City managers, mayors, elected officials are all expected to have all the answers when it comes to the pros and cons of direct lending vs. municipal bonds. The world of finance has many options for your new modular building facility. Some municipalities use capital expenditure. In this case you can burn through a fiscal budget quickly. Some municipalities choose to build a bond program and go out for public approval, then fund multiple projects under a municipal bond. While still others choose to go the route of direct lending for their new modular building. Which option is best depends on so many variable. Communities that need a new town hall or civic facility choose modular solutions for the flexible design-build programs. What you may not know is that we have great options in the bond and direct lending arena. Below are a few highlights that James Lott from Holman Capital Corporation recently shared with our clients.
A modular building can be a sizeable expense when you include all the site development and architectural fees. Modular Solutions preconstruction team will help you get a firm fixed quote through our cooperative procurement program. The cooperative procurement saves time and money for your modular building purchase. When we team with a finance or bond company you are able to defer the expense for years in the future.
If your community has a strong tax base then a bond is a feasible option and a strong way to build community. If your tax base is declining or the voters in your community might not approve a bond in an election direct lending is a great option.
Our team at Modular Solutions can help facilitate the required documents so that you can explore the option of direct lending.
- The pros of a bond:
- Long term repayment
- community buy in, fast sale in an uncertain stock market
- low/set interest rates
- projects that might not have been funded are now viable
- The cons of a bond:
- rate is not set until the day the bond gets sold on the market
- voters might not approve a bond program
- there are additional expenses for lawyer, documentation, etc that go into the cost of a bond
- The pros of direct lending:
- most every municipality qualifies, with interest rates holding 30 to 34 days
- direct funding can be a fixed or flexible rate depending on structure of the loan
- projects fund quickly upon final documentation
- the const of direct lending:
- not all municipalities can qualify
- weak credit or future revenues can result in higher rates
- some legal advisement fees for document control
As you can see there are pros and cons with direct lending vs municipal bonds and our team is glad to meet with you to further discuss how we can help you get into a new permanent slab on grade modular facility that will be there for many future generations to enjoy.