ACE credit may be used to provide funds for projects and activities that result in the creation or retention of jobs or provide services or other benefits for low- and moderate-income people and communities. ACE funds may be used to support community lending and economic development, including small business, community facilities, and public works projects.
- Finance commercial, industrial, and manufacturing activities, including small business and microenterprise lending
- Finance social service and other community or public facility projects
- Finance public or private infrastructure projects, such as roads, utilities, and sewers
- Interest rates and fees are generally lower than rates and fees on regular Bank advances
- Prices and fees are generally lower than prices and fees on regular Bank letters of credit
- Available in a variety of maturities for a wide array of credit products
- ACE applications may be made at any time
- ACE advances and letters of credit may help you meet your CRA goals
- ACE credit may be used to finance SBA lending
Varies according to type of credit product
Credit Products Available
- Fixed Rate Credit (FRC) Advance
- FRC Advance with Embedded Cap
- Callable Advance
- Amortizing Advance
- Adjustable Rate Credit (ARC) Advance
- ARC Advance with Embedded Options
- Standby Letters of Credit
The interest rate on an ACE advance will vary according to credit product and maturity. Interest rates on ACE credit are generally lower than the rates offered under the Bank's regular advance programs, and the prices for ACE letters of credit are generally lower. Members are encouraged to provide favorable prices and terms to borrowers on ACE-qualifying activities in consideration of the preferential rates or prices on ACE credit.
If the Bank determines that a participating member has not complied with the qualifying terms of the program or has not provided acceptable documentation to verify compliance, the Bank may change the interest rate on each outstanding ACE advance, retroactive to its funding date, to the rate in effect on the funding date for a comparable advance under the Bank's regular advance programs. Prices for an ACE letter of credit may be similarly revised.
Eligible Projects and Activities
ACE credit may be used to finance specific loans or other financing activities that meet the eligible use criteria (specified below) and that serve targeted beneficiaries (also specified below).
ACE funds must be used for economic development projects that either:
- Result in the creation or retention of jobs (other than construction jobs) for low- and moderate-income people and communities, or
- Provide services or other benefits to low- and moderate-income people and communities.
Specific eligible economic development projects may include:
- Commercial, industrial, and manufacturing activities, including small business and microenterprise lending
- Social service and other community or public facility projects
- Public or private infrastructure projects, such as roads, utilities, and sewers
ACE credit may be used in a variety of financial transactions, including:
- Originating loans
- Purchasing a participation interest, or providing financing to participate, in an economic development loan consortium or other financial intermediary
- Making loans to entities that, in turn, make loans for economic development projects
- Supporting a secondary market for ACE-eligible loans
- Purchasing New Markets Tax Credits
ACE may be used for eligible financing originated up to 3 months before the ACE funding date or up to 12 months after the ACE funding date (but before the advance maturity date, if the advance has a term of less than 1 year).
To qualify for ACE credit, the above eligible uses must serve targeted beneficiaries. These include beneficiaries defined by a targeted area, targeted activity, or targeted income levels for individual beneficiaries in rural and urban areas.
The project or activity is located in one or more of the following targeted areas:
As designated by the U.S. Department of Housing and Urban Development (HUD):
Urban Empowerment Zone
Urban Enterprise Community
Urban Champion Community
- As designated by the U.S. Department of Agriculture:
- Rural Empowerment Zone
- Rural Enterprise Community
- Rural Champion Community
- An "Indian area," as defined by the Native American Housing Assistance and Self Determination Act
- A property that is eligible for a federal brownfield tax incentive
- An area affected by a military base closing in a community in the vicinity of the installation, as defined by the U.S. Department of Defense
- A community affected by the North American Free Trade Agreement as designated under the Community Adjustment and Investment Program
- A federally declared disaster area or an area eligible for federal economic development assistance
- A state-declared disaster area or an area eligible for state economic development assistance (approved by the Finance Agency)
- A rural neighborhood or community with average median incomes at or below 115% of the HUD area median income (AMI)
- An urban neighborhood or community with average median incomes at or below 100% of the HUD AMI
- The project qualifies as a small business as defined by the Small Business Administration.
Targeted Income Levels for Individual Beneficiaries in Rural and Urban Areas:
- In rural areas, at least 51% of the jobs created or retained by the project or activity (excluding construction jobs) have annual salaries that pay up to 115% of the HUD AMI.
- In rural areas, at least 51% of the families that benefit from the project or activity have incomes up to 115% of the HUD AMI.
- In urban areas, at least 51% of the jobs created or retained by the project or activity (excluding construction jobs) have annual salaries that pay up to 100% of the HUD AMI.
- In urban areas, at least 51% of the families that benefit from the project or activity have incomes up to 100% of the HUD AMI.
To request ACE credit, the member must complete the CIP and ACE Credit Application or the ACE Application for SBA Lenders. Within 12 months of the ACE funding date or, if the advance has a term of less than 1 year, prior to the maturity date of the ACE advance, the member must demonstrate its ACE-eligible lending activity in the full amount of the ACE credit by providing the Bank with a certification that:
- The funds were used to benefit targeted beneficiaries (defined by a targeted area, a targeted activity, or targeted income levels for individual beneficiaries in rural and urban areas) and the use of the funds is consistent with the ACE application, the criteria for eligible projects and activities, and the other terms and conditions of ACE. The certification must include a description of how the ACE advance (or letter of credit) meets the requirements, and, as appropriate, a summary list, or other documentation showing the number and salaries of jobs created or retained.
- Qualifying loans were originated no more than 3 months before the date of the ACE funding and no later than 12 months following the ACE funding date or, if the advance has a term of less than 1 year, prior to the advance maturity date. If the eligible project was financed up to 3 months prior to the submission of the ACE application, the certifications and accompanying documentation may be submitted with the application.
If the eligible project is receiving funds from another targeted federal economic development program with the same or more restrictive eligibility targets, certification that the project is in compliance with those requirements is sufficient.
Limit Per Member
The Bank has established an aggregate limit on the amount of advances that an individual member may borrow each year under the Bank's CICA credit programs: ACE and the Community Investment Program (CIP). The member may borrow up to the maximum amount under just one program or under both programs until it reaches the aggregate limit.
The maximum amount of CICA credit that an individual member may borrow in aggregate each year will depend on the member's total assets as of the previous yearend, as follows:
|Total Assets||Annual CICA Credit Limit|
|Up to $20 million||$1 million|
|$20 million to $4 billion||5% of total assets as of previous yearend|
|$4 billion and over||$200 million|
Total Funding Limit
The Bank may limit the total amount of ACE credit to be made available to all members in a calendar year on a first-come, first-served basis. Once the limit is reached, a member may not obtain additional ACE credit even if the member has not reached its individual limit.
All ACE advances and letters of credit must be fully collateralized. ACE-eligible loans may or may not be eligible to be pledged to the Bank as collateral. Please refer to the Bank's Collateral Guide for a detailed description of the Bank's collateral eligibility requirements.
Other Terms and Conditions
Other terms and conditions for ACE credit are the same as for other Bank advances and letters of credit.
Last Modified: January 2015