CCFS has four primary service offerings that support quality charter schools. Most of our work will be providing subordinate loans to schools as part of a facility purchase or renovation.
To help lower the cost of early stage financing, CCFS offers subsidized subordinate loans.
In Colorado, charter schools often spends more than 20% of their PPF (per pupil funding) on their building, leaving 80% or less of their public funds for education-related expenses: teachers, counselors, supplies, support services, food services, and more.
A subordinate loan complements a senior loan from a bank to help a school borrow more total funding than would be possible under standard commercial lending terms. The subordinate loan functions like private mortgage insurance that allows a home buyer to borrow a greater percentage of the total price of a home.
The key difference is that private mortgage insurance is an additional cost to the home buyer but a subordinate loan from CCFS is subsidized such that the funds are actually less expensive than the senior loan.
CCFS subordinate loans can function as a substantial portion of a school’s down payment for a new facility and the presence of the subordinate loan often lowers the cost of the senior debt. The word “subordinate” simply refers to the fact that CCFS agrees to a subordinated lien interest in whatever real estate asset is financed, in comparison to the senior lender.
As a new school, facility space is often one of the biggest initial challenges, and families are often unwilling to commit to enrolling their students until they know where the school will be located. In certain limited circumstances, CCFS can participate in and/or lead development of a school building that is designed to house two schools simultaneously during start-up and then eventually transition to become the permanent home of one of the schools. At present, CCFS does not have incubation space to offer, but if more than one charter is seeking to open/expand in a similar geography with complementary programs, this approach can save both schools money as they ramp up.
CCFS is not a real estate developer or agent, but we can introduce the schools we work with to developers and agents who may be able to support their search. Similarly, we can help schools connect with lending professionals who in turn can provide loan terms and bids for the school to evaluate, once a project has been deemed feasible.
Our experience with charter schools, school finance, and other charter-oriented organizations uniquely positions us to serve as a resource for charter schools during a pivotal transition and period of growth. Along with financial support services, CCFS can highlight avenues that may be otherwise unknown to school leaders—or we can put you in touch with an organization that can.