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Your status as a not-for-profit allows you to borrow at lower rates

One of the benefits of being a not-for-profit is the ability to borrow at tax-exempt rates. Whether your project is being funded through operating cash flow or a capital campaign, First American Bank can help you finance a new facility or equipment and realize substantial savings through 501(c)(3) bonds.

How The Bonds Work

The bonds are issued by a governmental authority, and the interest is not subject to federal income taxes. The bank passes this benefit on in the form of a lower interest rate, resulting in substantial savings for your organization.

  • The borrower must be designated as a 501(c)(3) corporation under the federal tax code.
  • Funds can be used to build a new facility, acquire land, or buy equipment or an existing facility.
  • In some cases, funds may be used to refinance existing debt related to capital expenditures.
  • All bond financed expenditures must be consistent with the organization's 501(c)(3) purpose.
First American Advantages
  • Competitive Rates:  Whether you choose a variable-rate or fixed-rate loan, you can expect interest savings of 20% to 30% compared to traditional financing.
  • Direct Placement: First American purchases the bonds directly. This structure reduces costs, saves time and provides flexibility. Once closed, the bonds operate like a conventional loan, but with a lower interest rate.
  • Accurate Needs Assessment: Even if you qualify, a 501(c)(3) Bond may not be your best option. With our experience, we can accurately determine the cost of a bond, a commercial mortgage, and other financing options and help determine which is best for you.
  • Smooth Process: Given the many parties involved, a bond financing can take 45 days or longer to complete. First American manages the whole process, which ensures an efficient transaction thanks to a team of specialists with a thorough understanding of all legal and financial aspects.



First American Bank is a full-service bank with locations in Illinois, Wisconsin and Florida.