LOAN OR GRANT REVIEW PROCEDURES
Small Business Loan and Grant Implementation Tool #5
Description: As part of the Disaster Recovery Small Business Loan Program Design and
Implementation Toolkit, the Loan and Grant Review Procedures provide a basic framework for a
CDBG-DR grantee to analyze and subsequently approve or reject any small business loan or grant
that the program/loan officer does not have the authority to approve. The Procedures outline key
areas of focus and critical questions to ensure each loan or grant meets the program’s policies and
requirements.
Modification of Source Documents Provided by: State of Louisiana Disaster Recovery Unit, Office
of Community Development.
Caveat: This is an informational tool and/or template that should be adapted to each grantee’s
specific program design.
For More Information
This resource is part of the Disaster Recovery Small Business Loan and
Grant Program Design Toolkit. View all of the Disaster Recovery Toolkits
here: https://www.onecpd.info/resource/2853/cdbg-dr-toolkits.
For additional information about disaster recovery programs, please see
your HUD representative.
This is not an official HUD document and has not been reviewed by HUD counsel. It is provided for
informational purposes only. Any binding agreement should be reviewed by attorneys for the parties
to the agreement and must conform to state and local laws.
U.S. Department of Housing and Urban Development
Community Planning and Development, Disaster Recovery and Special Issues Division
LOAN OR GRANT REVIEW PROCEDURES
Objective
The DR Grantee established the Loan Review Procedures for the Small Business Loan and Grant Program
to review all aspects of program applications, including but not limited to: project benefits, project
costs, private financing sources, CDBG National Objective, CDBG Eligible Activity, Comprehensive
Underwriting (if applicable), Loan structure(s) (if applicable), and all additional considerations.
The goal of the review is to make one of three recommendations:
1. Deny the application,
2. Approve the application, or
3. Table/rework the application.
Approval Process & Areas of Focus
Grantee staff will have, at a minimum, reviewed each project application and associated financial
information. The project manager will give a brief presentation on each project outlining project
benefits, project drawbacks, and fulfillment of all eligibility criteria. The lead underwriter (where
applicable), if different than the project manager, will give a brief presentation of the
project/principal(s) relevant financial information. After the project and underwriting presentation
(where applicable), grantee staff will discuss the application, until a majority consensus is reached,
focusing specifically on the following areas/questions:
CDBG Components




What National Objective does the project meet?
What eligible activities are associated with the project?
Is there a public benefit component to the project?
Does the project meet CDBG Underwriting standards (as applicable)?
Project Specific Components:
 What specific areas/communities does the project benefit & what characteristics of these areas
make it an attractive project?
 How many jobs will be created/retained per $ CDBG contributed to the project? How many and
what percentage of those jobs will be LMI?
 Does the project have a sound business plan?
 What is the total project cost?
 What % of the project will be funded by CDBG Dollars? (Extra consideration if <XX%)
 How much equity and in what form will be contributed to the project?
 Are there other sources of private financing? Are they committed to the project?
 What is the timeline of the project and is it feasible?
 Does the underwriting show the project will have adequate cash flow to service all debt (if
applicable)?
 Is there cash available for working capital?
 Are pro formas & other projections reasonable and comparable to industry standards?
 Does the project meet all eligibility criteria? Have we already asked specific questions about
eligibility criteria in other questions? If so, remove this one
 Does the project provide an essential service to the community? (extra consideration)
Small Business Loan and Grant Tool: Loan Review Procedures
1
 Does the project have demonstrated community support? (extra consideration)
 Does the project benefit a community that was especially hard or slow to recover? (extra
consideration)
Principal/Company specific components:




Have the principal(s)/company submitted all relevant personal financial information?
Is the credit history of the principal(s)/company acceptable?
Do the principal(s)/company have adequate financial resources to guarantee the project?
Do the principal(s)/company have experience and/or capabilities to complete this type of
project?
At this point grantee staff may elect to deny the application or table the application and schedule a site
visit/meeting with the applicant.
If the consensus is to recommend approval of the project, the discussion will continue in the following
areas:
Loan or Grant Structure:




Is the requested amount reasonable? Should we approve at that amount?
What loan terms/structure was requested by the applicant (if applicable)?
Is this the best structure (if applicable)?
If not, what structure is recommended (if applicable)?
Compliance Considerations:




Has the applicant obtained an adequate environmental review?
If not, what is the estimated time to completion of the environmental review?
Are there any compliance issues specific to this project?
What is the timeline to closing?
NEXT STEPS
The grantee staff will then make one of the following recommendations: deny the application, approve
the application, or table/rework the application. All recommendations will be forwarded to the
Executive Director for final decision. If an application is denied, tabled, or reworked, the program
participant(s) must be notified within {Insert number} days with the detailed evaluation from the
grantee staff.
Small Business Loan and Grant Tool: Loan Review Procedures
2