Your Goal Is To Make Loans.
Our Goal Is To Help.
As a lender, your goal, at its most fundamental level, is to make good loans that support the stability and growth of the communities you serve. That's good business and good corporate citizenship.
The Building Block Fund works with lenders to assist charter schools in meeting their facility needs - from securing funding for leasehold improvements to mortgage and tax-exempt bond financing for the construction, acquisition and/or renovation of permanent facilities.
In short, we provide the credit enhancements - and take the first loss and greatest risk exposure - that give lenders the confidence and assurance they need to make facility and capital improvement loans to charter schools.
Building Block Fund: A Credit Enhancement That Makes Loans Possible
The Building Block Fund, a revolving credit enhancement program, is simple: we provide credit enhancements in the form of partial/limited loan guarantees, first loss/debt service reserves, substitute equity and/or additional collateral for charter school loan repayment obligations. The fund helps lenders by taking on first loss exposure and significantly reducing the risk of loans made to charter schools, and helps charter schools by giving them greater access to debt at lower rates for longer terms.
Charter schools are typically non-profit organizations without the financial history or asset/collateral means to obtain financing under banking regulations and normal lending guidelines. This is where the Building Block Fund can help.
The Building Block Fund also provides partial guarantees of a charter school's lease payment obligations, again reducing risk, in this case for a landlord, and helping charter schools secure better (longer and less-expensive) lease agreements.
The Building Block Fund's credit enhancements typically have a term of 3-5 years that is co-terminus with the school's charter and have aggressive, built-in partial release provisions. Typically, a credit enhancement "unwinds" and revolves to CSDC in years 2-5 with the average full release and reconveyance occurring in five years. A Building Block Fund manager will work directly with the lender to negotiate a release schedule that, at a minimum, will reflect annual releases proportionate to the amount of principal reduction on the loan.
What Charter Schools Can Mean To Your Community: Stability And Growth
First and foremost, charter schools offer opportunities and options for a quality public school education that would otherwise be unavailable to, or beyond the reach of, many parents. But beyond the hugely important role of improving public education for millions of children, charter schools also have an impact on overall community growth that should not be overlooked. Charter schools often become community institutions and a driving force for the revitalization of once-ignored neighborhoods.
What Charter School Financing Can Mean To You: Reliability and Profitability
Lenders from across the nation participate in the Building Block Fund program, not just because financing charter schools is good for communities, but because it's good business.
The Building Block Fund gives lenders a level of security by taking the first loss exposure that puts the financing of charter schools on a level with other commercial lending. Dozens of lenders have participated in CSDC's Building Block Fund credit enhancement program, including:
The Process: It's Easy
Typically, a Building Block Fund manager is involved in the process from start to finish. We advise charter schools to work with local lenders to obtain a tentative loan commitment that identifies the amount and term of the credit enhancement required and encourage lenders to contact us directly for help and guidance in working with the school and the Building Block Fund program. The next step is to submit the draft or conditional term sheet that identifies the credit enhancement needed to fill the school's financing "gap." This serves as the application to the Building Block Fund program.
Building Block Fund processing procedures are efficient and avoid duplication of effort. Because we work off of lenders' underwriting, charter schools don't have to submit the same organizational and financial documents for our review, which streamlines the process and minimizes delays.
Assuming the school meets the underwriting standards of both the Building Block Fund and the lender, the enhancement is made and a "Credit Enhancement Agreement" is reached between CSDC, the lender and the school.
Contact Us
CSDC's Building Block Fund has helped dozens of charter schools, serving more than 10,000 students in states across the country, obtain over $110 million in capital financing and leases for over a million square feet of faculties space.
Contact us to find out how you can use CSDC's Building Block Fund credit enhancement program to assist charter school loan applicants. Call us at 443-561-1280 and let us help you make facility loans for charter schools to improve education and expand learning opportunities for children in your community.
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