Bank Qualified Bank Direct Tax-Exempt Loan Program
The City of Minneapolis offers a financing program to provide cost-effective tax-exempt financing for capital projects for smaller 501 (c)(3) organizations for projects in the $1 million to $2 million range. Traditionally, tax-exempt revenue bonds have often not been a practical financing option for small organizations or companies’ projects in the past. By providing a streamlined application and documentation process, the red tape is significantly reduced resulting in lower borrowing costs when using this program.
What are the benefits of the program?
- Lower than typical conventional interest rates as a result of the tax-exempt status of interest to the bank purchasing the bonds.
- Lower cost of issuance and less lead-time from application to actual funding since the program documents are pre-approved by the City of Minneapolis and Bond Counsel.
- The City and other participants are committed to ensuring a smooth and efficient process.
- Reduced fees, compared to standard tax-exempt bond financing.
What are the rates, terms and fees?
- Bank Qualified Bank Direct tax-exempt revenue bonds can be issued below commercial-market interest rates due to the tax-exempt status of interest to the bank purchasing the bonds.
- The interest rate can either be variable or fixed.
- All documentation is prepared by bond counsel. All parties are represented by their respective counsel.
- Bank Qualified Bank Direct tax-exempt revenue bond issuance expenses include bond counsel and sometimes a financial advisor. These fees may be financed through the bonds up to certain limits.
What is the Bank Qualified Bank Direct Loan Program process?
- A City staff person will handle your loan application from initial inquiry through post-closing monitoring.
- The complete public approval process takes about 45-60 days after the application is received, if a bank has committed to purchasing the bonds.
- The City approves bank direct loans based on the public purpose served, such as preserving and creating jobs, increasing the real estate tax base, and providing community services.
Loan applicants should return a completed Bank Qualified Bank Direct Loan Program application to the City with the following information:
- Financial statements for the past two years and any interim statement
- Appraisals and environmental reports about the proposed project
For more information contact (612) 673-5072.
All programs and guidelines are subject to change without notice.
Online information from the City of Minneapolis at MinneapolisMN.gov/CPED
Last updated Jan. 11, 2013