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Providence Financial



Are you tired of hearing about expensive government programs that don’t seem to benefit those who really need the help? I am going to tell you about a couple of government programs that could help your school obtain favorable facility financing.

Facility Financing for Charter and Private Schools in Small Communities:

Charter and private schools in small communities usually have some unique challenges, including limited populations from which to draw student enrollment and teachers. However, there is one helpful advantage they have over schools in larger communities. In an effort to invigorate communities with smaller populations and provide opportunities and jobs, the United States Department of Agriculture (“USDA”) has established certain financial guarantee programs for financing the facilities of nonprofit organizations in these communities. These programs are available to qualifying charter and nonprofit private schools. There are several benefits of this program for a school, including:

     • schools can borrow at interest rates that are lower than the schools would otherwise be able to access;

     • Schools that would otherwise not qualify for financing may be able to finance their facility with these programs;

     • up-front fees are relatively low.

USDA guarantees of bank loans have been around for some time. However, a more favorable variation of this program, which we think is the most beneficial for a school, is to use it in conjunction with a bond offering. The primary advantage of using this program with a bond offering is that we can achieve 30-year fixed interest rates instead of a 20-year variable interest rate, as is common with USDA-guaranteed bank loans. This is a favorable feature that provides schools with future stability.

Qualifying geographic areas may not be as limiting as one may think with this type of program. Even if a small community is adjacent to a large city, it may qualify under the government’s rules. This program is likely the most favorable type of financing available for qualifying schools.

A money source typically will only have the incentive to discuss the programs that they have available internally.

Facility Financing for Charter and Private Schools in At-Risk Communities:

In order to help provide the stability of facility ownership to charter and nonprofit private schools in at-risk communities, certain quasi-government and charitable organizations provide financial guarantees and enhancements for facility financing to these organizations. This provides the opportunity of facility ownership to schools that may otherwise not qualify for financing. Qualification criteria for these programs can fluctuate depending on the amount of current demand for the available funds. Criteria these organizations may look at when allocating funds include: whether the school district in which a school operates is failing Adequate Yearly Progress (“AYP”), whether the geographic area in which the school operates qualifies for new market tax credits and the percentage of a school’s enrollment that qualifies for free and reduced lunch.

These are just a few of the programs available for different types of borrowers. Providence Financial is familiar with many types of financial “tools” available in the marketplace. It is unlikely that any money source (such as a bank or underwriter) would provide these alternatives to a school. A money source typically will only have the incentive to discuss the programs that they have available internally. We have the ability to facilitate any program that may be available to a borrower because we work exclusively for the borrower. We have no allegiance to any money sources and you can count on objective financial advice. If you would like to explore whether your school qualifies for one of the above programs, or if you have any questions about facility financing, please give us a call.

For information contact Rick Van Alfen, Providence Financial Co., Inc.
Phone: 801-556-2290
Email: rick@providencefinancialco.com