessor (financier) with an advanced agreement of leasing back to the lessee for a fixed lease rental per period. It is exercised by the entrepreneur when he wants to free his money, invested in the asset, to utilize it at the whatsoever place for any reason in the former case, the lessor and asset supplier are one and the same person and this case is called ‘bipartite lease’. In a bipartite lease, there are two parties
Domestic Factoring
Represents receivable finance where BM finances the credit sales of its clients.
Supply Chain Finance
(AKA) Reverse Factoring where BM finances the operating purchase needs of its clients