The American Hospital Association and state health finance authorities urged House and Senate finance committee leaders to make permanent two temporary stimulus-law incentives that encourage banks to give tax-exempt loans.
AHA wants permanent lending incentives
In letters to Max Baucus, (D-Mont.) and Iowa Republican Chuck Grassley in the Senate and Massachusetts Democrat Barney Frank and Spencer Bachus, (R-Ala.) in the House, the AHA and various municipal organizations argued the two incentives, which expire at the end of December, helped open credit markets after recent distress.
One incentive allows banks to buy up to $30 million in bonds per borrower and deduct interest on debt used to finance the deal. Previously, the law limited such deductions, known as bank-qualified, to $10 million for each debt issuer, such as state finance authorities that often bring bonds to market for multiple borrowers. The second incentive allows banks, like corporations, to enjoy interest deductions as long as tax-exempt bonds account for less than 2% of their assets, beyond bank-qualified bonds.
Small tax-exempt borrowers will see more “expensive, complex and risky” financing without such incentives, the National Association of Bond Lawyers said.
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