Advoca Capital provides Tax-Exempt Bond financing on a nationwide basis to assist Manufacturing Companies to expand their businesses. Besides non-profit organizations and municipalities, manufacturing companies are the only other companies that can borrow on a tax-exempt basis.
For Tax Exempt Bond purposes, a manufacturing facility is a facility used in the manufacturing or production of tangible personal property, including the processing resulting in a change in the condition of such property. Also included in this definition is the related equipment used in the manufacturing process. Borrowers eligible for tax exempt financing include any corporation, partnership, individual or other entity engaged in manufacturing which satisfies the $10 million and $40 million limitations.
Tax Exempt Bonds can only be issued for manufacturing projects if at least 95% of the Bond proceeds is used (i) for manufacturing (including processing) facilities and (ii) is used to acquire land or property subject to the allowance for depreciation under the Internal Revenue Code of 1986 (the “Tax Code”).
At least 70% of the bond proceeds must be used for “core manufacturing” and up to 25% of bond proceeds can be used for items directly related and ancillary to core manufacturing (such as employee parking, etc.). The remaining 5% can be used for any purpose permitted under applicable state law.
The Advoca Capital program utilizes a straightforward application and closing procedure and is funded by the issuance of the Tax Exempt Bonds.
- Engage Advoca Capital as Advisor and Placement Agent.
- Advoca Capital undertakes an initial credit evaluation to determine if the borrower qualifies for the program.
- Upon qualification, Advoca Capital sends the underwriting information to a group of acceptable Letter of Credit Banks.
- Upon approval of the application by a Letter of Credit Bank, a Commitment Letter is issued to the borrower detailing the required security elements, operative loan covenants and other requirements and contingencies necessary for loan closing.
- Borrower’s counsel reviews the Commitment Letter.
- Borrower executes and returns Commitment Letter, along with any commitment fees stipulated in the Commitment Letter to Advoca Capital.
- Bond documents are generated and distributed to the financing team.
- Borrowers generally can be funded within 45 to 60 days following execution of the Commitment Letter.
- Advoca assists the borrower in securing interim financing if the borrower has immediate funding needs.
