Tax-Exempt Bank Loans Still an Option
By: Grant Ostlund and John E. Cheney
(HFM July 2011)
Introduction:
Over the past two calendar years, commercial banks have been a significant source of tax-exempt financing for healthcare organizations. Driven by an expanded definition of “bank-qualified debt” provided in the American Recovery and Reinvestment Act of 2009, commercial banks issued approximately $70 billion of direct tax-exempt loans in 2009 and 2010.1 And, while the expanded definition no longer exists, commercial banks continue lending to not-for-profit and publicly-owned hospitals and healthcare systems by directly purchasing tax-exempt debt (with fixed or variable interest rates).