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Tax-Exempt Bond Programs Overview.

The IFA is authorized to issue tax-exempt bonds, which lower the cost of financing for manufacturing projects and certain other qualified projects. In order to qualify for tax-exempt financing, a borrower that is not a 501(c)(3) must first be awarded "Volume Cap." Indiana is allotted a finite amount of Volume Cap that is allowed to be awarded to allow qualified borrowers to issue tax-exempt bonds.

Tax-exempt bonds are often structured similarly to a term loan or mortgage, and the interest rates vary based on the company's financial situation, credit enhancements, method of sale of bonds and the current market. In 2006, the IFA was able to eliminate annual fees that had previously been required of its borrowers due to consolidation with the Indiana Health and Educational Facilities Financing Authority and other added efficiencies.

Volume Cap Program (prerequisite for tax-exempt financing through IFA)

  • The IFA awards Volume Cap to applicants within Indiana's $536 million allotted capacity to issue tax-exempt private activity bonds. Volume Cap is competitively awarded based on jobs created and/or retained, wages, capital investment, project location, dedication to low-income housing and other factors. A borrower who is not a 501(c)(3) must be awarded Volume Cap before issuing bonds through the IFA.

Large Bond Program (for lower-interest borrowing of amounts more than $3M)

  • Companies who need to issue $3 million or more in bonds can utilize the IFA through this program. Also known as Industrial Revenue Bonds (IRBs) or industrial Development Bonds (IDBs), these private activity bonds are issued by state or local government entities for the benefit of a private company.

Small Bond Program (for lower-interest borrowing of amounts $3M or less)

  • Businesses who need to issue $3 million or less in bonds can utilize the IFA's Small Bond Program. The bonds can be used for costs related to manufacturing, agriculture and nonprofit organizations such as charter schools.

Health and Educational Facilities Bond Program

  • The Health and Educational Facilities Bond Program, provides affordable financing alternatives for Indiana health care organizations and private institutions of higher education. The Program offers a number of options to meet the financing needs of health care providers and private institutions of higher education.