Frequently Asked Questions
The following are Frequently Asked Questions (FAQs) regarding IBank and its financing programs. IBank prides itself on providing flexible, fast and accurate customer service to all current and potential borrowers. Please feel free to contact a member of the IBank team with any questions or application support.
Q: What is IBank?
A: The California Infrastructure and Economic Development Bank (IBank) is the State of California’s only general purpose financing authority. The Legislature created IBank in 1994 to finance public infrastructure and private development that promote a healthy climate for jobs, contribute to a strong economy, and improve the quality of life in California communities. IBank operates according to the Bergeson-Peace Infrastructure and Economic Development Bank Act in California (Government Code Sections 63000-63089.98) et seq.
Q: How much financing has IBank done through its programs since 1994?
A: IBank has financed more than $55 billion in infrastructure and economic development projects.
Q: Where is IBank located with the State of California’s government structure?
A: IBank is located in the Governor’s Office of Business and Economic Development (Go-Biz).
Q: How is IBank governed?
A: IBank is governed and its corporate power exercised by a five-member Board of Directors, and an Executive Director who runs the day-to-day operations. The Board consists of the Director of the Governor’s Office of Business and Economic Development, the State Treasurer, the Director of the Department of Finance, the Secretary of the California State Transportation Agency and a Governor’s Appointee.
Q: What does IBank have the authority to do for the State of California?
A: IBank has broad statutory authority to issue tax-exempt and taxable revenue bonds, provide loans to state and local governments for public infrastructure and economic expansion projects and loan guarantees to help small businesses. IBank’s current programs include the Infrastructure State Revolving Fund (ISRF) Program; Bond Financing Program, including: 501(c)(3) Bonds, Industrial Development Bonds; Exempt Facility Bonds; and Public Agency Revenue Bonds; as well as the Small Business Finance Center. In addition, IBank created the California Lending for Energy and Environmental Needs Center (CLEEN) to help meet the State’s Greenhouse Gas Reduction Goals.
Q: Does IBank operate on taxpayer supported funds?
A: IBank is a self-supporting governmental entity that pays for its operations from service fees and interest earnings on loans and investments. The Infrastructure State Revolving Fund (ISRF) Program, a direct loan program, was originally funded with seed money from the State’s General Fund in the late 1990s and early 2000s. ISRF loans are currently funded with the proceeds of tax-exempt ISRF revenue bonds.
Q: What is the Infrastructure State Revolving Fund (ISRF) Program?
A: The ISRF Program provides financing to public agencies and nonprofit corporations sponsored by public agencies for a wide variety of infrastructure and economic development projects. ISRF Program funding is available in amounts ranging from $50,000 to $25 million, with terms for the useful life of the project up to a maximum of 30 years. Eligible projects include (not limited to):
Educational, cultural and social facilities, environmental mitigation, goods movement-related infrastructure, hospitals, industrial, utility and commercial facilities, military infrastructure and defense conversion, parks and recreational facilities, ports and public transit, power and communications, public safety facilities, sewage/solid waste collection, treatment and disposal, streets and highways, water projects (drainage, supply, flood control, treatment and distribution) and more.
Q: Who can apply for Infrastructure State Revolving Fund (ISRF) Program financing?
A: Eligible applicants must be located in California and include any subdivision of a local government, including cities, counties, special districts, assessment districts, joint powers authorities and nonprofit organizations sponsored by a government entity. For a more comprehensive list of eligible projects and more information, click here.
Q: What are bonds and how are they used?
A: Government agencies sell bonds to finance a variety of projects and activities. When investors purchase bonds, they essentially lend money to the bond seller, or issuer. In this way, a bond is similar to a loan. In return for the bond proceeds, the issuer promises to pay the investor a specified rate of interest over the life of the bond and to repay the bond when it comes due.
Q: What is a municipal bond?
A: Bonds issued by government agencies are called municipal bonds. The funds are used to finance projects that benefit the community such as roads, schools, bridges, sewers, parks or water treatment. Most bonds issued by government agencies are tax-exempt. This means bondholders do not have to pay federal income taxes and, in most cases, state income taxes on the interest they earn.
Q: Is IBank a conduit bond Issuer?
A: Yes, as a conduit issuer, IBank issues bonds on behalf of a borrower and then lends those proceeds to that borrower. The borrower provides security to the bondholder and agrees to repay the bonds.
Q: What Types of bonds does IBank Issue?
A: Industrial Development Bonds (IDBs): Tax-exempt conduit revenue bond financing for eligible small to mid-size manufacturing companies up to $10 million for the acquisition, construction, rehabilitation and equipping of manufacturing and processing facilities.
501(c)(3) Bonds: Tax-exempt conduit revenue bonds provide low-cost financing for capital improvement projects for nonprofit public benefit corporations.
Public Agency Revenue Bonds (PARBs): Tax-exempt bond financing for government entities are for projects that enhance infrastructure, or the economic, social or cultural quality of life for residents in the community or State.
Exempt Facility Bonds: Tax-exempt financing for projects that are government-owned or consist of privately used or leased facilities on public -property; such as private airline improvements at publicly owned airports, ports, water facilities and other private enterprises that serve the general-public.
Q: What are the benefits of doing business with IBank?
A: IBank offers a number of benefits for its clients including below-market interest rates, the ability to finance a wide-range of projects, an in-house team of loan officers, legal and technical support, non-competitive application process competitive application and issuance fees, a single TEFRA (Tax Equity and Fiscal Responsibility Act) hearing and more including applications being accepted continuously.
Q: What is the Jump Start Loan Program?
A: IBank’s Jump Start Loan Program helps low-wealth entrepreneurs in low-wealth communities start, grow, and thrive. Jump Start provides technical assistance, financial literacy training and microloans from $500 to $10,000. Go here for more information including eligibility.
Q: What is the California Small Business Loan Guarantee Program (SBLGP)?
A: IBank’s SBLGP helps lenders provide loans to small businesses, farmers and exporters that may be experiencing difficulty accessing affordable capital. IBank partners with Financial Development Corporations (FDCs) to guarantee loans up to 80 percent, to encourage lenders to provide funds to small businesses. For more information, including what proceeds from the loans are eligible to fund, please go here.
Q: How does IBank partner with Financial Development Corporations (FDCs) for the California Small Business Loan Guarantee Program (SBLGP)?
A: IBank issues loan guarantees in partnership with seven partner Financial Development Corporations (FDCs) located throughout the State. Potential borrowers may contact FDCs directly to apply for a loan through participating financing institutions, credit unions, or Community Development Financial Institutions (CDFIs). For more information, please click here.
Q: Are there restrictions on what IBank can finance?
A: Yes, IBank cannot finance housing. All projects must be located in California. All financing applications are subject to Board approval.
Q: When are IBank Board meetings?
A: Board meetings are typically on the fourth Wednesday of each month, but may vary. The meeting schedule is here.
Q: When are the deadlines for submitting applications?
A: Applications are continuously accepted for all IBank financing. A calendar of deadlines for advancing an application to the Board in a timely manner is here. *Meeting the deadlines do not absolutely guarantee an application will be submitted to the Board for approval.
Q: What are the costs involved with financing a bond through IBank?
A: The costs involved with issuing bonds are called Costs of Issuance (“COI”). COI generally includes, but is not limited to the fees related to underwriters/lenders, bond counsel, consultant/municipal advisor, underwriters/lenders counsel, agent-for-sale, IBank, rating agencies, trustee, printer, title company, verification agent. The total COI cannot be more than 2% of the issue par amount. Borrowers may select to pay the COI with the bond proceeds or pay it with their other sources of available funds.
Q: Does IBank offer bond counsel to assist during the application and issuance process?
A: Applicants will need to select and hire a bond counsel who will assist in completing the IBank application, preparing bond documents and providing necessary advice and direction during the issuance process.
Q: How does IBank manage the bond underwriting process?
A: IBank is a conduit bonds issuer and does not underwrite bonds in house. The underwriting is performed by the borrowers’ selected bank/lender.
Q: Can housing be included or part of a project that is financed through an IBank bond?
A: IBank Bergeson-Peace Act Sections 63010 (g) & (q) excluded any housing projects from the various types of economic and public development projects that IBank Bond Financing Program can assist financing.
Q: Can IBank adjust the debt service payments on a bond?
A: No, IBank cannot adjust the debt service payments on a bond. Borrowers will need to consult with their bond counsel about any changes to the bonds documents and/or the bonds structure.