Understanding IBank – A resource for manufacturing facilities
IBank, the California Infrastructure and Economic Development Bank, was created in 1994 with the mission to provide capital for public infrastructure and private development that generates jobs, supports the economy, and promotes a sustainable environment.
Unlike a commercial bank, IBank does not receive deposits or make direct loans. Instead, IBank finances projects by issuing tax-exempt and taxable revenue bonds for public agencies, provides credit enhancement, and acquires facilities.
While most of IBank’s products are geared towards public agencies and non-profit corporations for a wide variety of infrastructure and economic development projects, IBank has two programs that can assist small businesses with expansion and retention.
California Small Business Loan Guarantee Program — Small businesses often have difficulty accessing loans due to large commercial banks’ strict requirements. This program encourages lenders to provide small business loans by lowering the requirements for lending. IBank provides a guarantee to the lender for the loan, thus reducing the borrower’s requirements for collateral and credit score.
The program emphasizes lending to small businesses that are expanding, staying, and creating new jobs in California. It can be accessed through a certified Community Development Financial Institutions (CDFI) or a local bank working with CDFI.
Industrial Development Revenue Bonds — There are many demands for specialized buildings and equipment for advanced manufacturing companies. Industrial Development Bonds (IDBs) are tax-exempt securities issued by a governmental entity in order to provide money for the acquisition, construction, rehabilitation, and equipping of manufacturing and processing facilities for private companies. The bonds must be used to finance manufacturing or processing facilities, and equipment worth up to $10 million. IBDs have longer terms and a more competitive interest rate than typical market rate commercial loans.
Interested in learning more? You can listen to a webinar about Small Business Loan Guarantee Program. Or, read up on other manufacturing resources we’ve featured on the blog, including Ex-Im Bank, Foreign Trade Zone, and other great programs and incentives.