Loan Program

• Infrastructure Ontario’s Loan Program
• Applying for a Loan
• Short & Long Term Financing
• Ontario Opportunity Bonds
• Infrastructure Renewal Bonds

Infrastructure Ontario’s Loan Program

What is Infrastructure Ontario’s 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 200 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 committed to the financing of over $2.4 billion in approved loans, of which over $2 billion has been advanced to clients. Modern and efficient public infrastructure is key to building a strong economy, prosperous communities and a clean healthy environment.

What organizations are eligible to apply for loans?

The following organizations are eligible to apply for loans:

• Hospices
• Local Services Boards
• Non-profit Long-term Care Homes
• Municipal Corporations
• Municipalities
• Non-profit Professional Arts Training
• Housing Providers
• Universities & Affiliated Colleges

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.

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

Clients need to make sure that they compare the facts before signing financing agreements. Based on Infrastructure Ontario’s high credit rating, its cost of capital is very low; this means Infrastructure Ontario can pass on a very low interest rate to its borrowers.

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

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

Borrowers can still look to other sources of capital from the government.

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

The Loan Program provides various benefits to public sector borrowers:

• Affordable rates updated frequently as we track the movement of our cost of borrowing in the capital markets
• Flexible terms (up to 40 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

When will the government expand Infrastructure Ontario’s Loan Program to include other sectors?

In 2008 the Government of Ontario expanded the popular Loan Program to include social and affordable housing providers, local services boards and non-profit professional arts training institutes in Ontario.

Infrastructure Ontario is now accepting loan applications for local services boards, non-profit professional arts training institutes and housing providers through the online WebLoans system.

Infrastructure Ontario continues to work with key stakeholders to develop program parameters.

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.

Does one borrower’s default make other borrowers liable for their loan?

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

Does Infrastructure Ontario maintain a reserve fund in case of defaults or the inability to raise funds?

When the loan program was first established, it was capitalized with a $1.12 billion reserve fund in the form of a 50-year, subordinated loan from the Government of Ontario and a 20-year, subordinated loan from the Ontario Clean Water Agency.

This reserve fund enhances Infrastructure Ontario’s credit rating; provides a substantial cushion to protect investors and, in the unlikely event that access to short-term or long-term capital is not available, the reserve fund would allow Infrastructure Ontario to meet its clients’ requirements.

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 Judy Lam 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

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

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.

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.

What are Infrastructure Ontario’s interest rates?

As of April 1, 2008 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.

For applications submitted prior to April 1, 2008, please contact an Infrastructure Ontario representative for current rate information. Call 1-800-230-0937.

Our online lending rates are updated frequently as we track the movement of our cost of borrowing in the capital markets.

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

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.

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. This fee will only be applicable to financing agreements executed on or after April 1, 2008.

Short & Long Term Financing

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
Infrastructure Ontario will purchase a debenture from the client for up to the approved amount of the loan as per the financing agreement on an agreed upon date. Principal and interest payments are payable bi-annually with the first payment six months from the date of purchase and 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.

Click here to link to our online Loan Payment Calculator.

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

How do I request a construction loan?

Borrowers can request construction loans though the online loan application system. The Web Loans application 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

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.

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 Judy Lam at (416) 326-7812 or call Infrastructure Ontario toll free at 1-800-230-0937 to begin the debenture process.

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

Infrastructure Ontario staff spoke to several 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.

Ontario Opportunity Bonds

Who is eligible for the refund of income tax on Ontario Opportunity Bond (OOB) interest?

The Tax Revenue Division (TRD) of the Ontario Ministry of Finance is responsible for administering the tax system in Ontario, including refund programs and policies. According to TRD you are eligible for a refund of Ontario personal income tax if you:

• are a resident of Ontario on the last date of the taxation year;
• have filed an income tax return for the taxation year;
• reported interest earned on the OOB as interest income on the tax return; and
• are required to pay tax for the taxation year.

What is my tax refund based on?

The Tax Revenue Division (TRD) of the Ontario Ministry of Finance (MOF) is responsible for administering the tax system in Ontario, including refund programs and policies. For individuals and trusts, the refund will be based on the amount of Ontario income tax paid on the OOB interest. For an individual who owns the bonds through a partnership, the refund is limited to the individual’s Ontario income tax paid on their share of net income of the partnership.

How do I receive my tax refund?

The Tax Revenue Division (TRD) of the Ontario Ministry of Finance (MOF) is responsible for administering the tax system in Ontario, including refund programs and policies. If you are an individual, you will receive the refund automatically from the Ontario Ministry of Finance. Under the Income Tax Act, a trust or a partnership is required to apply to the Ontario Ministry of Finance for the refund of tax. If you are a corporation, the interest income must be claimed as a reduction on your Corporations Tax Return (Line 664, Page 15 of the 2003 CT23 return).

Where can I get additional information on my Ontario Opportunity Bonds?

If you have questions about your OOB account, please contact Infrastructure Ontario’s fiscal agent, CIBC Mellon, at 1-800-387-0825.

The Tax Revenue Division (TRD) of the Ontario Ministry of Finance (MOF) is responsible for administering the tax system in Ontario, including refund programs and policies. Please contact TRD at 1-800-263-7965 if you have any questions about the tax refund process.

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Infrastructure Renewal Bonds

What are Infrastructure Renewal Bonds (IRBs) and how do they work?

Funding for Infrastructure Ontario’s Loan Program comes from the proceeds of the sale of Infrastructure Renewal Bonds (IRBs). These bonds are available to institutional and individual investors. They offer an investment that is backed by the credit strength of public sector borrowers. The inaugural issue of IRBs took place on February 17, 2005.

Does the Province guarantee IRBs?

No, IRBs are not guaranteed by the Province. IRBs are backed by the credit strength of Infrastructure Ontario’s public sector borrowers.

Infrastructure Ontario’s approach encourages prudent financial management and accountability. 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 an ongoing basis.

Does Infrastructure Ontario use a commercial paper program?

Yes, Infrastructure Ontario conducts commercial paper (CP) auctions twice monthly in order to match the cash flow requirements of its loan program.

Why not issue long-term debt?

Infrastructure Ontario uses a mix of long and short-term financing to meet its program financing requirements. CP provides short-term financing and offers Infrastructure Ontario the flexibility to meet its cash flow needs. Infrastructure Renewal Bonds are used to cover Infrastructure Ontario’s long-term financing requirements.

How are IRBs different from Ontario Opportunity Bonds?

The Ontario Municipal Economic Infrastructure Financing Authority (OMEIFA) previously issued tax-exempt Ontario Opportunity Bonds to finance OMEIFA's Municipal Loan Program. OMEIFA's experience suggests that these kinds of bonds may not be the most efficient products to use to raise funds for a broader infrastructure loan program.

Taxable IRBs are a more efficient financial instrument. They maintain a link among investors and the investments in Ontario communities, but also impose accountability and discipline on borrowers.

Infrastructure Ontario will continue to fully honour all OMEIFA commitments on outstanding Ontario Opportunity Bonds, and the government will continue the tax-exempt treatment of interest earned on these bonds until their maturity.

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