Equitable Facilities Fund says it has loaned $1B to charter schools

The Equitable Facilities Fund, a nonprofit that provides low-interest loans to public charter schools, announced Thursday that it has surpassed $1 billion in loans since its launch in 2017.

On Tuesday, at the National Charter Schools Conference, founder Anand Kesavan will announce EFF's "round two," in which the fund aims to offer $3 billion in loans over the next seven years.

"Reaching [the $1 billion] milestone demonstrates the unprecedented scale and measurable success of the sustainable model we built to help our nation's highest-performing public charter schools access equitable funding," Kesavan said in a press release. "In just six years, the fund has supported more than 150 school campuses serving 75,000 students and forecasts rapid growth to meet the community need in the coming years as it seeks to achieve equity self-sustainability."  

EFF's revolving loan fund has closed four bond issuances, totaling more than $800 million in proceeds, and plans to sell more in August, according to the fund's investor relations website. The bonds have more than 70 investors, a "social" designation from Kestrel Verifiers and an A rating, with a positive outlook, from S&P Global Ratings.  

The fund provides a novel way to invest in charter schools, Kesavan said. It appeals to investors by pooling charter school borrowers, often considered a risky investment, to protect investors if one school defaults. Should one of the schools default, EFF has a 46% debt coverage ratio. 

So far, Kesavan noted, all of EFF's 156 schools have paid back 100% of their loans. He credits this success to the fund's high standards for borrowers.

"We spend 12-18 months doing diligence on all these schools, including the financial plan, their school operations, their academic results, prior enrollment, their leadership and governance," Kesavan said. 

Last year, EFF began a state-specific fund in Texas, which has loaned $79 million to 10 campuses so far. Kesavan said he plans to replicate this in at least five other states. 

EFF estimates that its low-cost loans have saved schools nearly $250 million over the last five years. Environmental Charter Schools in Los Angeles received a $30 million loan from EFF, according to the press release. 

"With EFF, it feels like you are working with an advocate who understands the impact of your schools and believes in your mission," ECS Superintendent Farnaz Golshani-Flechner said in the press release. "The lower cost financing has allowed us to continue our model of education in a meaningful way."