Industrial Revenue Bond Financing

Description

The Central Illinois Economic Development Authority (CIEDA) acts as the issuer of the bonds, passing its DOUBLE tax-exempt status on to a manufacturing company to finance the acquisition of fixed assets including land, buildings, machinery and equipment. Because the interest on the bonds is not subject to state or federal income taxes, investors and lenders require a lower interest rate to achieve an equivalent after-tax return. Therefore, the borrower receives a preferential interest rate, generating substantial savings.

Eligibility

Fund Usage

Funds can be used to build a manufacturing plant and acquire necessary land. Funds can be used to acquire an existing manufacturing plant as long as 15% or more is used to rehab the structure. Funds can be used to acquire new equipment used in the manufacturing process.

Required Expenditures

At least 75% of the bond proceeds must be used for expenditures directly related to the manufacturing process. No more than 25% may be used for ancillary facilities such as warehouse or office space.

Value Added

Funds must be used by a manufacturer of tangible goods. The company must add value or alter raw materials.

Expenditure Cap

The borrower’s capital expenditures cannot be greater than $20 million (except with a lease) in the city where the project is located. This $20 million is the amount spent over a defined six-year period: 3 years before financing and 3 years after.

60 day notice

Funds expended prior to sixty days before receiving initial approval from CIEDA may not be eligible.

Capital Improvements

The capital improvements must take place in the territory of CIEDA in the counties of Calhoun, Christian, DeWitt, Greene, Jersey, Logan, Macon, Macoupin, Menard, Montgomery, and Sangamon.

Benefits

Lower Interest Rate

A CIEDA Double Tax-Exempt Bond is exempt from state and federal income taxes, making it an attractive investment for the bondholder. The interest rate available on these bonds is far lower than conventional financing, and a lender can expect an interest savings to range from 150 – 300 basis points lower than a conventional loan.

100% Financing

Finance up to 100% of the project cost – contingent upon meeting credit standards of a lender backing the bond.

Smooth Process

CIEDA has been described as a “Nimble Issuer” because of its flexible guidelines and an expedited approval process. We can assemble a team of IRB specialists who have a thorough understanding of all the legal and financial aspects of this type of transaction. We'll work closely with you every step of the way, answering your questions, helping you avoid pitfalls, and making sure you get the financing that's right for you.

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