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We are an impact driven lender for charter school and are motivated by the positive change that our lending shall bring upon our borrowers to enable them to better serve their student body, majority of which is expected to be comprised of underprivileged children residing in low-income neighborhoods where access to conventional forms of financing is limited.
Unlike their traditional public school counterparts, public charter school do not benefit from local tax revenues or State guaranteed bond proceeds to build their school buildings. Therefore, facility is a challenge for charter schools, either for a start-up school looking for an initial facility or for an established school seeking a permanent home. While our lending program is suitable for smaller projects, we also act as a participation lender for larger projects. For instance, our direct lending program can be helpful if you are in need of a small change in your floor layout, a change which can provide you with more seats for underserved children and can also reward you financially with increased enrollment. For larger projects, we can help you build your equity to get dream project financed. Let us know what you need and let us help you with financial solutions and out of the box ideas that fit your needs.
Each project is different and loan decisions are made on case by case basis; however, typical loan terms are as follows:
• Loan amount: Average size of $250,000
• Maturity: 1 to 5 years
• Repayment: Monthly with up to 15-year amortization
• Loan to Value: Up to 90%
• Collateral requirement: Depends on project
NMTC is a federal program designed to incentivize lenders and developers to invest in low income communities. If qualified, NMTC is essentially free money for your school for about 20% of your total project cost.
To be eligible for NMTC, your school project should be physically located in a low-income community, which is defined as a census tract with a poverty rate of at least 20% or with a median income no more than 80% of the area median income. NMTC is a competitive program and your approval chances are higher if your project is located in a distressed area, a more stringent criterion which is defined as a census tract with a poverty rate of at least 30% or with an unemployment rate of 1.5 times higher than the national average. Another important criterion for eligibility is job creation. Your project, either acquisition and construction of your dream facility or expansion of your existing school building would have to entail new jobs.
You may use below link to check if your project is located in a qualifying census tract.
Community Development Entities (CDE) receive tax credit allocations from the Community Development Financial Institutions (CDFI) Fund thru a competitive process. The tax credit comes in the amount of 39 cents for every dollar invested in a designated census tract, and the credits may be claimed over a period of 7 years; 5 cents in years 1 thru 3 and 6 cents in years 4 thru 7. To get upfront money, CDE sells this tax credit to an investor, who then pays approximately 30 cents into your project today in return for receiving 39 cents over a period of 7 years. CDE then arranges for a lender to provide other 70 cents for the project. 30 cents portion constitutes the equity of project and 70 cents the leverage loan. School pays debt service to the leverage lender thru CDE and equity portion is not paid back to the investor. Net tax credit subsidy into your project is typically around 20%, 20 cents on the dollar, after the fees.
Real estate development is a complicated process from acquisition and due diligence to permits and construction. School leaders typically do not possess the expertise to manage this process. Tell us what you have in mind and let us offer you real estate solutions customized to your needs and help you manage your project. Please contact us for more information.