Charter Schools at start-up are very limited in their ability to secure financing for a permanent facility. The case mentioned illustrates the ingenuity required by Charter Schools at the early stages. Charter Schools are a new business for traditional lenders; therefore bankers are more stringent in their underwriting criteria.
Some of the solutions I have seen school operators are the following;
• Partner with a local developer to provide a facility. The school would lease the facility with an option to purchase after the first few years.
• Lease from a local community organization. (Church, recreation hall, ..). After two to three the school would have financial history allowing for the purchase of their own facility.
• Seller of a property provides subordinated financing or donates land. This helps mitigate the need for equity in a project.
After the initial start-up phase there are various financing vehicles schools can use for financing a permanent facility (Credit enhancement, New Market Tax Credits, USDA guarantee loans,..)
Posted as a reply to:
Examples of Creative Facilities? by Michelle Godard Terrell 
|
|
