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Loan Program: Frequently Asked Questions

  1. What is the Loan Program?
  2. What organizations are eligible to apply for loans?
  3. What are the advantages of using Infrastructure Ontario for financing capital investments?
  4. Some clients claim they can get a better rate from their local bank. Is this true? 
  5. If an applicant’s loan is approved does that mean the applicant is prohibited from applying for any other provincial government funding?
  6. What happens if there is a default on a loan? How are you going to protect the public interest  
  7. Can one borrowers default, make other borrowers liable for their loan?  
  8. What happened to my Ontario Municipal Economic Infrastructure Financing Authority (OMEIFA) loan?
  9. What kinds of projects/investments are eligible for financing under Infrastructure Ontario’s Loan Program?
  10. What type of reporting is required by borrowers using the Loan Program?
  11. How long is my loan application valid?
  12. What are Infrastructure Ontario’s interest rates?
  13. When do borrowers receive their money?
  14. How long is my financing agreement valid?   
  15. What types of financing are available? 
  16. How do I request a construction loan?
  17. What is a debenture?
  18. How does the debenture process work?
  19. How was Infrastructure Ontario’s municipal debenturing process set up? 

 

 Q 1. What is the Loan Program?

Infrastructure Ontario’s Loan Program is one of the alternative financing approaches that the government is using to help municipalities, universities and other public sector partners renew Ontario’s public infrastructure.

 

Since 2003, we have helped improve the quality of life in communities across Ontario by providing affordable, long-term financing in support of infrastructure development. 

 

With almost 350 public sector clients, Infrastructure Ontario has helped finance various types of infrastructure projects – from the construction of roads, bridges, arena complexes, and long-term care homes to the acquisition and installation of capital assets like fire trucks, smart meters and energy efficient lighting.

 

To date, IO has provided over $6.5 billion to more than 350 different loan clients, including more than 230 municipalities. Modern and efficient public infrastructure is key to building a strong economy, prosperous communities and a clean healthy environment.

 

Q 2. What organizations are eligible to apply for loans?  

The following organizations are eligible to apply for loans:

For more details on eligibility please see the program guidelines on the webpage of each sector.

 

Click here to go to the Loan Program webpage.

 

Q 3. What are the advantages of using Infrastructure Ontario for financing capital investments?

The Loan Program provides various benefits to public sector borrowers:

  • Affordable interest rates 
  • Flexible terms of up to 30 years, designed to match the life of the asset
  • Access to dedicated and experienced staff throughout the loan process 
  • Instant access to capital markets with no extra fees or commissions
  • No need to refinance over the life of the loan

Q 4. Some clients claim they can get a better rate from their local bank. Is this true?

Loan applicants need to make sure that they compare the facts before signing financing agreements. Infrastructure Ontario’s cost of capital is very low, and it passes these savings onto borrowers by way of low interest rates.

 

Please consult our program guidelines for sector specific details on eligibility.

 

Q 5. If an applicant’s loan is approved does that mean the applicant is prohibited from applying for any other provincial government funding?

No.  Approved borrowers are still able to seek other sources of government funding.

 

Q 6. What happens if there is a default on a loan? How are you going to protect the public interest

All borrowers are subject to a credit review and are required to meet financial soundness criteria before qualifying for a loan.

 

Infrastructure Ontario also monitors borrowers on a continuous basis. It conducts financial soundness reviews of its borrowers after loan approval to ensure that their credit quality continues to meet the loan criteria.

 

In the unlikely event there is a default, there are processes in place to resolve the issue, including restructuring the financial agreement to facilitate full repayment of a loan, as well as the potential to intercept provincial payments to public sector borrowers.

 

Q 7. Can one borrowers default, make other borrowers liable for their loan?

No. When borrowers take out a loan under the Loan Program, the financing agreement is entirely between Infrastructure Ontario and the borrower. A default by any other borrower has no financial impact whatsoever on the individual borrower.

 

Q 8. What happened to my Ontario Municipal Economic Infrastructure Financing Authority (OMEIFA) loan?

All of OMEIFA's assets and liabilities, including the commitments made under its 2003-04 Loan Program, have been assumed by Infrastructure Ontario. Infrastructure Ontario continues to honour the commitments made under the 2003-04 OMEIFA Municipal Loan Program.

 

Please contact Daine Crawford at (416) 326-7812 or call Infrastructure Ontario toll free at 1-800-230-0937 for information regarding the 2003-04 OMEIFA Municipal Loan Program

 

Applying for a Loan 

 

 Q 9. What kinds of projects/investments are eligible for financing under Infrastructure Ontario’s Loan Program?
Our loans can be used to finance a broad range of capital expenditures including construction and expansions, energy efficiency projects as well as systems and equipment purchases.

 

Please consult our program guidelines for sector specific details on eligibility.

 

Click here to go to the Loan Program webpage.

 

Click here to link to the online Loan Application

 

Q 10. What type of reporting is required by borrowers using the Loan Program?

To help ensure effective and efficient delivery of projects financed (in whole or in part) with funds from the Loan Program, Infrastructure Ontario has introduced some reporting requirements for capital construction projects only. Loan clients are responsible to submit project reports according to the Estimated Project Start Date as indicated in their online application and Financing Agreement.

 

Q 11. How long is my loan application valid?

Infrastructure Ontario reserves the right to withdraw applications if they become inactive for more than one year after the date of submission.

 

Q 12. What are Infrastructure Ontario’s interest rates?

All new loan applications are subject to loan pricing based on the borrower’s market sector.

 

Infrastructure Ontario’s sector loan pricing recognizes the unique fundamental credit character of each eligible client sector and continues to provide equitable access to affordable financing rates. Pricing is based on the relative long term credit strengths of each eligible client sector, recognizing the varying degrees of government involvement and the security afforded to Infrastructure Ontario.

 

This loan pricing approach ensures that Infrastructure Ontario can support all eligible clients in an equitable and non-discriminatory manner. All eligible clients within each sector share the same affordable rates, and same benefits of the Loan Program.

 

Our lending rates are available online and are updated frequently.

 

Click here to go to the Infrastructure Ontario’s lending rates page.

 

Q 13. When do borrowers receive their money?

Infrastructure Ontario disburses money to approved borrowers upon request once project expenses are incurred. Some borrowers forgo construction financing and opt to go directly to debenture at a convenient milestone or upon project completion.

 

Q 14. How long is my financing agreement valid?

Clients who have signed a financing agreement but have not drawn on the loan for a period of 12 months will be required to pay an annual standby fee of 0.25% on the committed amount. 

 

Short & Long Term Financing

Q 15. What types of financing are available?

Short-Term or Construction Financing 

Short-term (construction) financing is available during the construction period of an approved project based on incurred costs. Interest is calculated and payable monthly on the 1st day of each month based on the posted short-term rates.

 

Short-term advances are processed on the 1st and 15th of every month and Infrastructure Ontario requires five business days notice to process a payment.

 

Clients can request construction loans through the online loan application and also view a summary of advances previously taken.

 

Click here to log in to the online loan application.

 

Long-Term Financing 

On an agreed upon date, Infrastructure Ontario will purchase a debenture from the loan client for up to the approved amount of the loan as per their financing agreement. Principal and interest payments are payable monthly or bi-annually with the first payment being due one month or six months from the date of debenture purchase. The interest rate is fixed for the entire term. Debentures close on the 1st and 15th of every month. The debenture process generally takes about 4 weeks to complete.

 

Infrastructure Ontario offers both amortizing and serial debentures to clients. With amortizing debentures, borrowers pay equal amounts of blended principal and interest every six months. Alternately, with serial debentures, borrowers pay equal amounts of principal every six months and interest is calculated on the declining principal balance.

 

Infrastructure Ontario also offers Promissory Notes to non-municipal applicants.

 

Click here to link to our online Loan Payment Calculator.

 

Click here to link to a PDF of our Serial vs. Amortizer Debentures information sheet.

 

Q 16. How do I request a construction loan?

Approved borrowers can request construction loans though the online Loan Application system on the Infrastructure Ontario website. The online Loan application system provides users with an intuitive step-by-step process to carry out their construction loan requests.

 

Clients are able to:

  • Manage their own information and produce detailed reports for advances, debentures and projects
  • View outstanding requests and historical loan information
  • Generate documentation with a click of a mouse
  • Request advances prior to the start of construction (pre-flow advances)
  • Access client summary reports

Click here to link to the online Loan Application

 

Q 17. What is a debenture?

A debenture is an unsecured debt backed by the credit worthiness of the borrower. Like a mortgage, it is a long-term debt that is paid back over time according to a fixed payment schedule. Unlike a mortgage, however, debenture payments are fixed for the entire loan period, and are not renegotiated every few years.

 

Infrastructure Ontario offers flexible approaches to financing and provides borrowers with the option of serial, amortizing or bullet loans over a variety of different terms.

 

Infrastructure Ontario also offers Promissory Notes to non-municipal applicants.

 

Q 18. How does the debenture process work?

Any participating borrower interested in long-term financing may contact Infrastructure Ontario to begin the debenture process. The borrower will then be provided with an offer letter that describes the detailed steps necessary to complete the debenture process.

 

Debentures close on the 1st and 15th of every month - the process generally takes about 4 weeks assuming that all documentation is provided in a timely manner.

 

Please contact Daine Crawford at (416) 326-7812 or call Infrastructure Ontario toll free at 1-800-230-0937 to begin the debenture process.

 

Q 19. How was Infrastructure Ontario’s municipal debenturing process set up?

Infrastructure Ontario staff spoke to various large and small municipal borrowers prior to setting up the debenturing process. The result is a process that is very similar to other debenture processes.

 

Infrastructure Ontario‘s debenture process will meet the accountability needs of both the province and borrowers, and is consistent with the current process used by borrowers when they go to the capital markets to sell debentures.

 

Infrastructure Ontario is committed to providing high quality customer service. As has been the case since the start of the 2003-04 loan process, Infrastructure Ontario staff will work closely with borrowers to assist them with the loan process.