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Welcome!!!!!!
KITSAP COUNTY REGIONAL
COORDINATING COUNCIL
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N.E.W. Access, LLC
Economic Development
& Business Finance
Deal Structuring, Loan Packaging &
Economic Development Planning
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TODAY’S AGENDA
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WHAT IS A REVOLVING LOAN FUND?
SPECTRUM OF REVOLVING FUNDS
MATURE REVOLVING LOAN FUNDS
EXAMPLES- NCWBLF, TEDD, COOP FUND
RLF’s IMPROVE BANK’S PRODUCTION
PARTNERSHIP LENDING
‘DEAL SAMPLER’- a few discussed, more later
REVOLVING LOAN FUND & SMALL
BUSINESS DEVELOPMENT STRATEGIES 4
NOT TODAY’S AGENDA
• RLF FUNDING SOURCES- Short time, discussion @
later Date
• FLASH THE ‘FINANCE’ MENU/PARTNERS- Short
time, discussion @ later Date
• ‘DEAL KILLERS & The EQUITY MENU’- Short time,
discussion @ later Date
• ‘DEAL SAMPLER’- a few discussed, more later
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What is a Revolving
Loan Fund (RLF)?
A Community Based Financial
Institution (CDFI) that provides access
to capital (loans) to local businesses
that cannot attract private financing.
RLFs also provide ‘gap’ financing to
allow a bank to participate in a loan
they could not make otherwise.
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Spectrum of Revolving
Loan Funds
Revolving Loan Fund Menu
(See Handouts for More Info)
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Revolving Loan Fund Menu
• STATE MANAGED RLFs- Generally used for
larger projects ($500,000 to $10,000,000).
Recruiting, Retention, Expansion and Start-ups.
• LOCAL RLFs- Medium projects <$1,000,000.
Loans range from $7,500 to $250,000. Focus on
Retention, Expansion and Start-ups.
• MICRO LOAN FUNDS- Usually <$5,000.
Used primarily for start-ups in the U.S. No Startups Internationally.
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Washington State
RLF INDUSTRY PROFILE
Corporation for Enterprise Development,
Ford Foundation
Washington Lender’s Network
State Office of Trade & Economic Development
PARTNERED TO RESEARCH & DEVELOP A
WASHINGTON STATE RLF INDUSTRY
PROFILE
SEE HANDOUT FOR SUMMARY RESULTS
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WHAT DOES A MATURE
RLF LOOK LIKE?
Meets long term goals (ORGANIZATION &
FUNDER’S)
• Management/Board Continuity & Involvement
• Clarity & Specificity of Goal(s)- A Very Few
• Consistent Planning, Tracking & Reporting
• DIVERSIFIED FUNDING SOURCES- private &
Public
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WHAT DOES A SUCCESSFUL
RLF LOOK LIKE?
Profitable/Surplus Efficiency Oriented Operations
• Smooth Loan Approval, Closing & Collection
Process
• Successful Strategic/Partnership Lending
• Strong, Growing Market
• On Time, Accurate Reporting & Audited Financial
Statements to Board & Funders
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NORTH CENTRAL WASHINGTON
BUSINESS LOAN FUND
• In Business since 1995, a stand alone 501c3
• Approximately $3.0 Million Lending Capital
• Over $5.1 Million in Loans made
– All Funds have revolved at least once
• Total loss since inception- $40,000
• Average Monthly Delinquency Ratio 5-6%
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NORTH CENTRAL WASHINGTON
BUSINESS LOAN FUND
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Generally 25 to 30 loans outstanding AND
8-10 Loans in the Pipeline
Usually 30% to 50% Approved & Closed
High Approval Rate Due to Pre-Screening
by SBDC & Sometimes SCORE
• Without Pre-Screening Estimate Loan
Approval & Closing would be 10-12%
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NORTH CENTRAL WASHINGTON
BUSINESS LOAN FUND
LOAN PORTFOLIO
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20% Food Service including Restaurants
26% Value Added Ag Processing
30% Service Industry (ISP & Highland Stage)
24% Other/Miscellaneous
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NORTH CENTRAL WASHINGTON
BUSINESS LOAN FUND
• Average Loan Amount is $80,000
• Primary Loan Capital Funders:
– USDA Rural Development
– CDBG
• $8,000 Cost per Job
– Only required to have $20,000 per Job
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NORTH CENTRAL WASHINGTON
BUSINESS LOAN FUND
OPERATIONAL EFFICIENCY IS BASED
ON:
• Experienced Staff
• OUTSOURCING
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LOAN DOCUMENTATION (LASER-PRO)
ACCOUNTING
COLLECTIONS (day to day payments)
LEGAL
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NORTH CENTRAL WASHINGTON
BUSINESS LOAN FUND
ISSUES IDENTIFIED BY BOARD &
STAFF
• Need to further diversify funding sources
• Looking for Niche Markets:
– Green Businesses
– Value Added Ag Processing
– Micro Lending Targeted at Hispanic & Native
American Borrowers
• Understaffed !! Need one Lender & Office
Manager
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TRI COUNTY ECONOMIC
DEVELOPMENT DISTRICT
• In Business since 1985. Originally served
three counties
• CURRENTLY SERVICES 10 EASTERN
WASHINGTON COUNTIES
• $6.0 Million Loan Capital
• Quasi Government. Payroll & Accounting
done by Stevens County. Includes Benefit
Package
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TRI COUNTY ECONOMIC
DEVELOPMENT DISTRICT
• DIVERSIFIED FUNDING SOURCES:
– EDA (GRANT)
– CDBG Business Loan Capital (GRANT)
– CDBG Micro Lending Capital (GRANT)
– USDA Rural Development (LOAN)
• CONTRIBUTES SOME SURPLUS TO
ECONOMIC DEVELOPMENT DISTRICT
OPERATING BUDGET !!!!
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• SPOKANE??????
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Economic Development Finance
Improves Bank Loan Production
• Fills Gaps to make deals bankable
– Collateral Gaps
– Equity Gaps
– Liquidity Gaps
• Retains bank relationships with
existing customers by leveraging other
funds
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Building Strategic Partnerships
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Partnership Lending
• Commercial Banks
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Commercial Finance & Lease Companies
US Small Business Administration
Certified Development Companies
US Dept of Agriculture- RD & Forest Service
US Bureau of Indian Affairs/Tribal Credit
State Development Finance Tools
HUD, CDBG, CERB, PWTF, EDA
• Local Revolving & Micro Loan Funds
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A ‘Deal’ Sampler
Deal Structuring in
Action
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Chapter 11 Buyout
Dimensional Lumber to Specialty
Cedar Mill
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State Timber Revolving Fund$ 750,000
Bank Operating Line of Credit
$1,000,000
Local Revolving Fund
$ 325,000
Stockholder Subordinated Note
$ 320,000
Owner Equity- Stock
$ 80,000
TOTAL PROJECT
$2,475,000
40 Family Wage JOBS
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ROAD GRADING &
CRUSHING CONTRACTOR
• Bank LOC (Borrowing Base) $ 300,000
• CIT Reducing Revolver
$1,000,000
• Local Revolving Fund
$ 250,000
• TOTAL PROJECT
$1,750,000
30 Family Wage JOBS Retained, 10 Created
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Tribal Entrepreneur- Logging
Environmental & Large Logs
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Bank Leasing Co
Local Revolving Fund
Bank LOC/Linked Deposit
Commercial Finance Co
Business Cash
TOTAL PROJECT
$269,808
$150,000
$150,000
$125,785
$ 82,173
$777,766
40 Family Wage JOBS
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Very Rural Grocery Store
Local Revolving Fund
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Bank Direct (504)
SBA 504 Bonds
Local Revolving Fund
Trade Supplier Term Note
Owner Equity
TOTAL PROJECT
$ 443,000
$ 373,000
$ 150,000
$ 125,000
$ 114,000
$1,205,000
13 JOBS
Get the players together, Segregate Collateral
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Certified Organic Fruit Packing,
Storage & Marketing Warehouse
• State Loan Fund
• Revolving Loan Fund- LOC
• Owner Equity- Stock
WAREHOUSE FINANCING
• Bank - Orchard Term Loan
• Bank - Orchard LOC
ORCHARD FINANCING• TOTAL PROJECT
62 JOBS
$ 249,100
$ 250,000
$ 156,000
$ 655,100
$1,320,000
$ 780,000
$2,100,000
$2,755,100
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RLF & Small Business
Development Strategy
Economic Development
Job Creation & Retention
Help Small Business Access Capital
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Rural Enterprise & Small
Business Development
STRATEGIES
• The LOTTERY
• GARDENING
• BREAD & BUTTER
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The LOTTERY
• RECRUITING- The effort to attract
outside firms to locate in your community.
• HIGH FRONT END INVESTMENT.
– CASH, RESOURCES, TIME & ORGANIZATION
• LOW ODDS OF SUCCESS particularly in
small communities.
• HIGH RETURN if successful/big impact.
– FAMILY WAGE JOBS, ALOT OF JOBS, OFTEN
MANUFACTURING OR HIGH TECH/VALUE
ADDED PROJECTS
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GARDENING
• BUSINESS DEVELOPMENT/START-UP
The effort to assist local entrepreneurs to start a
business. Efforts range from technical assistance
and peer support groups to business incubators
and loans.
• Long Term Strategy- providing the seeds for
future expansion and job creation.
• High Risk- Without significant nourishing
(technical assistance, financing & resources) 6070% fail in 1st 3 years.
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BREAD & BUTTER
• RETENTION & EXPANSION OF
EXISTING BUSINESSES- The effort
to keep and expand the industry, business &
economic activities currently in the
community.
• 75-85% of JOBS created and retained
come from this strategy.
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QUESTIONS????
Dave Wingate, CEcD
Certified Economic Developer
3075 Marx Rd, Rice WA 99167
509 738-2324
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