Loan financing

Globaly Investkredit is the only bank benefiting fom a Global Loan Refinancing by KfW-Bankengruppe, designed and committed to pass on those benefits to German Schools abroad through Investkredits's financing activities.

Investkredit includes already more than 20 schools in more than 10 countries amongst its customers: from Vienna to Ecuador and from Brussels to Sofia. Our various financing solutions are oriented towards the specific needs of international schools.

A school ought not to expose itself to any financial risks. That is why we attach great value to a medium-term planning. Key parameters determine the planning of the School's overall budget:

• Estimates of future development of the “number of students” and the “fee structure” need to be conservative;
• the “term of the financing” and – for calculation purposes – “future rates of interest” are set deliberately high.

We analyse these calculations with our partners at the schools and draw up financing models for new building projects. In this way, we ensure that the school has financial leeway throughout the time of the financing. To avoid any foreign exchange risk, we consider it to be particularly important that the loan is granted in the same currency in which the school fees are paid.

Financing Models
1. The Classic Capital Investment Loan Model
It is essential for schools to have certainty in the planning and predictability of their financial affairs. That is why the financing models that we offer, after a period free of capital repayments, have equal annual instalments comprising both interest and capital repayments. The loan is paid out in line with construction progress. At the beginning of the construction phase, we only charge interest. After that, the loan's repayment phase starts. Over the maturity the schools pay instalments of the same amount each year. In the final year, depending how interest rates have moved, only the balance due is charged.

This model also offers the attractive option of switching part of the loan during times of low interest rates to a fixed rate for several years. This gives even more certainty to a school's planning and significantly reduces the school's dependence on the way interest rates move.

2. Flexible Current Account Loan Model
This financing model is ideal for schools that want to cover part of their loan with funds raised by school fees charged at the beginning of the school year and so massively reduce the interest due. No fixed capital repayments are agreed: instead the school can use up the credit line – depending on liquidity – over the course of the year.

During the school year, if liquidity is required to cover running costs, the loan can be utilised up to a contractually agreed maximum amount. Each payment or receipt must be at least EUR 100,000, as this loan model is not intended as working capital but to finance a capital expenditure project. The maximum amount of the loan available is reduced each year over the term of the loan.

3. Asset Management Models
We have developed no-risk and/or low-risk ways of investing funds for schools that want to make use of the annual school fees received at the beginning of a school year. Depending on the prevailing interest-rate situation, the funds may be deposited at fixed or variable rates for periods of three, six or nine months or combinations thereof. Options include classic deposits, securities and electronic deposits. The school determines whether it wishes to receive better returns by accepting a low risk exposure at a level selected by the school itself.