With 35 years of experience in commercial real estate and 12 years of experience working exclusively with charter schools as a real estate development firm, our team has picked up a wealth of knowledge regarding charter school facility financing. In this article, our goal is to share some of that knowledge with you. After reading this post, you will have a base understanding of how to obtain financing for your school’s dream facility. You will also know how to approach a real estate development project in general from a financial standpoint.

1. Don’t Put The Cart Before The Horse

Starting on the journey of building your school’s dream facility is a very exciting time. However, be careful not to put the proverbial  “cart before the horse.”  What do we mean by this?  We mean starting your project BEFORE knowing just how much financing your school will qualify for. This is probably the number one mistake we see charter schools make. There have been so many times we’ve come across schools that, in the midst of their excitement, decided to retain an architectural firm. The architect drafts beautiful plans for their facility. Then the school discovers the beautiful plans they spent hundreds of thousands of dollars on are worthless. This is because the school can’t qualify for enough financing to build that facility.  So, determine first how much a lender will be willing to lend for your project. Then work on design. 

2. Keep The Process In Perspective

When looking at doing a development project, it’s important to remember the basic steps of obtaining a home mortgage. When we want to purchase a new home, we don’t go out and look at million-dollar homes if we know we can’t afford the required mortgage. . Instead, we start by speaking with a lender. We take our financials into a bank. A banker works with us and ultimately prequalifies us for a certain size mortgage. From there, we work with a real estate broker to find a house that fits our budget. Obtaining financing to fund the development of your charter school facility works in much the same way. Your school needs to work with financial institutions to gain an understating of how much financing it will qualify for.

3. Evaluate All Forms Of Charter School Facility Financing

Knowledge is power, and knowing all the various forms of financing available to your school is very important. Bonds are probably the best-known source of financing available to charter schools. However, there are actually eight sources of financing available to work with. These various sources include conventional banks, credit unions, private equity, single party bonds, revenue bonds, new market tax credits, USDA loans, and the Community Development Financial Institutions Fund. Knowing all these forms of financing are available is very empowering for schools. It enables charter schools to shop their project to various lenders so they can find the best deal.

4. Attempt To Qualify With Multiple Lenders

There’s no such thing as too many suitors when it comes to financial lenders for your project. Also, the process of obtaining financing for your project can be quite lengthy, anywhere from 4 months to a year. So, it’s always a good idea to go through the qualification process with multiple lenders. That way, if in the last inning, one lender decides to pull out of your deal, your school has other lenders to fall back on.

5. Hire A Charter School Facility Finance Expert

Obtaining financing is key for any charter school wanting to build a permanent facility. Every other aspect of the development process hinges on your charter school being able to qualify for financing. It can be a long, stressful, and confusing road to traverse alone, which is why we recommend hiring an expert to help you through the process. Just in the same way we retain an attorney to help with legal matters or architects & engineers to ensure structural safety in the buildings we live and work in, it’s important to have a helping hand when pursuing financing. By working with an expert, you will know the entire process is handled with the utmost care and expertise.