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Home >> Finance/Incentives >> Illinois Finance Authority
Illinois Finance Authority Programs
The Illinois Finance Authority (IFA) is a self-financed, state authority principally engaged in issuing taxable and tax-exempt bonds, making loans and investing capital for businesses, non-profit corporations, agriculture and local government units statewide.
IFA Agriculture Programs
Beginning Farmer Bond Program
This program provides affordable financing to farmers by using federally tax-exempt bonds ("Aggie Bonds") to reduce the interest rate on a loan to purchase farmland. This program can be used between a buyer and his/her local lender or between a buyer and the seller for a contract purchase. The lender or contract seller make all credit decisions for the loan. Loans may be used to purchase capital assets including farmland, new or used farm improvements or buildings, new equipment and used equipment when purchased with farmland. Loan proceeds may not be used to finance a residence. The maximum loan size is $250,000.
Eligibility requirements include:
- Must be an Illinois resident at least 18 years old
- Have a net worth of less than $500,000
- Borrower will be the principal user of the capital item
- Have not owned a significant amount of farmland
State Guarantee Program for Restructuring Agricultural Debt
This loan program allows a farmer to consolidate existing debt and spread the payments out over a longer term. Loans are made through a local lender and the lender will receive an 85 percent guarantee on the principal and interest of the loan. The maximum loan size is $500,000, and 30 years is the longest term available. The interest rate can be variable or fixed and must be less than the market rate of interest generally available to the borrower.
Eligibility requirements include:
- Must be an Illinois resident at least 18 years old
- Must be the principal operator of a farm who derives at least 50 percent of gross income from farming
- Have a debt/assets ratio between 40 and 65 percent on a current balance sheet
- Have adequate cash flow and collateral for the loan
Specialized Livestock Guarantee Program
This program is designed to provide family-sized livestock operations the access to capital needed to enter, upgrade or expand their livestock business. Local lenders receive an 85 percent guarantee of the principal and interest on the loan. Loan proceeds may be used for the purchase of capital assets used in livestock production. This includes construction, purchase or remodeling of livestock facilities and the purchase of equipment and/or breeding livestock. Purchases cannot be made more than six months prior to IFA loan approval. The maximum loan size is $1,000,000, and the maximum term is 15 years. The interest rate can be variable or fixed, and the interest rate must be less than the market rate of interest generally available to the borrower.
Eligibility requirements include:
- Borrower or the owner of a partnership or corporation must be an Illinois resident at least 18 years old
- Applicant must be the principal operator and materially involved in the operation
- Debt/asset ratio of borrower generally should not exceed 70 percent after the project is considered unless risk reduction measures are undertaken
- Cash flow and collateral must be adequate for the loan
Value-Added Stock Purchase
These loans are made by local lenders who receive an 85 percent guarantee on the principal and interest of loans to Illinois farmers planning to purchase stock in value-added entities that further process their commodities. Loan proceeds are used to purchase stock in a value-added entity. In conjunction with a purchase, debt may be refinanced to improve lien position or financial structure, up to the amount of the purchase. A portion of the stock can be used as collateral for this loan. The maximum loan size is $100,000, and maximum term is 10 years. The interest rate can be variable or fixed and must be less than the market rate of interest generally available to the borrower.
Eligibility requirements include:
- Borrower or the owner of a partnership or corporation must be an Illinois resident at least 18 years old
- Applicant must be the principal operator and materially involved in the operation
- Debt/asset ratio of borrower generally should not exceed 70 percent after the project is considered unless risk reduction measures are undertaken
- Cash flow and collateral must be adequate for the loan
Young Farmer Guarantee Program
This program allows farmers to make capital purchases that will expand or upgrade their operation. Loans are made by local lenders who receive an 85 percent guarantee of the principal and interest on the loan. The loan proceeds may be used for the purchase of farm related capital assets including farmland, machinery and breeding livestock. The maximum loan size is $500,000, and the maximum term is 15 years. The interest rate can be variable or fixed and must be less than the market rate of interest generally available to the borrower.
Eligibility requirements include:
- Must be an Illinois resident at least 18 years old
- Must be the principal operator of a farm who derives at least 50 percent of gross income from farming
- Must have a net worth of at least $10,000
- Debt/asset ratio of borrower cannot exceed 70 percent after the project is considered
- Cash flow and collateral must be adequate for the loan.
State Guarantee Program for Agri-Industries
This program is designed for farmers and agribusinesses that wish to diversify into new enterprises or to further process existing crops or livestock. Loans can be made to farmers or agribusinesses to purchase new or used property, equipment or other capital items that will be used for one of the following purposes:
- Growth and development of new crops or livestock not customarily grown in Illinois
- The further processing of grain or livestock grown in the state
Loans are made through a local lender who receives an 85 percent guarantee on the principal and interest of the loan. The interest rate can be variable or fixed and must be less than the market rate of interest generally available to the borrower.
Eligibility requirements include:
- Must be an Illinois resident at least 18 years old
- Must be the principal operator of a farm or land
- Must have at least 50 percent of gross income come from farming
- Must have a gross income of at least $20,000 based on previous years tax return
- Must have a net worth less than $500,000
- An agribusiness must be located in Illinois, and the products used must be or will soon be grown in Illinois
- Must have a cash flow and collateral adequate for the loan
SOURCE: http://www.il-fa.com/products/programs.html#VA
IFA Industrial Participation Loan Program
The Illinois Finance Authority assists Illinois businesses that create or retain jobs by offering a loan participation program in conjunction with their banks. Through this program the Authority will purchase up to the lesser of $1,000,000, or a 50 percent participation in the loan, directly from the borrower’s bank. Details are available from your IFA Funding Manager.
Benefits
- Participation loans will finance the purchase of land or buildings, construction or renovation of buildings and acquisition of machinery and equipment.
- Interest rates are 200 basis points (i.e., 2.0 percent) below the rate charged to the borrower by the bank, thereby resulting in a lower blended interest rate on the loan. Participating banks may retain up to 100 basis points as a servicing fee. A minimum of 100 basis points must be passed on to the borrower.
- IFA will share in all collateral prorated on a first mortgage position (pari passu) with the bank
- Long-term maturities, with a maximum term of 10 years
- Single application process
Type of Financing
Participating banks will originate, underwrite and service all loans. IFA staff will review the bank’s analysis to assure it meets IFA standards. If the maturity exceeds 10 years, IFA requires a balloon payment at the end of 10 years.
Eligibility
Financing is available to businesses in Illinois that create new or retain existing jobs. Funds from the participation purchased by IFA must be used primarily for the acquisition of fixed assets.
Fee
There are no IFA fees. Participating banks may retain a servicing fee; a minimum of 100 basis points are passed on to the borrower.
SOURCE: http://www.il-fa.com/products/ind_part.html
IFA Industrial Revenue Bond
The Illinois Finance Authority issues tax-exempt Industrial Revenue Bonds (IRB’s) on behalf of manufacturing companies to finance the acquisition of fixed assets such as land, buildings and equipment. Bond proceeds also may be used for either new construction or renovation.
Benefits
Benefits of Industrial Revenue Bond financing include:
- Long-term financing at interest rates lower than conventional financing, usually below prime
- Fixed or variable rate financing
- Finance up to 100 percent of project cost (subject to credit approval and underwriting standards of the borrower’s bank)
Type of Financing
Because of significant up-front costs of issuance, Industrial Revenue Bond issues of less $1.5 million generally are not cost effective. Smaller fixed asset projects may be eligible for financing through other IFA loan programs.
For most companies, bank participation is necessary before bonds can be sold to investors. The participating bank will make the credit decision, structure terms and set collateral requirements. Banks can either (1) guarantee the bonds by providing a Direct Pay Letter of Credit or (2) purchase bonds directly to hold as an investment in their portfolio.
Eligibility
Qualified Industrial Revenue Bond projects include facilities that are primarily used to manufacture or process tangible products. The Internal Revenue Code defines all IRB eligibility requirements. Final determination of project eligibility is subject to a legal opinion from a recognized municipal bond attorney. A completed Economic Disclosure Statement (EDS) and a Volume Cap Application must accompany the Industrial Revenue Bond application.
Fee
A non-refundable application fee is due when the application is submitted. There are also closing fees plus other applicable charges. For a fee schedule, contact a funding manager at your local IFA office. In most cases, applications can be reviewed by staff and considered by the Board of Directors within 30 to 45 days of submission.
SOURCE: http://www.il-fa.com/products/ind_irb.html
IFA Not-for-Profit Bond Program
The Illinois Finance Authority helps non-profit, 501(c)(3) corporations secure low-cost, tax-exempt financing for capital improvement projects through tax-exempt revenue bonds.
Benefits
Tax-exempt bond financing affords qualified non-profits the opportunity to purchase capital equipment without depleting cash reserves or paying the higher costs of traditional debt financing. Benefits of bond financing include:
- Favorable interest rates – considerably less than conventional loans
- Long-term financing
- Fixed or variable rate financing
- Up to 100 percent financing
Type of Financing
Tax-exempt financing may be used by non-profits for the acquisition, construction or
renovation of real estate; the acquisition of machinery, equipment or other fixed assets or, in some cases, refinancing outstanding debt. The maturity of the debt will generally match the useful lives of the assets financed.
Eligibility
Any non-profit corporation with a 501(c)(3) designation from the Internal Revenue Service may be eligible for financing. Projects must be located in the state of Illinois. Final determination of project eligibility is subject to a legal opinion from a recognized municipal bond attorney.
Fee
A non-refundable application fee is due when the application is submitted. A closing fee based on the principal amount of bonds issued is paid to the Authority at closing. The Authority does not charge an annual fee. In most cases, applications can be reviewed by staff and considered by the Board of Directors within 30 to 45 days of submission.
Contacts
Chicago office: (312) 651-1300
Springfield office: (217) 782-5792
Peoria office: (309) 495-5959
Carbondale office: (618) 453-5566
SOURCE: http://www.il-fa.com/products/nfp_501bond.html
IFA Not-for-Profit Lease Program
The Illinois Finance Authority provides non-profit, 501(c)(3) corporations with low cost, tax-exempt lease financing for acquisition of machinery, equipment or other fixed asset and capital improvement projects.
Benefits
Leasing affords qualified non-profits the opportunity to purchase capital equipment without depleting cash reserves or paying the high cost of traditional debt financing.
- 100 percent tax-exempt financing
- Favorable interest rates – considerably less than conventional loans
- Low transaction costs
Type of Financing
Capital equipment and certain real estate purchases are financed with a lease purchase agreement between the not-for-profit corporation and the Illinois Finance Authority. The maturity of the lease will generally match the useful lives of the assets financed, up to 10 years.
Eligibility
Any non-profit corporation with a 501(c)(3) designation from the Internal Revenue Service may be eligible for financing. Final determination of project eligibility is subject to a legal opinion from a recognized municipal bond attorney. Projects must be located in the state of Illinois. The maximum lease term is 10 years.
Fee
A non-refundable application fee is due when the application is submitted. A closing fee based on the face amount of the lease is due at closing. In most cases, applications can be reviewed by staff and considered by the Board of Directors within 30 to 45 days of submission.
Contacts
- Chicago office: (312) 651-1300
- Springfield office: (217) 782-5792
- Peoria office: (309) 495-5959
- Carbondale office: (618) 453-5566
SOURCE: http://www.il-fa.com/products/nfp_501lease.html
IFA Technology Development Bridge Seed Stage Venture Capital Fund
The Technology Development Bridge is an Illinois venture capital fund that provides seed stage equity financing to small technology companies. It is an innovative public-private partnership, developed by the Illinois Coalition and funded by the IFA, aimed at helping technology firms access capital they need to grow and create jobs.
Benefits
- It provides seed and early-stage equity financing that is often difficult to obtain.
- Leverages private venture investment by accredited venture capital investors.
- Equity investments typically range from $150,000 to $300,000.
Type of Financing
IFA venture capital investments provide venture and seed financing to Illinois businesses that have the potential to stimulate long-term employment and economic activity in Illinois. Investments require a co-investment by one or more professional venture investors. Businesses are required to locate their operations in the state of Illinois. IFA will "match” the terms set forth by a qualified co-investor.
Eligibility
Candidates must be small, privately-owned businesses with less than 50 employees. The company must be developing or commercializing a new technology or invention. The investment represents financing for applied research, development and testing and initial marketing of a technology, product, process or invention.
Fee
There is no fee.
Contact
To learn more about the Technology Development Bridge, contact Chris Vandenberg in the Chicago office at (312) 651-1300.
SOURCE: http://www.il-fa.com/products/sb_vc.html