Agri-Industries
Industrial Revenue Bond
Description:
The Illinois Finance Authority issues tax-exempt Industrial Revenue Bonds
(IRB's) on behalf of manufacturing companies to finance the acquisition of
fixed assets such as land, buildings and equipment. Bond proceeds also may be
used for either new construction or renovation.
Benefits:
Benefits of Industrial Revenue Bond financing include:
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Long-term financing at interest rates lower than conventional financing,
usually below prime
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Fixed or variable rate financing
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Finance up to 100% of project cost (subject to credit approval and underwriting
standards of the borrower's bank)
Type of Financing:
Because of significant up-front costs of issuance, Industrial Revenue Bond
issues of less $1.5 million generally are not cost effective. Smaller fixed
asset projects may be eligible for financing through other IFA loan programs.
For most companies, bank participation is necessary before bonds can be sold to
investors. The participating bank will make the credit decision, structure
terms and set collateral requirements. Banks can either (1) guarantee the bonds
by providing a Direct Pay Letter of Credit or (2) purchase bonds directly to
hold as an investment in their portfolio.
Eligibility:
Qualified Industrial Revenue Bond projects include facilities that are
primarily used to manufacture or process tangible products. The Internal
Revenue Code defines all IRB eligibility requirements. Final determination of
project eligibility is subject to a legal opinion from a recognized municipal
bond attorney. A completed Economic Disclosure Statement (EDS) and a Volume Cap
Application must accompany the Industrial Revenue Bond application.
Application and Fee:
Interested parties should complete and submit the Industrial Revenue Bond
Application as well as the Economic Disclosure Statement forms available below.
A non-refundable application fee is due when the application is submitted.
There are also closing fees plus other applicable charges. For a fee schedule
contact a Funding Manager at your local IFA office. In most cases, applications
can be reviewed by staff and considered by the Board of Directors within 30 to
45 days of submission.
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