Loan/Program Related Investment (PRI) REQUEST NARRATIVE

CDFI A

$300,000 Lending Capital Loan

 

Background

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CDFI A is requesting a $300,000 loan/PRI which will be used for lending capital for its Loan Fund (“LF”).   

 

CDFI A provides training, technical and financial resources and advocacy so rural communities can achieve their goals and visions. Founded more than 35 years ago, CDFI A provides a wide range of community development services for rural and Native American communities, and community-based organizations in 13 western states and other Pacific islands. CDFI A was certified as a CDFI in 1996 and through its LF, finances affordable housing, community facilities, environmental infrastructure and small businesses in rural communities. As a CDFI, CDFI A fills financing gaps and serves those traditionally neglected by conventional markets.  Headquartered in XX, California, CDFI A’s more than 160 employees serve rural communities from field offices located throughout its service region.

 

To-date, CDFI A has funded over 1,250 loans totaling $700 million and leveraged more than $2.4 billion for projects in rural communities. These loans have supported approximately 15,550 affordable housing units; 11,500,000 feet of community facility space; 120,000 individual water and wastewater connections; and created or retained 22,800 jobs.

 

Loan Terms

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• Amount: $300,000

• Interest: 2.5%

• Term/Structure: 5 years, with 5 year auto reset at 2.5%.  10-years interest only. Full repayment of principal upon maturity

• Collateral: unsecured with full recourse to CDFI A

• Funds will only be used to finance loans in rural XX Counties

 

Social Impact Measurement

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CDFI A will provide the following reporting:

• On a quarterly basis, CDFI A’s Loan Fund Investor Report that includes the Fund’s activity (loan production, portfolio performance, and loan amounts per type).

• On an annual basis, all CDFI A loans made in XX Counties.  

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Currently, CDFI A has 31 loans in the four counties for a total of $5.9 million.  Of those 31 loans, 26 were small business, 4 were community facilities and one was housing related.

 

DEI Focus

 

CDFI A has a long history of serving BIPOC rural communities in its footprint. Of its 1,250 loans totaling $700 million since inception, approximately 37% have been located in communities of color. Through its PPP loan program (described in further detail under the PPP Program section), CDFI A has provided 53% of its new $15.8 million PPP loans to BIPOC-owned small business owners.

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In the past year and half, CDFI A has increased its outreach to communities of color as the COVID pandemic disproportionally impacted BIPOC communities. This outreach has included:

• New loan products with lower interest rates discounted by new grant sources

• Additional technical assistance focused on helping borrowers access government COVID relief programs

• Adapted underwriting criteria so there is no requirement of surpluses nor a requirement to provide operating projections or cash flow projections. Instead, CDFI A is helping organizations produce these documents, where useful and desired, through specialized technical assistance

 

With this targeted outreach, CDFI A reports it has increased its lending to communities of color by 26%. As part of its Strategic Plan 2021-2023, CDFI A’s goal is to provide at 50% of all its credit facilities and technical assistance to communities of color.

 

Staff

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CDFI A has a seasoned management team with extensive expertise in community development lending and technical assistance serving rural communities.

 

Jane Doe, Chief Executive Officer

Joining CDFI A in 2019, Jane brought with her 30+ years of community development and leadership experience in rural communities. Her career began in rural Colorado as founding executive director of a nonprofit, building a single purpose organization into a diverse community development entity that became one of Rural LISC’s partners. Subsequently, as LISC’s vice president, she led Rural LISC’s national community, housing and economic revitalization work, partnering with rural community-based organizations, serving 2,200+ counties across 45 states. Jane is a member of the U.S. Bank Community Advisory Committee and serves as a board member for National Rural Housing Coalition; California Coalition for Rural Housing and Rural Community Assistance Partnership.

 

John Doe, CFO

John joined CDFI A in 1998 and has spent 29 years in various finance roles. He has served on the CDFI A Senior Leadership Team for 20 of those years. As controller, he managed CDFI A’s finance, grants and contracts department, presiding over a $16 million operating budget. In 2015, he was promoted to CFO. He is responsible for the organization’s financial operations including oversight of finance, grants, contracts, and Information Technology. He has more than 34 years of experience in financial and organizational management, nonprofit accounting, financial reporting, and governmental regulations.

 

Mary Doe, Director, Loan Fund

Mary joined CDFI A in 2000 and became Loan Fund director in 2017. She oversees loan originations; manages CDFI A’s lending program, activities and staff; develops new lending and other financing products and programs; and serves as the chief executive officer’s liaison to the board’s Loan Committee.  In her role, she coordinates and communicates with individual clients or networks of clients and funding sources and participates in strategic planning, program development and marketing of CDFI A programs, products and services. Prior to joining CDFI A, Mary was the closing manager for a local bank and the operations manager for a large mortgage company.

 

Lending Programs/Product Type

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CDFI A operates its lending programs in four main sectors: A) Affordable Housing; B) Community Facilities: C) Environmental Infrastructure; and D) Small Business.

 

1. Affordable Housing Loan Program: Provides short-term and long-term financing for the construction and rehabilitation of single- and multifamily housing for low-income families. Borrowers include nonprofit developers, local government agencies and tribal governments.

2. Community Facility Loan Program: Provides short-term loans for early property acquisition and predevelopment, interim construction costs and long-term permanent financing. Applicable facilities include public and nonprofit office buildings, treatment centers, emergency and transitional housing, assisted living, human services, pub­lic safety, child care, education and cultural facilities. Borrowers include nonprofit developers, local government agencies and tribal governments.

3. Environmental Infrastructure Loan Program: Provides short-term and long-term financing to construct, improve or expand the supply of safe drinking water and waste disposal systems. Borrowers include nonprofit organizations, public agencies and tribal governments. Eligible projects include water, wastewater, solid waste and storm water facilities that primarily serve lower-income rural communities.

4. Small Business Loan Program- Provides loans for a variety of business financing needs including working capital, lines of credit and long-term loans for real estate and equipment acquisition. Most small businesses that generate employment can be considered for loans.

 

The following is CDFI A’s portfolio composition by type as of FYE20: