Small Business

Participation Loan Program

Description:
IFA assists Illinois businesses that create or retain jobs by offering a loan participation program in conjunction with their lender. Through this program the Authority will purchase up to the lesser of $500,000, or a 50% participation in the loan, directly from the borrower’s lender. Details are available from your IFA Funding Manager.

Benefits:

• Participation loans will finance the purchase of land or buildings, construction or renovation of buildings, and acquisition of machinery and equipment
• Provides a lower blended interest rate to borrower
• IFA will participate at a fixed rate of interest for up to five (5) years. The bank's portion of the loan can be fixed or variable
• Interest rate for the IFA participation is the 3 month LIBOR plus 100 basis points. The rate is set on the first business day of the month in which the completed application is accepted and approved by the Authority's Credit Review Committee for consideration at IFA's next Board meeting. Upon board approval, the rate is locked for a 6 month commitment period. Upon expiration of the commitment period, IFA may extend its commitment but will reset the rate at the prevailing 3 month LIBOR plus 100 basis points.
• IFA will share in all collateral prorated on a first mortgage position (pari passu) with the bank
• Mid- to long-term maturities, with a maximum term of 10 years
• Single application process

Type of Financing:
Participating banks will originate, underwrite and service all loans. IFA staff will review the bank’s analysis to assure it meets IFA standards. If the maturity exceeds 10 years, IFA requires a balloon payment at the end of 10 years.

Eligibility:
Financing is available to businesses and industry in Illinois that create new or retain existing jobs. Funds from the participation purchased by IFA must be used primarily for the acquisition of fixed assets.

Fee:
No IFA fees. Participating lender may retain a servicing fee. Borrower's interest rate savings on the IFA participation will be at least a) one percent or, b) the difference between the lender's rate and the IFA rate if less than one percent.

For more information, contact a Funding Manager at your local IFA office.