Description
The Upper Illinois River Valley Development Authority (UIRVDA) acts as the issuer of the bonds, passing along its DOUBLE TAX-EXEMPT status to a manufacturing company to finance the acquisition of fixed assets including land, buildings, machinery, and equipment. Because the interest on the bonds is not subject to state or federal income taxes, 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.
A Good Investment at a Great Rate
Eligibility
- Funds must be used by a manufacturer of tangible goods. The company must add value or alter raw materials.
- At least 75% of the bond proceeds must be used for expenditures directly related to the manufacturing process.
- No more than 25% may be used for ancillary facilities such as warehouse or office space.
- Funds can be used to build a manufacturing plant and acquire necessary land.
- Funds can be used to acquire an existing manufacturing plant as long as 15% or more is used to rehab the structure.
- Funds can be used to acquire new equipment used in the manufacturing process.
- The borrower’s capital expenditures cannot be greater than $20 million (except with a lease) in the city where the project is located. This $20 million is the amount spent over a defined six-year period: 3 years before financing and 3 years after.
- Funds expended prior to sixty days before receiving initial approval from UIRVDA may not be eligible.
- The capital improvements must take place in the territory of UIRVDA in the counties of Bureau, Grundy, Kane, Kendall, Lake, LaSalle, Marshall, McHenry and Putnam.
Benefits
Lower Interest Rate
An UIRVDA Industrial Revenue 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 the borrower can expect 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
UIRVDA has been described as a “Nimble Issuer” because of its flexible guidelines and a expedited
approval process. We can assemble a team of IRB 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.
Application
Manufacturers 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.