Healthcare
1985 Revolving Fund Pooled Financing Program
The Illinois Finance Authority is pleased to provide qualified Illinois hospitals with access to capital financing at one of the lowest possible borrowing costs.
Background:
In December of 1985, the Illinois Health Facilities Authority established a Revolving Fund Pooled Financing Program (the "Pool Program") by issuing $400 million in variable rate demand bonds. As successor to the IHFA, the Illinois Finance Authority continues to facilitate Pool Program financings to qualified healthcare facilities in Illinois. As of January 2008, the pool has provided financing of over $700 million in loans made to 132 institutions. Three revolving pools (C,D, and F Pools) remain open with total lendable funds of $167 million. Currently, approximately $40 million is available to be loaned to qualified organizations.
Uses of Financing Proceeds:
Pool Program financing can REIMBURSE healthcare institutions for a wide variety of healthcare capital projects including, but not limited to:
- Equipment acquisitions
- Renovations
- Land and building acquisitions
- Construction
- Refinancing of taxable debt
Highlights and Benefits:
- Favorable interest rates and low fixed fees
- Origination costs are significantly lower than those of stand-alone bond financings
- Pool Program maintains Pre-1986 tax law status, which conveys significant benefits to the Borrower,
including:
- Certain projects no longer eligible under federal tax law for tax-exempt financing may qualify for financing
- Earnings on Pool Program investments reduce costs to Borrowers
- Non-hospital related projects are not restricted to the $150 million limitation
- Financings are not restricted to the 120% limitation on the average weighted life of issue
- Variable-rate demand bond mode allows for flexibility and change of mode in accordance with economic conditions
- Standardized documents
Terms of Financing:
TERM: Typically three to five years
AMORTIZATION: Equal to the economic life of the project, but not to exceed fifteen years, amortized on an equal monthly basis
INTEREST RATE: Weekly floating rate equal to the interest rate of the bonds which fund the Pool Program (typically BMA), plus an "add-on"* (1.05%) to cover credit facility, remarketing, trustee and other administrative costs.
COLLATERAL: As the letter of credit provider for the Pool Program, JPMorgan Chase determines the collateral/security to be provided on an individual basis. Although most loans are unsecured, collateral, including a back-up letter of credit, may be required in certain cases.
BONDHOLDERS: JPMorgan Chase provides a letter of credit for the benefit of the Bondholders and remarkets the bonds on a weekly basis.
* "Add-on" includes: The Letter of Credit provided by JPMorgan Chase, administrative costs, on-going legal expenses, trustee fees, remarketing fees.
Process:
- An application is submitted to the IFA requesting financing. (see below)
- The application is forwarded to JPMorgan Chase for credit analysis.
- JPMorgan Chase will work with the Borrower to determine the Term, Amortization, Security, Collateral, and Covenants of the new loan.
- If approved, JPMorgan Chase will issue a financing commitment.
- Documentation will take place using standardized documents. Closing is expected to take place approximately four weeks after JPMorgan Chase issues a commitment.
Fees:
The IFA charges a low fixed fee. Other fees may include Borrower's Counsel, JPMorgan Chase Counsel, and services provided by the Borrower's accountant. All fees are paid by the Borrower.
Learn More about IFA Healthcare programs. Contact the IFA Healthcare Team.
Download the application:
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