CEDA IDB Financing for Manufacturers
Industrial Development Bonds (IDBs) are tax-exempt securities issued by cities, counties, and joint powers authorities (JPAs), such as CEDA, to provide small- to medium-sized manufacturers money for land purchases, building construction, facility expansion, new production equipment acquisition, and solar and energy conservation retrofits. Benefits of IDB financing include below market interest rates, long-term financing, and it is available statewide without limitations to specific areas or communities. Overall, IDB financing reduces total financing costs so more capital can be invested back into the organization’s operations.
CEDA issues IDBs of up to $10 million for California manufacturers that meet the applicable criteria. Generally, borrowers are manufacturers and processors (e.g. wineries, fabricators, food processors, etc.) that are established and creditworthy businesses with annual sales ranging from $7.5 to $30 million.
Why finance through CEDA? CEDA offers an experienced finance team and a single point of contact to the borrower throughout the lending process. CEDA’s IDB program does not incur an administrative burden or costs for local cities and counties. Financing can be structured through the issuance of bonds or a tax-exempt loan through a financial institution. Finally, CEDA is the only California JPA created with the mission of supporting statewide economic development—a focus on individual businesses that contributes to statewide prosperity.
Do you qualify?
- Is manufacturing or processing the primary business activity?
- Will at least 60 percent of the “project” involve equipment or facilities directly related to manufacturing or processing?
- Is the “project cost” under $20 million? (including all capital expenditures for the three years before and after the bond issuance)
- Can the company obtain a bank Letter of Credit to support the IDB issue? (If the company qualifies for a conventional bank loan, it should be able to qualify for a bank Letter of Credit.)
If you answered “yes” to these questions, please contact us for information on the next steps in the CEDA financing process.
Click here for an application for CEDA financing.
Click here for CEDA’s fee schedule for IDB financing for manufacturers.
- Has the company expended any funds for project costs to date? Project costs incurred more than 60 days prior to beginning the IDB application process are not eligible to be paid with bond proceeds.
- Tax treatment: Depreciation of financed equipment or facilities must use the straight line method (no accelerated depreciation).
- Industrial development bond funded construction projects are subject to prevailing wage.
Click here for more information on the IDB issuance process.