The ILP is a partnership between the Indiana Bond Bank (IBB) and the United States Department of Agriculture-Rural Development (USDA-RD) to provide Demand Study Financing or Interim Financing for USDA-RD eligible projects during the construction period.

Both loans are types of Bond  Anticipation Notes (BANs), but there are considerable differences between the two, so it is important to know which phase of the project you are in and which type of ILP loan you are applying for.

Construction ILP loans occur when a utility is ready to begin the construction phase of a project. Construction loans carry a promise from USDA-RD to take out the BAN (pay off with a USDA-RD loan). Draw requests are submitted to USDA-RD and approved throughout the construction drawdown process. USDA-RD will have provided the entity with a letter of conditions and a take-out letter prior to funding a Construction ILP loan.

Demand Study ILP loans provide financing earlier in the project lifecycle, funding costs for preconstruction work such as design and engineering (sometimes called “soft” costs). For Demand Study loans, USDA-RD has not necessarily guaranteed providing the take-out loan, and it is up to the utility and their professionals to keep invoices and careful records of payments made from loan proceeds, ensuring costs are eligible and any relevant procurement processes are followed and documented.

Frequently, Demand Study ILP loans are rolled into Construction ILP loans, but not until USDA-RD has reviewed all invoices and expenses for program eligibility. For a Demand Study ILP loan to be approved, sufficient utility rates and charges must be in place, and the entity will need to have received a letter of conditions from the USDA-RD.

You must meet the guidelines set forth by USDA-RD, which can be found at www.rd.usda.gov, and fall under the definition of an IBB "qualified entitry" as defined by I.C. 5-1.5-1-8.  Generally, municipal owned and non-profit utilities meet the definition of a qualified entity.

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No.  The Bond Bank team will review your application.  The Bond Bank will need your letter of conditions and take-out letter from USDA-RD before closing on your Construction ILP loan, and letter of conditions from USDA-RD before closing your Demand Study ILP loan.

Eligibility is based on receiving project approval from USDA-RD and having all local approvals in place.

USDA-RD's financing begins at a project's substantial completion.  The Bond Bank can provide interim financing for the planning and/or construction periods until USDA-RD's permanent financing begins at substantial completion.

The fee is $20,000 for BANs under $1,500,000.  The fee is $25,000 for BANs over $1,500,000.  The Bond Bank handles this automatically, withholding the fee from proceeds at closing.

Yes, the interim funds are deposited into a construction account with a third-party trustee.  The third-party trustee will disperse project funds as approved by USDA-RD.

Proceeds are deposited in a construction account for your entity with a program trustee.  The Bank of Oklahoma (BOKF) is the current trustee for this program.

The Bond Bank team will will provide your entity with an Exhibit B-Form of Requisition.  This form will need to be authorized by your local government official and a representative of USDA-RD.  USDA-RD will need documentation, including invoices, for any draw.

Yes.  BAN payoffs will need to be approved by USDA-RD.  You will need authorization from USDA-RD.  Please see question above for same approval process from USDA-RD.

BAN interest is typically due at maturity.  Howver, if you would rather make semi-annual interest payments, please tell the Bond Bank when submitting your application.

Yes.  The program trustee will wire of ACH funds to your bank account once a draw has been authorized.  Please note ACH is the preferred method, and there is no fee associated here.  You may provide wire instructions, but there may be a fee associated with this method.  Please check with your Municipal Advisor on the correct account for the program trustee to deposit authorized draws.

The interest rate is competitive but determined by current market conditions.  Please contact the Bond Bank for an indicative interest rate for the ILP Program.  Please note that the ILP interest rate will likely differ from the USDA-RD rate.

The Bond Bank accepts applications at the beginning of each month.  Please see the ILP Monthly Timeline in the above section.  Please contact the Bond Bank if the schedule does not work with your project's timeline.