The purpose of the FAST program is to finance short-term assets (including equipment) efficiently and at low cost to the borrower. The program provides fixed rate loans to borrowers. The loans may be taxable or tax-exempt, and are awarded based on availability of funds and approval by designated personnel. The FAST program size is currently $12 million.
Loan Size: The minimum loan size is $500,000. Individual loan amounts less than $500,000 may be aggregated to achieve the minimum threshold, but in no case will an individual loan be less than $200,000. There is no maximum loan amount.
Loan Terms: Financing terms can have amortization terms of 3, 5, 7, or 10 years (from equipment installation or project completion date). The loan term may be shorter than the average useful life of the facilities and/or equipment, but may not exceed the useful life of the asset being financed.
A Project Information Form must be completed by the borrower and submitted to the Treasury Office. The loan request should address the following:
- What revenues will be used to repay the loan, and other obligations against those revenues
- Description of what is being financed, and when funds will be needed
- Desired amortization term or terms
- Discussion of why the loan is needed, and what other mechanisms were considered in evaluating whether to use this program (i.e. why borrowing is necessary, rationale for using FAST program, etc.)
Approval by a Dean, or other authorized representative, is required. Once a description of funds pledged to repay the loan and the requested amortization term is provided, Treasury will evaluate participation in the program using some of the following criteria:
- Institutional savings from use of the program
- Importance to the institutional mission
- The size and timing of the loan request in conjunction with remaining program availability
For tax-exempt loans, the Treasury Office will create a Notice of Intent to Reimburse and begin working with the Bank. After the Bank and the Treasury Office have approved the loan (typically within two weeks of application submission), the interest rate will be fixed and the amortization schedule will be provided to the borrower.
Related Costs of Issuance: If a loan is approved for the program, a one-time fee of $2,500 will be assessed to the borrower. This fee represents the average cost of the legal work and associated tax opinion for the loan.
Account Procedures: Reimbursement loans will use the University’s Bank of America account without incurring additional bank fees. Non-reimbursement loans (e.g. draws) will require a State Street account to accommodate compliance with IRS guidelines. Additional bank fees related with a State Street account will be passed through to the borrower (e.g. $2,000).
Interest Rate: The interest rate will be established when the pre-approved loan request is sent to the Bank by the Treasury Office and will be fixed for the duration of the loan. The interest rate is determined by adding together a verifiable index plus a spread.
Payments: Amortization and debt service schedules will be provided by the Bank at the time of issuance. Principal will be amortized monthly resulting in level debt service payments. Payments from borrower will begin no later than 60 days after proceeds disbursement. Payments are to be made on the first business day of each month.
Prepayment Penalty: Prepayments are allowed under the FAST program but the borrower will be responsible for paying any breakage costs, prepayment penalties, fees, etc., associated with prepayment.