Economic Development Corporation (EDC)

What is it? A special type of corporation established by a community solely to act as a conduit. The EDC can, as a municipal entity, borrow funds or sell securities that are, in most cases, exempt from federal income tax. Consequently, the EDC can raise funds at lower interest rates than businesses. The lower-cost funds are used by the EDC to buy fixed assets that are then leased to the business. The lease rate reflects the EDCs low cost of capital. The EDC has no responsibility for the payment of interest and principal on the debt except to pass the businesss rent payments through to the investors.

Added By: Kayla

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