Are you in the market to finance construction, land and building acquisition or facility improvements?
Would you like to consider funding sources other than just your bank?
Consider talking to the Medina County Port Authority. The MCPA is an independent lender, with some very attractive rates and terms, not only the big deals, but also for small businesses seeking financing for fixed assets of $1 million.
The funding source comes primarily from bond financing. By virtue of the tax-exempt status with which a Port Authority is chartered, it can pass the tax breaks along to you. As an independent lender, the Port Authority employs investment bankers to conduct the underwriting and then to raise and place the debt in the open capital market.
Program highlights include:
• Fixed-rate financing program: This program is ideal for small businesses that wish to borrow money for fixed assets at investment-grade rates versus traditional bank financing, including construction, and permanent financing of the project. Requested financing should be between $1.5 million to $6 million. Your project’s total transaction size, however, may not exceed $20 million when combined with other financing sources. This form of “structured” or “piggy-back” financing, once reserved for primarily big business, is becoming increasingly popular for small businesses. The long-term, fixed interest rates are for up to 20 years with level payments throughout the term of the loan.
• Off-balance sheet financing and leasing program: This financing vehicle is designed to serve both for-profit companies and nonprofit organizations that need a new building or plant expansion but do not want the asset to appear on their balance sheet. It allows the Port Authority to own the facility and lease it back to the company. At the end of the initial lease, you can choose to extend the lease, purchase the asset or vacate the property. The terms include 100% financing, with no limits, for three types of leases: finance, operating or synthetic leases. The rates are fixed or variable up to 20 years with tax savings on construction materials used in the construction phase of the project. The owner also can take the depreciation on the taxes and, at the end of the lease, own the building. The financing can improve your balance sheet, avoids restrictive banking covenants and you retain complete control of the construction and occupancy of your building.
• Infrastructure financing program: This program is probably the most visible Port Authority program as it is used by developers, cities and other regional organizations and gets the most media attention. Small businesses should tap into this program with the right project because the incentives are extremely attractive. There is no equity required for this 100% financed, long-term, 30-year fixed, tax-exempt rate financing. The interest is also capitalized. Uses for this financing include public infrastructure projects, such as roads, underground utilities, sidewalks and streetlights. The debt is secured by using tax increment financing or special assessments as the revenue stream to pay for the bonds.
Expect between 45 to 90 days to secure the funding, which falls in line with traditional bank financing, the Small Business Administration or Ohio Department of Development financing plans. Interest rates are comparable to banks, but many times, at terms better than banks. By charter, Port Authorities can provide statewide lending, so if your business is in multiple locations you only need to work with one source. Most businesses can access these programs. One exception is retail, unless the retail business is buying a building and can handle a 20-year financing package. Charges incurred are generally legal fees and placement of debt fees.
For more information contact Bethany Dentler, Executive Director of the Medina County Economic Development Corporation, at firstname.lastname@example.org or 330.722.9215