After struggling to find an investor, the Paterson school district secured a $12 million loan using textbooks as collateral on Thursday afternoon. Without the loan, which was anticipated in the current budget, the district would have faced a severe cash crunch as the 2018-19 school year comes to a close.
TD Equipment Finance Inc. is providing the loan which is being guaranteed by the Passaic County Improvement Authority at a 3.74-percent interest rate. The district will have to pay the loan over a five-year period.
“This is great news for the district because we can ensure that payments to vendors will be met through for the 2018-2019 fiscal year,” said superintendent Eileen Shafer.
Shafer thanked the New Jersey Local Finance Board for approving the loan.
“I am very pleased and grateful that this funding was approved by the state Local Finance Board today,” said school board president Oshin Castillo in a statement. “It is my hope that Paterson Public Schools will get the help that it needs to maintain fiscal solvency and to provide a thorough and efficient education for our students.”
The school board agreed to borrow the funds last year after the superintendent said without the loan the district would have to cut 120 staff members.
“It is good to know that the district will be able to pay its bills for the remainder of the budgetary year,” added school board vice president Nakima Redmon.