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Revenue Bond and Mortgage Program (RBM)

(Industrial Revenue Bonds - Tax-exempt of Taxable)

Objectives and General Information  

The Revenue Bond and Mortgage Program is a financing program provided by the Commonwealth to stimulate economic development and create jobs. This objective is attained by providing tax-free, low interest loans to business and industry. One job must be retained or created for each $50,000 borrowed through the Revenue Bond and Mortgage Program.  

Type of Financing

Under the RBM Program, local industrial development authorities (IDA's) borrow money from private lenders and, in turn, lend it to business borrowers. Since the lender's interest income is not taxed at the federal and state levels, the effective rate is reduced. In either the Revenue Bond or Revenue Mortgage case, up to 100% financing is possible. Projects may be undertaken for construction of a new facility, expansion or purchase of an existing building. Machinery and equipment is eligible but working capital, inventory and refinancing are not. RBM money may be used to finance machinery and equipment in situations where the Pennsylvania Industrial Development Authority (PIDA) money is being used for land and building. The maximum capital expenditure allowed on a project in the period of three years prior to and three years subsequent to the project date is $20,000,000.00. If that limit is exceeded, the bond or mortgage issue becomes taxable retroactively. This will raise the effective interest rate. 


RBM money is suitable for manufacturing projects as well as exempt facilities. An exempt facility could include certain specialized projects such as solid waste disposal facilities, sewage treatment facilities, etc. Also eligible for tax-free financing is 501(c)(3) organizations. The Commonwealth and the local governmental officials must approve all applications. If you are interested in a tax-free loan for an industrial project, please contact the office of Industrial Development Authority before proceeding.

Interest Rate and Term of Loan 

Because the interest income to the lender is not taxed, the rate charged is usually below market rates. Typically, rates for these loans have been 80% to 90% of prime. The term of the loan is negotiable but cannot exceed the life of Authority.


Fees charged by Industrial Development Authority include a non-refundable $2,000.00 application fee, a 1% placement fee at the time of closing, Industrial Development Authority legal fees as well as any bank fees.

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