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In 1997, the IFF received a $2,000,000 grant from the Reform Board of the Chicago Public Schools to create the Charter School Loan Fund. Qualified borrowers are city of Chicago charter schools. Charter schools are encouraged to apply as early as possible for IFF loans because of limited capital available.
Loan programs: IFF charter school funds can be used for two types of projects:
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Facility Loan |
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Project: |
Acquisition, renovation, leasehold improvements. |
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Rate: |
5% |
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Term: |
Up to 5 year term and 15 year amortization. Balloon at 5 years. |
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Collateral: |
First position mortgage on owned property. Leasehold mortgage for leasehold improvements. |
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Please note: All of the facility loans will balloon at five years. This means that the entire remaining amount of the loan is due at that time. This is important to remember as you develop your five-year budgets and long-term fundraising goals. If the school's charter is renewed, the loan may be refinanced at that time.
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Equipment Loan |
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Project: |
Purchase of furniture and equipment for classroom and office use.
All equipment must be capitalized. |
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Rate: |
5% |
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Term: |
Up to 5 years. |
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Collateral: |
UCC filing on equipment. |
Technical assistance: IFF loan staff are available to help with the application process. To discuss a project or schedule technical assistance pertaining to the loan application process, please call 312.629.0060 and ask to speak with the loan staff.
Deadlines: All IFF loans are approved by the IFF Loan Committee, who meets monthly.
Deadlines are as follows:
- For presentation at the April meeting, complete applications must be received no later than March 11, 1999.
- For presentation at the May meeting, complete applications must be received no later than April 6, 1999.
Application Process: Charter schools must provide the IFF with the application, any requested documents and answers to questions by the above deadline in order to guarantee that the loan will be presented at the following committee date. Failure to provide us with complete information will delay your loan. There is no application fee.
Underwriting Guidelines: Because the charter schools are start-up programs and do not have any financial history, the loan approval process will rely heavily on acceptable budgets and cash flow statements that demonstrate the school's ability to repay these loans. The budgets cannot show deficits, and we prefer to see surpluses at the end of the year rather than a zero ending balance. The loan approval also will rely heavily on the strength of the management and Board of Directors of the school.
- We caution against making fundraising too large a portion of the revenues. The Loan Committee may question the school's ability to repay the loan if the projected fundraising goal appears unrealistic or accounts for too high a percentage of the budget (more than 15%). You may be asked to back up an ambitious fundraising goal with a detailed plan and designated manpower toward this effort.
Closing timeline: After loan approval, it can take several weeks for loans to close and for you to get the money. The closing timeline is up to you and IFF staff are happy to accommodate school's who need to close quickly. The closing process involves gathering several documents pertaining to the project and your school.
The charter school's Board of Directors must (by Board resolution) approve of the school taking on a loan before each loan closes. Please keep this in mind as you plan your next several Board meetings.
Post closing requirements: After loan closing and through out the term of the loan, the IFF will request information from your school, including regular financial statements, insurance information, service statistics, etc. IFF staff will make periodic site visits. This is so we can monitor the loan and to gather information to report to our funders and lenders.
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