Non-Profit Bonds

Non-Profit Bonds

Not-For-Profit Corporation Bonds

Description: The Authority issues DOUBLE tax-exempt bonds on behalf of a Not-For-Profit 501(c) (3) company to finance the acquisition of fixed assets including land, buildings, machinery and equipment. Interest on the tax-exempt bonds is exempt from federal and state income tax. 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: Some major eligibility requirements include: Funds must be used by a not-for profit corporation qualified under the federal tax code as a 501 (c) (3) for the purchase of fixed assets. Funds can be used to build a facility, acquire necessary land, new equipment. Eligible borrowers are hospital systems, medical centers, behavioral health centers, medical clinics, continuing care centers, and YMCAs. Funds can be used to acquire an existing facility as long as 15% or more is used to rehab the structure. Funds expended prior to sixty days before receiving initial approval from the Authority may not be eligible. The capital improvements must take place in the territory of the Authority.

Benefits: he benefits of Non-Profit Bonds include:

  • Lower Interest Rate- A Non-Profit 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 you can expect your interest savings to range from 150 – 300 basis points lower than a conventional loan.
  • Finance up to 100% of the project cost – contingent upon meeting credit standards of a local bank backing the bond.
  • Smooth Process – EIEDA has been described as a “Nimble Issuer” We have flexible guidelines and an expedited approval process. We can assemble a team of bond 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.

Fees: Companies interested should compete a one-page application and submit a non-refundable application fee. There is an issuance fee paid at closing along with other professional costs. The cost of issuing a Bond is generally more expensive than a conventional loan, but the total costs are usually break even in the first year of interest savings and will continue through the life of the bond. Costs of issuance funded from tax-exempt private activity bond proceeds are limited to 2.0%.

Contact: For an application or additional information please contact Andrew Hamilton, Executive Director, Eastern Illinois Economic Development Authority (EIEDA), 1817 South Neil Street, Suite 100, Champaign, Illinois 61820, Tel: 866-325-7525, email: andrewjhamilton@eieda.com