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ECONOMIC DEVELOPMENT LENDINGSUPERIOR CALIFORNIA ECONOMIC DEVELOPMENT
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WE HELP ENTREPRENEURS . . .
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CREATE JOBS IN OUR COMMUNITY
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WHAT TYPE OF LOANS DO WE MAKE?Revolving Loan Funds SBA 504
Purpose Job Creation / Job Retention Job Creation / Job Retention Community Development & Public Policy Goals
Use of Proceeds Gap Financing, Working Capital, Land & Building Acquisition, Machinery & Equipment Purchase
Purchase & Refinance Commercial Real Estate &Long-term Fixed Equipment
Interest Rates & Term 7%-10% Fixed, term varies Fixed for 20 years (changesmonthly)
Prepayment Penalty No Yes
Collateral Deeds of Trust, UCC & Personal Guarantees
2nd DT, UCC & Personal Guarantees
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WHAT TYPE OF LOANS DO WE MAKE?Revolving Loan Funds SBA 504
Project Size Up to $250,000 SBA portion up to $5 million
Average Loan Size $80,500 $632,350
Structure Borrower Min 10%Gap or Sole Source
50%/40%/10%Always with a 1st DT Lender
Territory Shasta, Siskiyou, Trinity, Modoc, Butte, Del Norte, Mendocino, Tehama & Humboldt Counties
California Statewide –Redding, Chico, Bay Area & Southern California
Target Market Existing businesses, start-up businesses, expanding businesses
Existing businesses that have been leasing and have been in business for 5+ years –Projection based deals okay
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RLF FUNDING SOURCES
• Capitalized Loan Funds
• Economic Development Administration (EDA)
• U.S. Forest Service – Old Growth Diversification (OGD)
• U.S. Department of Agriculture – Rural Development (RDA)
• Borrowed Loan Funds
• U.S. Department of Agriculture – Intermediary Relending Program (IRP)
• Rabobank
• SEED Fund
• Scott Valley Bank, Wells Fargo, Tri Counties,
Bank of Commerce Redding, Banner Bank
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WHERE ARE WE?
• Rural Northern California
• Population of 245,100
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SCED
Economic Development
Lending
SBA 504Revolving
Loan FundsSEED Fund
Economic Development
Planning
CEDS JPASpecial
Projects
SCED OVERVIEW
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SCED STAFF
• Executive Director
• CFO – Part-time
• Special Projects Manager – Part-time
• Loan Program Manager
• Loan Program Assistant
• Executive Secretary
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Executive Director
Executive Secretary
Loan Program Manager
Loan Program Assistant
Special Projects Manager
CFO
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SCED STAFF – LOAN TEAMWORK
• Teamwork
• At our size Loan Program Manager can’t do it all
• Took time to develop
• Makes the job more enjoyable
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Executive Director
Executive Secretary
Loan Program Manager
Loan Program Assistant
Special Projects Manager
CFO
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MARKETING – WHAT I’VE TRIED
• Lender Partner Referrals
• SCORE/SBDC
• Chamber of Commerce
• Website
• Social Media
• Community Presentations
• Newsletter
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MARKETING – WHAT WORKS BEST FOR US
• Lender Partner Referrals
• SCORE/SBDC
• Chamber of Commerce
• Website
• Social Media
• Community Presentations
• Newsletter
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HOW TO GET LENDER PARTNER REFERRALS
• Provide value to the lender
• Articulate your ideal project
• Sell solutions not specific RLF funds
• Marketing is a key to RLF success
• Proven track record of success of helps
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ECONOMIC DEVELOPMENT UNDERWRITING
• Professionalism and training
• Economic Development Finance Professional (EDFP) - RLF
• National Association of Development Companies (NADCO) - SBA 504
• CDFA – EDA webinars & in person training
• Loan work plans aren’t overly specific
• Learn by doing
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ECONOMIC DEVELOPMENT UNDERWRITING
• Application checklist
• Standardized loan memo
• Rural area – face-to-face meetings speak volumes
• Avoid emotional attachments
• Get the money out – we want to make loans
• Loan committee needs to be on the same page – not regular bank deals
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LOAN SERVICING
• LaserPro
• Checklists upon checklists
• Developed best practices
• Loan servicing software
• Active collections
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THINGS I WORRY ABOUT
• Consolidation of community banks
• Finding additional loan funds
• Rural economies
• The next downturn
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SCED’S SECRET SAUCE
• Professional, experienced staff
• Marketing
• SCED pays staff market rates
• Lender referrals
• Charge enough to cover loan costs
• CFO – Allows me focus on what makes us money
• Loan committee cares
• We know where we fit in the market
• Invested in loan software
• We make loans
• Provide value to our lending partners
• I love what I do
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WE HELP ENTREPRENEURS . . .
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CREATE JOBS IN OUR COMMUNITY
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1
Maximizing Revolving Loan Fund ImpactFebruary 20, 2018
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SC COG’s – the Landscape
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Our Mission and How We Work
Economic Development
•Workforce Investment
•Business Lending
•Energy Initiatives
•Economic Development Grants
Government and
Community Planning
•Planning/Zoning Staffing
•Geographic Information Systems
•Rural Transportation Planning/Public Transit Programs
•Regional Initiatives
•Block Grant Management
•Neighborhood Redevelopment, Housing Rehabilitation, and Demolition
•Brownfield Assessment and Remediation
3
Local
Government
Efficiency and
Effectiveness
Collaboration
and
communication
for regional
prosperity
The COG?
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Economic Development Loan Programs =
Complimentary Business Lending
Programs
• SBA 504
• SBA 7A/Community Advantage
• EDA – Revolving Loan Fund
• USDA – Intermediary Relending Program
• Brownfield RLF
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• WHAT’S IN IT FOR …THE BANK? --- primary contact
• WHAT’S IN IT FOR THE CUSTOMER?
• HOW CAN THE CDC ASSIST?
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1.What bank should I use?2.How can I minimize $$$ in project?3.Should I buy my building now?4.What’s a fair interest rate?5.Terms and Conditions for my loan?6.How to maximize my cash flow?
…For The Customer
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How to “Sell the Banker”Influencers/Key
Relationships
• Banks – Community vs. Regional/National
• Other Groups – ???
• Direct to Borrower – Business
• Using Technology – Newsletters, Email Blasts, Successes
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Key Relationships
• State Banking
Organizations
• Board and Staff
• Economic Development
• CPAs
• Chamber of Commerce
• Small Business
Development Centers
• Real Estate Brokers
• Appraisal Services
• Civic Clubs such as
Rotary Club
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“End of the Day”
1. Professional Staffing
2. Consistency over Time
3. Bank Partnerships
4. Identify Influencers
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Bond Buying Affects Interest Rates
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Tips from Invest
Atlanta’s Phoenix Fund
Loan Program
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HISTORY!
1995
EDA Funds: $793,998.
City of Atlanta Funds: $278,224.
Total Project Funding: $25,308,970.
New Funding: -O-
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PARTNERSHIPS
City of Atlanta
Mayor’s Office
Atlanta City Council
Credit Review Committee (Commercial Banks)
Community Workshops (inside and outside the office)
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Create Other Internal Loan Products
Business Improvement loan Fund
Opportunity Loan Fund
Empowerment Zone Loan Fund
Atlanta Catalyst Loan Fund
Atlanta Street Vendor Loan Fund
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Financing Franchises & Creating
Franchisors
The Franchises
The Would be Franchisor
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What Success Looks Like At The End Of
The Day!!
JOBS
Successful Enterprises
Revenue Increases
Revitalized Communities
Tax Base Growth
Expanded Vision
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Harry AllenCoordinator, Research &
Advisory Services614-705-1315
This webcast is designed to provide accurate and authoritative information in regard to the subject matter covered. It is available with the understanding that CDFA and the panelists are not engaged in rendering legal, accounting, or other professional services. If legal advice or other expert assistance is required, the services of a competent professional should be sought.