Private Activity Bond (PAB)
The term used in the Code to describe any bond issued as part of a bond issue that meets both of the private business tests or meets the private loan financing test.
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Qualified Small Issue Bond
A type of Tax-Exempt Bond issued as a Private Activity Bond (PAB) permitted under Section 144(a) of the Code if the aggregate authorized face amount is $1,000,000 or less (or, in certain cases, $10,000,000 or less) and at least 95% of the Net Proceeds of the Bonds are to be used (i) for the acquisition, construction or improvement of land or property of a character subject to the allowance for depreciation in connection with a “manufacturing facility,” or (ii) to redeem part or all of a prior Bond Issue which was itself a Qualified Small Issue Bond. Other general Private Activity Bond rules also apply.
See Also
Conduit Financing
Financing in which the Issuer issues the bonds to finance a project to be used primarily by a third party.
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Private Business Use (PBU) and Tests
Any use of Bond proceeds in a trade or business carried on by a person other than a governmental unit. The private business tests are used in part to establish whether a bond is a private activity bond (PAB).