Capital Financing 501

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Capital Financing 501 is a tax-exempt commercial paper program that provides
Massachusetts 501 (c)(3) institutions with a low-cost source of capital that can be
borrowed and repaid efficiently.

Published in: Economy & Finance
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Capital Financing 501

  1. 1. Capital Financing 501 The Sage School in Foxborough Tax-Exempt Commercial Paper Financing is using $2,250,000 from the Capital Financing 501 is a tax-exempt commercial paper program that provides Massachusetts 501 (c)(3) institutions with a low-cost source of capital that can be Capital Financing 501 program to borrowed and repaid efficiently. purchase and renovate a building the School had Program Specifics previousl y leased. The school Eligible Organizations Massachusetts based 501 (c)(3) nonprofit institutions. plans to renovate the space and add classrooms, administrative Projects Eligible for Financing offices, and a gymnasium in the Suitable projects include land or building acquisition, new construction, renovation, and equipment, as well as maintenance, repairs and ongoing capital expenditures. next several years. Capital Financing 501 can provide permanent or interim financing for large-scale projects that may be subsequently refinanced on a stand-alone basis or repaid through “We are pleased to partner with other sources such as grants or gifts. Citizens Bank and Structure MassDevelopment for our Borrowers gain approval from the letter of credit bank for credit enhancement of a expansion initiative. These maximum amount that can be borrowed under a borrower reimbursement agreement campus-wide improvements and subsequent loan agreements. Letters of credit are available in minimum amounts of $3,000,000, initially valid for up to five years and extended upon satisfactory will greatly enhance our mission, review. curriculum and extracurricular The term of each loan agreement (final maturity) is a function of the useful life of the offerings allowing us to better assets financed and the amortization schedule. prepare our students for Amounts outstanding from all borrowers are aggregated by the dealer and sold to investors as letter of credit supported tax-exempt commercial paper. success in the future.” Fees – Katherine G. Windsor, Head There is a $500 application fee. An issuance fee of .50% is deducted from amounts borrowed, and an annual of School, The Sage School administration fee of .40% is charged on outstanding principal. These fees pay the following expenses: the issuer, dealer, remarketing agent, trustee, rating agency, and respective counsel. Updated 5/06 160 Federal Street, Boston, MA 02110 800.445.8030 www.massdevelopment.com
  2. 2. Fees (continued) Borrowers pay for letter of credit bank and borrower counsel. Borrowers pay a tax-exempt variable interest rate on outstanding principal. As of March 1, 2006, the thirty-day tax-exempt commercial paper rate was 3.2% and since 1999, the thirty-day tax-exempt commercial paper rate has averaged 2.32%. Process A completed application with supporting documentation is submitted to MassDevelopment. Upon borrower and MassDevelopment Board approvals and the letter of credit bank’s credit approval, the borrower can close its first loan. Borrowers should allow no fewer than 60 days between the time they submit an application and the date on which they wish to close their first loan. Subsequent loans require only 45 days advance notice. What’s More... MassDevelopment is committed to helping your business grow by providing financing solutions that fit your needs. In addition to Capital Financing 501, we offer direct loans and other tax-exempt bond financing options. Please call us at 800.445.8030, or visit www.massdevelopment.com for more information on any of our programs. Updated 5/06 160 Federal Street, Boston, MA 02110 800.445.8030 www.massdevelopment.com

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