Many organizations are not aware of 501(c)(3) Bonds or how easy it is to use this method of financing today. But if you're a not-for-profit who wants to construct or furnish a new or existing facility, you should consider these bonds. In order for the financing to be tax-exempt, there are a few guidelines that must be followed:

 

• The borrower must be designated a 501(c)(3) corporation under the federal tax code.

   

   

• Funds can be used to build a new facility or purchase an existing facility, acquire necessary land, and purchase equipment.

   

   

• In some cases, funds may also be used to refinance existing conventional debt that was originally use dfor capital expenditures.

   

   

• All bond financed expenditures must be consistent with the organization's 501(c)(3) purpose.  In addition, the project itself must be non-sectarian.

• An initial resolution must be passed by the governmental issuer prior to finds being expended on the project. 

Because a 501(c)(3) Bond is exempt from some federal taxes, it can be an attractive investment for the bondholder. For this reason, the interest rate available on such bonds is far lower than conventional financing, and you can expect your interest savings to range from 20% to 50% or more. eCapitalFund lenders are able to offer you competitive rates within this range, whether you are interested in a variable rate loan or a fixed rate loan. 

There are many parties involved in a Bond transaction, and it can take from 45 to 120 days to complete. That's why you need a financial institution with the knowledge and experience to manage costs and make the process run as efficiently as possible. Our contacts within the Tax Exempt community make it possible for us to put together a team of specialists who have a thorough understanding of all the legal and financial aspects of a transaction. This team will work closely with you every step of the way - answering your questions, helping you avoid pitfalls, and making sure you get the financing that's right for you.