Private Activity Bond Law and Legal Definition

Private activity bond is a bond issue of which more than ten percent of the proceeds is used for any private business use, and more than ten percent of the payment of the principal or interest is either secured by an interest in property to be used for private business use, or is derived from payments for property used for a private business use. A bond is also considered a private activity bond if the amount of the proceeds used to make or finance loans to persons other than governmental units exceeds five percent of the proceeds or $5 million, whichever is less.