4.10.4 Limitations on Pooled Financing Loans
In a pooled financing, a state or local government issues bonds and subsequently loans the proceeds to multiple borrowers.80 A pooled financing bond is a bond for which more than $5 million of the proceeds are reasonably expected to be used (or are intentionally used) directly or indirectly to make or finance loans to two or more ultimate borrowers. Pooled financing bonds do not include qualified private activity bonds that are subject to the volume cap requirements. A pooled financing bond will not be tax exempt unless the issuer and the borrower satisfy certain requirements that are generally intended to limit issuance of pooled financing bonds before the time that the ultimate borrowers are known.