Credit Enhancement Program

Building Hope's Credit Enhancement Program, offered through our America's Charter School Finance Corporation affiliate, provides loan and lease guarantees to facilitate financing and leases for public charter school facilities nationwide. This Credit Enhancement Program is supported by grants from the U.S. Department of Education Charter School Facilities Financing Demonstration Program and The Sallie Mae Fund. Preference is given to schools that have been open for less than 3 years or have at least 50% or more students eligible for free or reduced-price lunch. Schools that receive assistance under our Credit Enhancement Program must also provide quality education options for their students.

New schools are evaluated on their proposed curriculum and program, and the experience of the school leaders and board. Existing schools are evaluated based on their academic performance as compared with schools in their locale with similar populations. General terms include a 1% commitment fee and a 1% annual guaranty fee, a guaranty period of three to five years, and an annual reduction in the guaranty.

To date, Building Hope has provided
$15 million in credit enhancement to over 30 projects, supporting over $230 million in total projects costs.

The Credit Enhancement program assists schools that are preparing to finance the acquisition, renovation or construction of facilities by guaranteeing mortgage loans, leases and leasehold improvement loans. Working with schools in Indiana, Massachusetts, Washington, D.C. and Texas, the Building Hope program has helped to create over 3,650 new public charter school seats.

When there is a shortfall in the financing for a charter school facility, a credit enhancement can provide the senior lender in the transaction an incentive to loan more money to a school than it would in ordinary circumstances. Likewise, a credit enhancement can provide an incentive for a lessor (landlord) to extend a lease to a school for its facility. The program helps to close the gaps in a transaction and allows a school's facility project to move forward. Usually, the credit enhancement results in lower borrowing costs for the school.

Building Hope has no restrictions on the enrollment characteristics or the geography of the charter schools eligible for the program. Preference, however, will be given to schools serving a high percentage of disadvantaged students as well as schools in their early stages of development. Other characteristics of the credit enhancement program include:

• A preferred term of guarantee of 3 to 5 years with gradual amortization over the 3 to 5 year period. Guarantees have ranged in size from $250,000 to $1 million. Each transaction, however, is different and is tailored to the needs of the school.
• Guarantees that are designed to attract bank participation, management organization contributions, foundation support and other contributions.
• Access to advisory services and real estate technical assistance related to financing, facilities and credit matters.
• Reasonable fees including an up front commitment fee equivalent to 1% of the guarantee amount and an annual fee of 1% of the guarantee balance.

Application Process

Any charter school with facility needs is encouraged to contact Building Hope early in its planning process. Experts will discuss your plans with you and describe our products (see Contact Us). As a first step, please complete and submit an intake form.

Charter school intake form

As your school's specific needs become evident, we encourage your school to submit an application to us. Use the links below to access our applications:

Credit enhancement program application for a mortgaged property
Credit enhancement program application for a leased property

Iif your application is selected for further review, we will ask for the supplementary materials listed at the end of the application to assist us in evaluating your school's financial position and readiness to take on the proposed project.