PEDFA Bond Financing Program
PEDFA provides cost-effective financing to businesses by issuing bonds, selling the bonds to private investors, and lending the proceeds to eligible businesses.
Pennsylvania Economic Development Financing Authority (PEDFA) Bond Financing
PEDFA administers both a tax exempt and a taxable bond program which can be used for land and building acquisition, building renovation and new construction, machinery and equipment acquisition and installation, designed infrastructure, refinancing and working capital. PEDFA's competitive interest rates and affordable closing costs make the financing cost effective for projects of all sizes. Depending on the size of the project, the bond may be a stand-alone bond or it may be part of our Composite Bond Pool.
There are two types of bonds:
Tax-Exempt bonds are bonds for which the interest earned by the bondholders is excluded from federal income tax. Since these bonds are more attractive to investors, the interest cost of Tax-Exempt bonds is restricted by federal law.
Taxable bonds have a higher interest rate than Tax-Exempt bonds, but they are not subject to the same stringent tax requirements as Tax-Exempt bonds. All businesses qualified to do business in Pennsylvania except speculative activities may be eligible for taxable financing. There are also fewer restrictions on the uses of the funds. PEDFA Applications must be submitted by a local Industrial Development Authority (IDA) or Industrial Development Corporation (IDC). Please see this list of IDAs and IDCs.
PEDFA Rates for Composite Bond Pool
The following chart is designed to help prospective borrowers determine what the effective or “all-in” rate would be for a PEDFA composite pool financing on any given day (These rates do not apply to stand-alone bond issues). The top figure is a rate based on an average of rates for a specified period. The four following figures are estimated annual charges, all of which are totaled to show what the effective rate would be (the final figure in bold).
PLEASE NOTE: The weekly variable rates as of March 27, 2017 were as follows: Tax-Exempt – 0.96% / Taxable – 1.07%.
|0.96 %||Variable Weekly Interest Rate||1.07 %|
|1.10 %||Master Bank LC Fee||1.10 %|
|1.50 %||Local Bank Fee *||1.50 %|
|0.13 %||Remarketing Agent||0.13 %|
|0.11 %||Trustee **||0.11 %|
|3.80 %||TOTAL||3.91 %|
* Estimated Rate – Fee is negotiated between the borrower and their local bank
** With a minimum fee of $1,750 and a maximum of $4,000
PEDFA Standard Form Bond Documents
You may access the appropriate standardized form bond documents (the "Bond Documents") that are utilized in connection with the PEDFA Composite Bond Pool by referring to our Bond Form Library. Do not utilize Bond Documents from any earlier PEDFA pool, as we are always working to fine tune the Bond Documents and earlier versions may be somewhat different. We suggest that prospective Borrowers provide the Bond Documents to their counsel at their earliest convenience for his / her review. The Bond Documents not only set forth the terms and conditions of the financing, but they contain important representations, warranties, and covenants that the Borrower will make at the time of the project's closing.
Please note that all Bond Documents, except the Reimbursement Agreement (for double-tier projects) and the Reimbursement, Credit, and Security Agreement (for single-tier projects) (collectively the "Reimbursement Agreement") are in final form. Bond Document negotiation for individual PEDFA pool projects is not feasible, as the success and cost-efficiency of a PEDFA pool depends on uniformity. A good example is the Standard Provisions for Trust Indentures (the "Standard Provisions"), one of the Bond Documents. The Standard Provisions are incorporated by reference in each project's Trust Indenture, and as such, cannot deviate among projects.