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CSFD is an impact-driven lender for charter schools and is motivated by the positive change that our loan products can bring to our borrowers to help them better serve their communities and student bodies, the majority of which are expected to comprise underprivileged children living in low-income neighborhoods where access to conventional forms of financing is limited.
Facilities are a real challenge for charter schools. Unlike their traditional public-school counterparts, public charter schools do not benefit from local tax revenues or state guaranteed bond proceeds to build their school buildings. Our loan products are customized to the specific needs and difficulties of being a charter school, and we can help you whether you are a start-up school looking for an initial facility or an established school seeking a permanent home.
A participation loan is a single loan to a borrower made by multiple lenders in which an originating lender underwrites and closes the loan but shares the funding of the loan with other participating lenders. A first priority lien against the property and a minimal down payment are required.
This product is very helpful if you have a senior lender lined up for your project but are having difficulty coming up with a required down payment. CSFD can make a loan to the project in a secondary position to help toward that down payment. We can also help you find a senior lender if you don’t yet have one.
Leasehold Improvements Loan:
This product is tailored to schools that are, or will be, leasing from a third-party owner. It is always a good idea to request tenant improvements from the owner, but in some cases, you have to lease an existing school facility AS-IS, and you need a loan to make minor modifications so that the leased facility matches your academic model.
Furniture, Fixtures, and Equipment (FF&E) Loan:
This loan helps with the purchase of desks, computers, smart boards, and other equipment. A first priority lien against the FF&E is required.
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. NMTC aids in your investment in education.
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.