Financing Programs
Stand-Alone Bond Financings

The Authority's most frequently used financing options include publicly offered bond issues for large projects and private placement of bonds or notes for smaller projects. Bond issues can be structured with fixed or variable interest rates and with or without credit enhancement or ratings. For example, a public bond issue may be enhanced by private municipal bond insurance or a letter of credit if the benefits will offset the additional cost of the premium. FHA-insured mortgage program is another enhancement that can provide savings to borrowers. Additionally, bond issues can be sold with or without a rating from one or more of the three primary rating services.

 

The following four Authority products were designed to meet the special borrowing needs of New Jersey's health care organizations.

COMP Program

The Variable Rate Composite Program ("COMP") is designed to lower the costs of issuance for smaller borrowings.  Under the program, bonds can be marketed for several borrowers at once, yet each borrower is only responsible for its own series of bonds.  The standardization of documents and simultaneous marketing of the bonds reduces the costs of issuance for access to capital markets.


What can COMP offer your organization?

  • Low cost variable interest rate debt
  • Loan terms negotiated directly between the borrower and the credit enhancer
  • Security provided through equipment liens and/or master indenture notes
  • Standardized documents to cut drafting time
  • Straightforward and uncomplicated prepayment terms
  • Shared costs of issuance among several borrowers
  • Ability to issue both taxable and tax-exempt bonds

The COMP Process includes the following...

  • Borrower requests an application
  • Authority's underwriter works with the borrower to obtain a letter of credit
  • Credit provider indicates the conditions upon which the borrower will be approved and negotiates various terms and conditions
  • Documents are drafted
  • Due diligence process is completed
  • Bond issuance is requested at an Authority meeting
  • Closing on the bonds

In order to be eligible for the Program, a borrower must provide a letter of credit.

Capital Asset Program ("CAP")

The Capital Asset Program ("CAP") is designed to take advantage of bonds issued prior to the 1986 changes in the tax laws.  Loans under the program are continuously repaid, making fresh funds available for other health care organizations in need of capital.

 

What can the CAP offer your organization?

  • Quickly approved applications from a credit provider familiar with the health care industry
  • Historically low variable interest rates
  • Loan terms negotiated directly between the borrower and the credit enhancer
  • Security provided through equipment liens and/or master indenture notes
  • No required arbitrage rebate
  • Available funds for certain "bad money" uses (i.e. parking garages, office buildings)
  • Standardized documents to cut drafting time
  • Straightforward and uncomplicated prepayment terms

The CAP Process includes the following...

  • Borrower requests an application
  • Submitted application is passed on to the credit provider for review
  • Credit provider indicates the conditions upon which the borrower will be approved
  • If conditions are acceptable, Bond Counsel is selected
  • Documents are drafted
  • Due diligence process is completed
  • Loan approval is requested at an Authority meeting
  • The loan closes

In order to be eligible for the Program, a borrower must:

  • be a 501(c)(3) organization, and
  • be credit qualified by the CAP credit provider
Equipment Revenue Note Program

The Equipment Revenue Note Program ("ERN") is designed to offer both an easy and efficient method of financing and refinancing equipment. 

 

What can ERN offer your organization?

  • Low cost fixed and/or variable interest rate debt
  • Negotiated loan term that will likely parallel the life of the equipment
  • Security provided through equipment liens and/or master indenture notes
  • Pre-approved negotiated private placement process that shortens the process by as much as a month's time
  • Pre-negotiation with bond counsel already selected by the Attorney General's office, which cuts costs and processing time
  • Standardized documents to cut drafting time

The ERN Process includes the following...

  • Borrower enters into a Memorandum of Understanding with the Authority
  • Borrower either works with Authority staff or finds its own note purchaser
  • Purchaser is identified and documents are finalized
  • Due diligence process is completed
  • Sale approval is requested at an Authority meeting
  • The loan closes

In order to be eligible for the Program:

  • The issue size must be $15 million or less
  • The proceeds must be used only for equipment acquisition costs, and
  • The bonds must not be rated
FQHC Loan Program

The Federally Qualified Healthcare Center ("FQHC") Loan Program is designed to help start-up FQHCs cover the costs needed to get up and running at a lower rate than available by conventional bank borrowing.

 

What can the Program offer your FQHC organization?

  • Low interest rates for organizations with short-term operational history or limited past financial data  
  • Security provided through a mortgage and/or a lien on the gross revenues or accounts receivable
  • Straightforward and uncomplicated prepayment terms

The FQHC Loan Process includes the following...

  • Borrower requests an application
  • Submitted application is reviewed by the Authority staff
  • Due diligence process is completed
  • Loan approval is requested at an Authority meeting
  • The loan closes

In order to be eligible for the Program, a borrower must:

  • be Section 330 approved qualifying it as an FQHC
  • be a 501(c)(3) organization