• Cumberland Area Economic Development Corporation
  • Serving Cumberland County
  • Pennsylvania’s destination for business and leisure

Tax-Exempt Financing


Tax-Exempt Financing is available for businesses, municipalities and nonprofits through the Cumberland County Industrial Development Authority (CCIDA) and administered by the Cumberland Area Economic Development Corporation (CAEDC).


  • Real Estate acquisition
  • Construction
  • Renovation or expansion
  • Machinery and equipment acquisition and installation
  • Financing costs
  • Infrastructure improvements
  • Tax-exempt refinancing
  • Transportation improvements
  • Greenways, trails and recreation improvements


  • Manufacturing
  • Industrial
  • Non-Profit 501(c)(3)
  • Energy
  • Solid Waste Disposal
  • Wastewater Treatment
  • Transportation Facilities
  • Assisted Living/Housing


Variable by project/$400,000 minimum


Since 1990, CCIDA rates have averaged approximately 50% of prime interest rate.

Terms are based upon a negotiated letter of credit and can go as far as 30 years. Direct tax-exempt loans are also available, which eliminates the need of obtaining a letter of credit


Let’s take an example of a borrower receiving financing for a $5,000,000 loan.

The borrower approaches its bank and asks the bank to quote the $5,000,000 financing on the basis of both a traditional taxable commercial lending rate, as well as a tax-exempt rate (contingent upon receipt of an appropriate opinion of counsel that the financing qualifies as a tax-exempt financing).

The bank quotes a 20-year amortization, with a five-year fixed rate and five-year demand option (bank has right to reset rate or require refinancing in five years). Based upon current market conditions, the strength of the borrower, a mortgage on the property and improvements, and a general security agreement with the borrower, the bank quotes a taxable five-year rate of 5%, and a tax-exempt rate of 3.5% (70% of the taxable rate).

Assuming a mortgage style amortization of principal, over the life of the loan, the total debt service savings in the first five years is $356,402 and, assuming interest rates do not change and the loan is not called by the bank, the debt service savings over the life of the loan is close to $1 million ($959,952).

Let’s assume the incremental costs associated with doing the transaction on a tax-exempt basis (bond counsel, issuer fee, issuer solicitor’s fee, additional work by borrower’s counsel, etc.) is 2% of the amount of the loan ($100,000), versus doing the loan as a taxable transaction.  Given the same assumptions as above, the net savings to the borrower would be $256,402 in the first five years and $859,952 over the life of the loan.

If interest rates rise over time, a tax-exempt transaction produces even greater savings relative to a taxable transaction, as the difference between taxable and tax-exempt interest rates is greater as taxable rates rise (tax-exempt rates are generally a fixed percentage of taxable rates).


Contact CAEDC to determine if your business and/or project are eligible for tax-exempt financing.

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