Here are some of the best WTF highlights!

Identifying sources of matching funds is a critical component of the Broadband Equity, Access and Deployment process. Over the past 12 months, the Fiber Broadband Association “Where’s The Funding?” series has been designed to equip applicants with the tools and information they need to satisfy BEAD’s matching contribution requirements under the signature National Telecommunications and Information Administration broadband funding program.

BEAD matching – January

Ready CEO Jase Wilson and Chief Operating Officer Mike Faloon gave an introduction to the BEAD financing requirements. The program requires applicants to match 25% of their project costs, either with their own capital or outside loans or investments. Crucially, those have to be secured before an application is submitted.

“It’s going to be the hardest part of your grant journey,” Wilson said.

BEAD matching – February

The BEAD program requires 25% matching funds, but applicants that secure more will have better chances of winning grants, said Evan Feinman, director of the BEAD program at NTIA.

Those matching funds can come from municipalities with remaining money from other federal programs like the American Rescue Plan Act and the Treasury Department’s Capital Projects Fund.

Another source of matching funds the NTIA will accept are in-kind donations, he said. That can include rights of way, pole access, and labor, among other things.

Sources of capital – March

David Hartin, president of the telecom investor ITC Holding Company, highlighted mezzanine debt and issuing convertible notes as potential ways of securing match funding for broadband grant applicants.

Mezzanine debt offers repayment plans tailored to the borrower’s revenue. Convertible notes are a type of bond that can function like both debt and equity, as they can be converted into stock in the issuing company or cash of equal value.

More sources of capital – April

Nonprofits have more flexibility when providing funds than banks or government offices, said Brian Vo, Chief Investment Officer at Connect Humanity, a nonprofit that finances digital equity projects. He has worked with providers to finance projects with revenue-based repayment plans, for example, in which loan payments are linked purely to how much money the network brings in after being constructed.

Impact-focused nonprofits like Connect Humanity can help smaller providers especially, but he noted that even nonprofits will want a partner to be familiar with their financial condition.

Navigating the previous Letter of Credit requirement – May

Until the NTIA issued a waiver for its 25% letter of credit requirement in November 2023, many in the broadband community were worried about this rule. Many of the individuals campaigning for a change to this requirement spoke about this in a special Ask Me Anything session on November 9, 2023. The updated guidance allows states to use performance bonds, which providers only pay out if the project fails, and milestone-based repayment plans to ensure the financial viability of a project.

In May, WTF guest Elizabeth Bowles, president of Aristotle ISP, flagged the restrictive nature of the original rules. A 25% letter of credit would tie up too much cash up front for smaller companies to compete, she said. 

Getting matching funds – June

Chris Perlitz, managing director at Municipal Capital Markets Group, has been contemplating using grant anticipation notes from local banks to help finance BEAD projects. That’s short-term financing issued to borrowers expecting to receive a government grant.

The funds can be placed in a trust account and used as collateral for letter of credit requirements, he said.

Municipal bonds – July

Municipal bonds are debt issued by a city or town. Investors in such bonds are exempt from federal taxes and from most state taxes. They provide a low capital cost and can help grant-funded projects get off the ground, Perlitz said in his second WTF appearance.

It will be important for providers to start building partnerships with municipalities early in the grant process, he said.

Matching for rural electric co-ops – August

Local governments can assist BEAD applicants by putting up other federal money as matching funds, said Darren Farnan, CEO Missouri-based electric co-op United Fiber. County officials helped his co-op secure other state broadband grants by signing on to United Fiber’s applications and providing ARPA money toward the matching requirement.

For co-ops specifically, the nonprofit model can allow networks in more densely populated areas to help subsidize the most remote places that for-profit companies won’t build to, he said.

Challenges of matching funds – September

Connect Humanity founder Jochai Ben-Avie discussed some of the challenges for rural providers looking to get matching funds. The high cost of serving rural areas is a significant barrier to getting that capital, he said, but small providers can work with electric co-ops to get pole access as an in-kind donation toward the 25% requirement.

The NTIA also left open the possibility of waiving the match down to zero in high-cost areas, which a number of states are attempting to take the agency up on in theory initial proposals.

Opportunities from securing matching grants – October

In October, Jack Lawrence, chief financial officer of Amperage Infrastructure Corporation, spoke to the issue of how matching funds unlocks major broadband grants. Prior to Amperage, Jack was vice president at Priority Technology Holdings and oversaw the Priority Technology Ventures portfolio. Prior to joining Priority, he was CFO and CAO of Finxera, Inc., which was acquired by Priority.

Tribal matching funds – November

Tribal Ready CFO Joe Valandra and American Indian law practitioner Jennifer Weddle discussed some of the specific barriers and opportunities Tribal communities face in getting funding for BEAD projects.

The BEAD matching requirement can be waived for Tribal projects, and Tribes need to be assertive about requesting those waivers from States, Weddle said.

Tribes can also use any ARPA funds they have yet to spend if matches are necessary.