Lending to Municipalities

This webinar has been developed for banks and bankers who are aware of opportunities to serve their community through credit services to municipalities and other local government or quasi-governmental organizations (i.e. volunteer fire departments, emergency health care providers, political subdivisions, etc.). Extending credit to municipal entities requires legal, tax, accounting and credit knowledge and analysis that can be quite different from conventional commercial lending decisions. There are many issues involved. Governmental entities provide financial information, often using unfamiliar fund accounting. Budgeting constraints have a direct impact on how credit requests are structured. Lease financing is frequently needed. Commercial customers may need financing for contracts with local government entities. Since 2008, municipal bankruptcies have risen, but overall the default risk on municipal bonds is low and interest paid by municipalities and related types of entities is often tax free to the bank.