Innovative IBank Provides California With An Edge

Welcome back to The Sunstone Way. 

You know I’m a big fan of innovation. Finding new ways to solve old problems is my definition of progress. 

Innovation is exciting when it comes to physical inventions, social approaches, even financial solutions. Today I want to tell you about a California institution that has been innovating – and helping other innovators – for the last 30 years. 

In The Right Place 

It comes as no surprise that this institution is a California thing. Our fair state has long been ahead of the curve when it comes to trying new things and making them work. 

There’s a reason California has the fourth largest economy in the world! 

That economy has ebbed and flowed over the years, just as the nation’s economy has gone up and down. But since 1994, state officials have understood and protected the huge asset that is the California Infrastructure and Economic Development Bank (IBank). 

A Helping Hand 

The concept for the IBank rests in the need for creative solutions to financing of needed projects, both public and private. Cities, towns and special districts (think water and sewer) have turned to the IBank when conventional financing to rebuild a water system or repave streets would be too expensive for the residents to bear. 

Because IBank is a state entity, housed within GO-Biz (Governor’s Office of Business and Economic Development), it has broad authority to issue tax-exempt and low-cost taxable revenue bonds. The bank deals directly with public agencies, loaning them the proceeds of the bonds with an advantageous repayment of the bonds directly by the local agency. 

There also is a program called the Infrastructure State Revolving Fund, which can provide amounts from $1 million to $65 million. Terms of repayment can stretch for up to 30 years. 

On The Private Side 

While local governments are primary IBank customers, private development and nonprofit corporations with facilities can be helped too. 

The IBank handles Industrial Development bonds for up to $10 million to provide money for manufacturing and processing facilities. There’s also an Expanding Venture Capital Access Program. 

Another bond program has been set up specifically for 501(c)(3) nonprofits from museums and libraries to YMCAs and agencies working for the prevention of cruelty to children and animals. 

Loan Guarantees 

One of the most effective innovations in financing is the concept of loan guarantees. Multiple government agencies make use of loan guarantees to help free up financing – the Small Business Administration has several such programs. 

In the case of IBank, loan guarantees can cover up to 80% of a loan should the borrower be unable to repay the debt. This allows lenders to complete loans when the borrower might otherwise be unable to qualify for the money. 

Loans of up to $20 million can get an 80% loan guarantee. Another upcoming loan guarantee program will allow loans from $5 million to $30 million typically to get 70% of the loan guaranteed. That amount bumps up to 80% if the loan is for a project in an underserved community. 

Modern Goals 

California has steadfastly led the fight when it comes to climate change – working to slow global warming while seeking innovative solutions to adapt to climate change. IBank has been a part of the movement.  

IBank officials have set up a Climate Catalyst Revolving Loan Fund. The first loan from the fund was made last year using state funds – $25 million to the California Wildfire Innovation Fund, which is managed by the nonprofit Blue Forest. It supports forest restoration, improving forest health and deploying new biomass technologies to reduce wildfire risk. 

Climate Incentives Bridge Loans will become available to provide bridge financing for projects (public or private) that anticipate receiving incentives such as utility and state agency rebates, clean-energy tax credits and other grants. 

That’s a small portion of the $446 million the IBank will deploy in 2025. IBank’s Climate Loan Participations allow it to lend alongside eligible lenders to make green loans to fund climate projects. IBank can take up to 50% of the loan; 60% in some instances. 

IBank’s board of directors is full of financial innovators, led by our friends Dee Dee Myers, Director of the Governor’s Office of Business and Economic Development, and State Treasurer Fiona Ma. They continue to look for new, effective ways to help those helping our state stay in the forefront of the climate change fight, and the economy in general. 

We stand beside them, because that’s The Sunstone Way. 

Remember, always be a Sunstone!