How exactly to Industrial Revenue Bonds work in terms of obtaining financing?

November 13th, 2008 | by bonds |
bronco asked:


I’m looking into building a hotel in a city that desparately needs one. I’m trying to figure out how I can obtain financing and to see the advantages of doing so via Industrial Revenue Bonds. I trying for tax abatements as well. Let me know.

ORVILLE
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  1. 2 Responses to “How exactly to Industrial Revenue Bonds work in terms of obtaining financing?”

  2. By jackalanhyde on Nov 16, 2008 | Reply

    JOHNATHON

    If I understand the question … the type of bonds you describe are paid from the future revenues of the company.

    Write up a business plan, detailing the expenses of construction and your expected revenue. Show how you plan to meet your financial obligations and pay the bondholders. Then look up the major banks and brokerages in your city and find out if they have an underwriting department.

    If you are new to investing and hotel construction, you will probably not get a top bond rating, which means you will have to pay more interest to your investors, so plan accordingly.

    Good luck!

  3. By Bond Dog on Nov 18, 2008 | Reply

    ODIS

    Most states and many larger city and county governments operate economic development finance authorities. They’re the ones to talk to. Often, these government agencies issue bonds to finance loans to businesses. If your business meets certain qualifications, you may be able to obtain cheaper financing through a state or local authority than directly from a bank. Economic development authorities also offer other kinds of programs to help businesses get financing like credit guarantee programs to reduce the risk banks face when they lend to businesses. Keep in mind, though, that state and local authorities usually don’t deal with start-up companies. You generally have to have a good business track record before you can qualify for the financing and other programs they offer.

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