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Financial Assistance - Tax Exempt Mini Bond Program |
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Mini Bonds |
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The purpose of the "Mini-Bond" Program is to further promote economic development in the region. The IDA, in association with the law firms of Gilmore & Bell and Hazelwood & Weber, L.C., developed a streamlined process that will allows savings of time and reduced fees to the borrower structure to the borrower. |
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ELIGIBILITY: |
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Projects whose total costs exceed $500,000 but are less than $3,000,000. |
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Projects that qualify for the program include: |
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Acquisition of an existing facility |
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Expansion of an existing facility |
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Construction of a new facility |
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The purchase of equipment |
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Refinance of existing debt for eligible 501 (c ) (3) corporations. |
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TERM, RATES AND CONDITIONS: |
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1. |
The "Mini-Bond is underwritten and collateralized like any conventional loan. The borrower is utilizing provisions in the tax code to obtain an interest rate, which is lower than conventional interest rates. |
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The term depends on the use of Bond proceeds and the expected economic life of the asset in relation to the project. |
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Amortization of up to 20 years on land and building. |
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Amortization on machinery and equipment is dependent on type of equipment, marketability and useful life. |
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The interest rates are negotiated between the borrower and the lending institution. |
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Interest rate can float or be fixed to the earliest put option. |
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COLLATERAL REQUIREMENTS: |
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The "Mini-Bond's" collateral requirements are very similar to conventional loans for the same purpose. The "Mini-Bond" is subject to normal lending institutions internal and external credit and collateral requirements. |
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Real Estate funding is subject to receipt of normal real estate documentation by the financial institution that may include, but not limited to the following: |
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Appraisals & Environmentals |
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Surveys |
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Title Insurance |
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DOCUMENTATION AND FEES: |
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Counsel prepares all documentation. Counsel (Borrower, Issuer, Bond Underwriter and Trustee) represents all parties. Below is a summary of the fees associated with a typical "Mini-Bond": |
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IDA Application Fee |
$ 500 |
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IDA Issuance Fee $500,000-$1,500,000 |
.25% |
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IDA Issuance Fee $1,500,000 - $3,000,000 |
.375% |
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IDA Counsel $500,000 - $1,500,000 |
$ 1,500 |
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Bond Issue Over $1,500,000 - $3,000,000 |
$ 2,250 |
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Trustee Acceptance Fee |
$ 500 |
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Bond Counsel Fee $500,000 Bond Issue |
$ 7,500 |
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Bond issue over $500,000 |
$ 7,500 + $ 2.50
per $ 1,000 |
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Borrower's Counsel |
$ 2,500 |
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BENEFITS OF THE "MINI-BOND" PROGRAM: |
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Lower than Prime interest rates that are offered due to the tax-exempt status of interest earned to the lending institution. Typically, the interest rates are 1% to 1.5% lower than conventional financing. |
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Reduced Fees. Because the "Mini-Bond" documents are pre-approved by the lending institution, Bond Counsel and the Trustee, the costs associated with the issue are reduced. |
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Rapid turn around time. Because the documents are pre-approved, the timing from application to funding is greatly reduced. |
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Economic Development Center
5988 Mid Rivers Mall Dr. Suite 100, St. Charles, MO 63304
Phone: 636.441.6880, Toll Free: (877) 441-6880, Fax: 636.441.6881
E-mail: info@edcscc.com
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