CHEFA provides a tax-exempt financing alternative for the purchase of capital equipment and associated improvements. The program features an abridged application process, standardized loan documentation, and reduced financing fees compared to a traditional bond financing. The issue is privately placed with one lending company.
The Equipment Loan Program utilizes a secured equipment loan structure where the commercial lender will loan the money, through the Authority, to the institution, and take a lien on the equipment and other financed improvements as collateral.
The program is available to eligible not-for-profit, tax-exempt organizations for which the Authority currently has authorization to issue bonds. See Eligible Institutions under Financing Programs.
An institution under this program may finance purchases from $250,000 and up for terms ranging from five to ten years. The maturity of the loan will be determined by the useful life of the equipment financed and/or by the investor (the Lender).
Typically, the larger the amount to be financed, the more investor interest will be generated. Attracting as many investors as possible will potentially result in more favorable interest rates and financing terms.
Eligible equipment includes, but is not limited to, the following.
Renovations associated with equipment installation may be financed as part of the project as long as these expenses do not exceed 25% of the overall financing amount.
The Authority charges a one-time fee of 0.10% of the amount to be financed. Other financing fees may include Borrower's Counsel, Lender's Counsel and the Lender's commitment fee, if applicable. Financing fees are based on the complexity and time required to close the transaction.
The Tax-Exempt Equipment Loan Program will use a secured equipment loan structure. Under this structure, the commercial lender will loan the money, through the Authority, to the institution, and take a lien on the equipment and other financed improvements as collateral.
Payments are made by the institution directly to the Lender during the term of the loan. Upon full payment of the loan, the institution becomes the owner of the equipment for the sum of one dollar.
The timeline from submission of the application to the closing of the loan is as follows.
| Review of application | Week 1 |
| Review by Internal Credit Committee | Week 2 |
| Submission of Bid Package | Week 3 |
| Receipt and Review of Bid Proposals | Week 4 |
| Institution Selection of Lender | Week 5 |
| Final Approval by Lender | Weeks 6-7 |
| Finalized Financing Documents | Week 7-8 |
| Institution's Board Approval Resolution | Week 9 |
| TEFRA Hearing | Week 10 |
| CHEFA Board Review/Approval if necessary | Week 11 |
| Closing | Week 12 |
The institution will be required to complete an application which requires the following:
Under the Program guidelines, for loan transactions under $5 million, Authority staff is authorized to proceed without approval from its Board of Directors. Any transaction over $5 million is subject to review by the Board, and any transaction over $10 million requires formal approval by the Authority's Board of Directors.
Once the application is received, the Authority's Staff will assemble and distribute a bid package to potential investors which includes information regarding the borrower, the equipment to be financed, the term of loan and timeline for the financing.
We typically allow one week for investors to submit their proposals. Once all proposals are received, the Authority will compile an analysis detailing the results of the bid and review the results with the institution for its selection of the investor that offers the most favorable interest rate and terms.
Once an investor is selected, the investor will conduct a final credit approval of the institution before issuing a final commitment. This usually takes approximately ten business days to two weeks.
