1 / 64

Nebraska Revolving Loan Funds (RLF) Join the Talk January 17, 2013

Nebraska Revolving Loan Funds (RLF) Join the Talk January 17, 2013. Revolving Loan Fund Programs IRP = Intermediary Relending Program RBEG = Rural Business Enterprise Grant REDLG = Rural Economic Development Loan & Grant RMAP = Rural Microentrepreneur Assistance Program.

mostyn
Download Presentation

Nebraska Revolving Loan Funds (RLF) Join the Talk January 17, 2013

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. NebraskaRevolving Loan Funds (RLF)Join the TalkJanuary 17, 2013

  2. Revolving Loan Fund ProgramsIRP = Intermediary Relending ProgramRBEG = Rural Business Enterprise GrantREDLG = Rural Economic Development Loan & GrantRMAP = Rural Microentrepreneur Assistance Program

  3. What is a RLF -Revolving Loan Fund ? • A Revolving Loan Fund (RLF) is a source of money from which loans are made for multiple small business development projects. • The fund gets its name from the revolving aspect of loan repayment, where the central fund is replenished as individual projects pay back their loans, creating the opportunity to issue other loans to new projects. • Revolving loan funds share many characteristics with microcredit and micro-enterprise namely providing loans to persons or groups of people that do not qualify for traditional financial services or are otherwise viewed as being high risk. • Organizations that offer revolving loan fund lending aim to help new project or business owners in become financially independent and eventually to become eligible for loans from commercial banks. • Revolving loan funds are also excellent sources of gap financing; between the borrower’s equity injection and the funds available from another traditional lending source.

  4. USDA RURAL DEVELOPMENT Revolving Loan Funds Rural Business Enterprise Grant (RBEG); Intermediary Relending Program (IRP); Rural Microentrepreneur Assistance Program (RMAP) are funded in all 93 countiesRural Economic Development Grant (REDG) Boyd Keya Paha Sioux Dawes Sheridan Cherry Holt Dakota Rock Dixon Brown Knox Cedar Wayne Thurston Pierce Box Butte Antelope Loup Wheeler Thomas Garfield Cuming Burt Grant Hooker Blaine Madison Stanton Scotts Bluff Garden Platte Boone Colfax Dodge Washington Banner Morrill Logan Arthur McPherson Valley Greeley Nance Saunders Douglas Butler Sarpy Keith Sherman Howard Polk Kimball Cheyenne Custer Merrick Deuel Seward Cass Hamilton Perkins Buffalo Lancaster Lincoln Dawson Hall York Otoe Hayes Frontier Adams Chase Phelps Clay Fillmore Saline Kearney Nemaha Gosper Johnson T Thayer Franklin Richardson Hitchcock Furnas Harlan Gage Dundy Webster Nuckolls Pawnee Red Willow Jefferson

  5. Intermediary vs. Ultimate Recipient • Intermediary is the entity that receives the loan or grant from Rural Development • Ultimate Recipient is the actual business that receives the financial assistance from the Intermediary

  6. IRP-Intermediary Relending Program • Loan from RD to Intermediary • 1% for 30 years – annual payments • Interest only payments first 3 years • Maximum loan amount $400,000 • Applications may be submitted at any time

  7. IRP – Intermediary Relending Program • 455 Intermediaries Nationwide – • $300MM available to lend Nebraska Historical portfolio includes; • 8 Intermediaries – since 1990 • 10 IRP loans totaling $6,501,000 • $11 plus million re-loaned through Intermediaries • 150 ultimate recipient businesses assisted • $73,000 average loan • 1,261 jobs created or saved • $8,700 per job

  8. IRP – Intermediary Relending Program Nebraska current portfolio includes; • 5 Intermediaries • 7 IRP loans • $4,330,921 loaned • 66 ultimate recipient businesses assisted • 363 jobs created or saved • $1,565,554 available for relending • 2 IRP loans closings pending ($373,000)

  9. RBEG-Rural Business Enterprise Grant • Grant from RD to Intermediary • Must assist a small & emerging private business – number of employees & yearly income limits • Create & save jobs • More points for requests under $100,000 • Annual application cycle – due 4/1/2013

  10. RBEG-Rural Business Enterprise Grant Nebraska Historical portfolio includes; • 17 Intermediaries – since 1989 • 24 RBEG loans totaling $2,172,900 • $2.4 plus million re-loaned • Over 150 ultimate recipients • Over 400 jobs created or saved

  11. REDLG-Rural Economic Development Loan and Grant • Loan program provides zero-interest loans to eligible electric and telephone borrowers to promote economic development and job creation projects • $1 million maximum loan amount • Grant program provides opportunities to establish revolving loan funds for community facilities and infrastructure, business and economic development • $300,000 maximum grant amount • Eligible municipalities and Public Power Districts in Nebraska are eligible for grant funds only • Applications may be submitted at any time, considered for funding on a monthly cycle

  12. REDL or “Pass Through” Loan Intermediary borrows from UDSA RD at 0% interest Intermediary loans to recipient at 0% interest $740,000 max Intermediary

  13. RED Loan Terms • Maximum $1 million or up to 80% of project, whichever is less (less than 80% is better) • 0% Interest Loan • Up to 10 Year Term • Up to 2 year payment deferment if requested; loan repayment to RD will match loan repayment of ultimate recipient to Intermediary • Monthly payments ** Intermediary Guarantees Loan repayment to RD ** ** Adequate Security a Must **

  14. REDL-Rural Economic Development Loan Program Nebraska Historical loan portfolio includes; • 17 loans totaling $7,259,100 • Each loan funds one economic development project • Loan from Rural Development to Intermediary is loaned to Ultimate Recipient, repaid to Intermediary is repaid to Rural Development • 388 jobs created or saved

  15. RED Grant for Revolving Loan Fund USDA RD grants to Intermediary $300,000 maximum Intermediary administered RLF of $360,000 Intermediary matches 20% with own funds $60,000 max Intermediary

  16. RED Grant for RLF -- “Initial Loan” Terms Application is submitted on behalf of one or more projects • Maximum $300,000 from Rural Development • Initial Loan to Non-Profit Entity or Public Body • Application can be up to 80% of project costs • Project receives a 0% Interest Loan • Up to a 10 Year Term • Up to 2 year payment deferment if requested • Monthly payments

  17. REDG-Rural Economic Development Grant Program Nebraska Historical grant portfolio includes; • 16 grants totaling $4,050,119 • Grant from Rural Development to Intermediary establishes a revolving loan fund (RLF) • Loan funds from RLF repaid by Ultimate Recipient are re-loaned to other Ultimate Recipient • 27 Ultimate Recipient projects funded • 794 jobs created or saved

  18. RMAP-Rural Microentrepreneur Assistance Program Nebraska portfolio includes; • 3 Intermediaries – since 2010 • 3 RMAP loans totaling $1,200,000 • $1,123,300 loaned to • 34 ultimate recipient businesses • 37 jobs created or saved • $183,794 available for relending • This program not currently funded in the Farm Bill

  19. FY 2013 • IRP $32 million available; national competition • RBEG $1 million available; anticipated Nebraska state allocation $200,000-$300,000 additional funds held for national competition • REDL $6 million available; national competition • REDG $1 million available; national competition

  20. Applicable Regulations • RD Instruction 4274-D – IRP • RD Instruction 1942-G – RBEG • RD Instruction 4280-A – REDLG • RD Instruction 4280-D – RMAP

  21. Rural Development Business Programs Nebraska Offices July 1, 2012 Scottsbluff Field Office Marla Marx, BP Specialist - 1132 Shelly Latham, BP Technician - 1131 818 Ferdinand Plaza, Suite B Scottsbluff, NE 69361-4401 Phone : (308)632-2195 Fax : (308)635-2787 Norfolk Field Office Bill Sheppard, BP Specialist - 1004 1909 Vicki Lane, Suite 103 Norfolk, NE 68701 Phone : (402)371-5350 Fax : (402)371-8930 Boyd Keya Paha Dawes Knox Cedar Sheridan Brown Dixon Sioux Cherry Rock Holt Dakota Pierce Box Butte Antelope Wayne Thurston Scotts Bluff Thomas Blaine Wheeler Stan- ton Cuming Loup Madison Burt Hooker Garfield Grant Morrill Boone Garden Banner McPherson Platte Colfax Dodge Wash- ington Arthur Logan Valley Greeley Custer Nance Douglas Butler Saunders Kimball Cheyenne Keith Sherman Howard Merrick Polk Sarpy Deuel Lincoln Lancaster Buffalo Cass Perkins Dawson Hall York Seward Hamilton Otoe Saline Chase Frontier Clay Fillmore Hayes Gosper Phelps Kearney Adams Nemaha Johnson Red Willow Gage Dundy Hitchcock Furnas Franklin Webster Nuckolls Thayer Jefferson Richardson Harlan Pawnee State Office – Lincoln Robin Templeton, Business Programs Director Deb Yocum, Business Programs Specialist Joan Scheel, Business Programs Specialist Deborah Drbal, Business Programs Specialist Room 308, Federal Building, 100 Centennial Mall N. Lincoln, NE 68508 Phone : (402)437-5568 Fax : (402)437-5408 Kearney Field Office Kelley Messenger, BP Specialist - 1120 Diane Pavel, BP Technician - 1126 4009 6th Ave, Suite 1 Kearney, NE 68845-2386 Phone : (308)237-3118 Fax : (308)236-6290

  22. Rural Economic Development Loan & Grant Program ED Agencies & Utilities Jen Wolf, Executive Director Dawson Area Development jen@dawsonareadevelopment.com

  23. REDLG Loans & Grants Rural Economic Development Loan and Grant (REDLG) Program • REDLG loans and grants are available to Rural Utilities Service (RUS)** electric and telephone borrowers to assist in developing rural areas • Grants are awarded to the utility based on an initial community seed project. The utility loans the grant money to a non-profit at zero percent with a maximum term of 10 years. When this loan is paid back, the repaid funds are placed in a revolving loan fund (RLF) to be loaned out to other community economic development projects. • Projects that are given priority : • Business incubators • Industrial/Business Park development • Facilities and equipment for education • Facilities and equipment for medical care • Subsequent loans made from repayment of the initial loans may be used for any rural economic development purpose, including loans to private entities. (in accordance with a prior agreement between the utility and USDA) **Check with USDA to see if your municipality can qualify as a RUS borrower. The rules have changed, and your town may now be eligible!

  24. Received 5 Rural Economic Development Grants in 2012 • ($1.22 Million between three cities) • Created 3 Revolving Loan Funds to Aid in Recruitment of New Business totaling ($1.47 Million) • Leveraged State Grants to assist in speculative building/site development • Created 25 jobs thus far, currently hiring for 50 more, future is expected to add 150 more. • Assisted with two projects to improve rural health care

  25. USDA Grant Process for Revolving Loan Fund

  26. Dawson Area Development & Utilities Developing the Partnership • ED Director went to each eligible entity and discussed program and determined buy-in. • Utilities requested to become RUS borrowers. • Building & Site Development Already prioritized as a Need in Communities through Strategic Planning so 3 initial projects were identified. • City Managers & Mayors part of the ED Boards so they worked to together on applications. • DAD & Cities Put Together a Business Plan for each project to ensure success.

  27. For the ED Agency • REDG Injects 0% Loan Funds into a Project • Creates a Revolving Loan Fund to Aid in Recruitment of Future New Business • Can Be used as Matching Funds to Leverage other resources

  28. For the Municipality/Utility • An initial grant to the municipality • Demonstrates “Commitment to Community” • Can Use Existing Revolving Loan Funds (LB840) to leverage more loan dollars • (Example $5 of Redg for every $1 of local) • Can Contract out the administration of the Loan Fund.

  29. How Were Projects Chosen? In Dawson County all three cities had gone through the NE Economic Development Certified Community Program which requires: 1. Designation or establishment of a local economic development organization and 2. Completion of a comprehensive community assessment and community profile and development of a strategic plan to address deficiencies 3. Identification of, at a minimum, one available industrial / commercial site OR one available building . Building or site must be consistent with targeted industry needs and community must demonstrate how research has been done regarding the industry(s) 4. Either the identified site or building must have infrastructure capacity or plan with budget and timelines showing how needs could be met 5. Local financing and incentive assistance

  30. Dawson County’s Projects Purchase of Existing Manufacturing Facility to be Marketed as a Spec Building Other funds in project: Local LB840, NE Site Building Development Fund City of Lexington loaned funds to Dawson Area Development to purchase building

  31. Dawson County’s Projects Extension of Water & Sewer to Rail Served Site in Gothenburg Other funds in project: Local LB840, NE Site Building Development Fund & Tax Increment Financing City of Gothenburg loaned to Gothenburg Improvement Company funds for construction

  32. Dawson County’s Projects Development of a Training Center and Incubator Office Space Other funds in project: Local LB840, CDBG Revolving Loan Funds City of Cozad loaned to Cozad Development funds for construction

  33. Dawson County’s Projects Purchase of Digital Ultrasound/Doppler Machine & Upgrades to IT infrastructure Other funds in project: Hospital & Hospital Foundation City of Cozad loaned to Cozad Health Systems funds to purchase equipment. (Hospital Foundation Donated City’s Match to the Revolving loan Fund)

  34. Dawson County’s Projects Upgrade to Lexington Regional Medical Systems Server Other funds in project: Local LB840, Hospital City of Lexington loaned to Lexington Regional Medical System funds to upgrade.

  35. REDLG priorities • Business Incubators, Development of Industrial Building or parks, Infrastructure extensions to industrial/business parks • Provide Technical Assistance to rural businesses or educate/provide medical care to rural residents • Enhance rural development by providing advanced telecomm services/computer networks for medical, educational and/or job training.

  36. Outcomes • Stimulates economic growth in your region • Employment retention/creation • Improves Rural Infrastructure • Gives Municipalities a Seat at the Economic Development Table • Access to Capital for financing of projects • Permanent Incentive for Recruitment of Future Projects

  37. Thank You Questions??? Jen Wolf, Executive Director Dawson Area Development jen@dawsonareadevelopment.com

  38. USDA-RD Revolving Loan Funds Craig Eberle 2631 “O” Street, Lincoln, NE 68510 Office: 402-475-2560 (Tuesday & Thursday) Office: 402-736-4417 (Monday, Wednesday & Friday) E-Mail: ceberle@sendd.org Website: www.sendd.org

  39. How to Leverage Funds With Other Lenders: • Primary Partnerships are with a Regulated Lender • Typical Loan Distribution Percentage • 50%/40%/10% or 50%/30%/20% • Negotiate Terms • Collateral, Other Loan Terms & Conditions

  40. How to Leverage Funds With Other Lenders Partnerships with Other Federal, State, Regional and Local Fund Programs. • Other State/Regional Loan Programs: • Rural Enterprise Assistance Project (REAP) • Nebraska Enterprise Fund (NEF) • Community Development Resources (CDR) • SBA 504 Loan Program • Local/County Revolving Loan Funds • City LB840 Local Option Sales Tax Programs • CDBG Program Income Revolving Loan Funds • Loan Guaranty Programs • USDA-RD Business & Industry (B&I) Guaranteed Loan Program • SBA 7(a) Guaranty Loan Program

  41. SENDD Business Loans

  42. Lending Partnership Examples • Rural Enterprise Assistance Project • Computer Solutions/Consulting Business – Ashland • Local and Regional CDBG RLFs • Diesel Repair Business – Fairmont • Local Community/Regional Loan Programs • Photography Studio – Wahoo • SBA 7 (A) Guaranty Loan Program • Funeral Home – Falls City • Tax Increment Financing (TIF) • Fur Harvesting Business – Wahoo • USDA-RD B&I Guaranteed Loan Program • Custom Molding & Flooring Business – Friend • Local LB840 Local Option Sales Tax Program • Welding and Manufacturing Business – Geneva

  43. Geneva Welding & Supply

  44. Ark Financial Services

  45. Need for Gap Financing: • Small Businesses Need “Gap” Financing • Cash Flow • Credit Worthiness • Equity • Collateral

  46. Determining How to Fill the “Gap” • Cash Equity • How much from the business is available • How much is reasonable • Availability of Other Assets • Business • Personal • Other sources

  47. Packaging Funding Proposals • Identify Adequate Resources • Qualified staff • Adequate time/funding • Identify Local and Regional Programs • Who is available locally/regionally to package proposals

  48. Packaging a Funding Proposals Communication is Key!

  49. Packaging a Funding Proposals • Collaboration with all parties (communication is key) • Know the programs you are working with • Identify available funding sources/amounts/limits • Develop solid business plans/financial proposals that can be utilized by multiple providers • Utilize documents that tie everything together: • Source and Use of Funds • Memorandum of Understanding/Lienholder Memo • Inter-creditor Agreement

  50. Questions

More Related