Public Finance Authority (PFA)’s Industrial Development Bond Program provides eligible manufacturers with capital project financing for land, buildings, and new equipment through the issuance of tax-exempt industrial development bonds (“IDBs”).
IDBs allow manufacturers to finance projects at a lower interest rate than conventional financing because the interest paid to the bondholders is exempt from federal income tax.
Small to medium sized manufacturers, including:
- Manufacturers incurring less than $20 million in capital expenditures three years prior to and three years following a bond issue.
- Manufacturers seeking less than $10 million for any particular project.
- Manufacturers with an aggregate amount of tax-exempt debt outstanding of less than $40 million at any one time.
Bond proceeds may be used to finance most capital expenditures with the following limitations:
- Bond proceeds must be used for the acquisition and rehabilitation, or construction of manufacturing facilities. Bond proceeds may also be used for the acquisition of new equipment.
- At least 75% of the bond proceeds must be used for core manufacturing purposes.
- No more than 25% of the bond proceeds may be used to finance certain ancillary facilities such as office space, warehouses, and loading docks.
- No more than 25% of the bond proceeds may be used for the acquisition of land.
- Manufacturers who use IDBs to acquire existing facilities must use at least 15% of the bond proceeds on rehabilitation expenditures.
All project financing requests are subject to availability and an award of volume cap allocation from the state in which the proposed project is located. PFA will assist potential borrowers in this effort.
For more information regarding PFA’s Industrial Development Bond Program or project eligibility, please contact a PFA Program Manager.