What is the difference between tax-exempt bonds and a loan from my local bank?
In general, tax-exempt bonds have a lower interest rate and a longer term than a loan from a bank. Depending on conditions in the credit markets, tax-exempt debt can have an interest rate that is substantially lower than a taxable bank loan. Also, tax-exempt bonds usually have a longer amortization period than a taxable loan. The longer amortization period and lower interest rate substantially decrease the debt service paid on an annual basis.
