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.

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.

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

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

The Federally Qualified Health Center ("FQHC") Loan Program was designed to provide start-up FQHCs with funding at a lower interest rate than available by conventional bank borrowing.  Currently, there are no plans for any new FQHCs in the foreseeable future, but this funding will continue to be available if the situation changes.

At the December 2014 Authority meeting the NJHCFFA has increased the scope of the FQHC Loan Program to include providing direct loans to qualified FQHCs that wish to upgrade or expand their operations.

The Expanded FQHC Direct Loan Program would be set up very similarly to the existing program for start-up FQHCs:

1. Loan repayments will not exceed ten years, depending on the project, amount and financial information provided by the borrower;
2. Interest will be computed using the rate on the New Jersey Cash Management funds as of the first business day of the month, for which the calculation is made, plus 2% and applied to the outstanding loan balance of the Loan plus any interest accrued to that point, for the number of days the Loan is outstanding."
3. Maximum loan amount will not exceed $2,000,000, based on availability of funds;
4. Security for the loan will be in the form of a first, parity or second mortgage and/or a first, parity or second lien on the gross revenues or accounts receivable of the FQHC.

New aspects of the expanded FQHC direct loan program are proposed as follows:

1. A $250 non-refundable application fee payable to the Authority for its work evaluating the loan application;
2. A $250 closing fee payable to the Authority for due diligence and documenting the loan; and
3. A 75 basis point annual fee based on the outstanding balance of the loan payable to the Authority for monitoring the loan and processing requisitions of loan proceeds.

The FQHC Loan Process is a quick and simple process:

• 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; and
• The loan closes.

Federally Qualified Health Center Loan Program 2014 [pdf 98kb]

The Master Leasing Program is designed to meet the unique needs of New Jersey’s health care systems, although stand-alone facilities may also participate. In the case of a System, the various members of the System can access tax-exempt equipment leases through a pre-arranged master lease financing. The Authority approves the System for a total dollar amount, and the System’s members enter into leases over a 10-year period aggregated up to that dollar amount. The System must enter into a master lease agreement with each separate lessor/equipment vendor.

What can the Master Leasing Program offer your organization?

• Low cost fixed and/or variable interest rate debt
• Negotiated lease term that will parallel the life of the equipment
• Security provided through equipment liens and/or master indenture notes
• Pre-approved negotiated process
• Standardized documents to cut drafting time

The Master Leasing Program Process includes the following:

• Borrower enters into a Memorandum of Understanding with the Authority
• Borrower finds its own equipment vendors
• Lessor/equipment vendor is identified and documents finalized
• Due diligence process is undertaken
• Sale approval is requested at an Authority meeting
• Individual loans close during the life of the Master Lease

In order to be eligible for the Program:

• The issue size must be greater than $15 million
• The proceeds must be used only for equipment acquisition costs