The coming revolution in USDA Revolving Loan Funds

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The coming revolution in USDA Revolving Loan
Funds

• Jeff Deiss, Business Cooperative Program
  Director
• jeff.deiss_at_or.usda.gov

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Starting point . . .

• 13 colonies, 13 intermediaries

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IRP program

• 13 intermediaries in Oregon
• 40,073,865 total IRP loans
• 45 IRP loans
• All counties in Oregon covered
• Oregons IRP program ranks 1 in US

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Oregon RLF today

• There are a handful of RBEG-RLFs and one
  REDLG-RLF.
• 93 of Oregons USDA-RLF are IRP-funded
• In all, 43 million from 16 RLF operators.

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Intermediary Relending Program CaseloadAs of
September 30, 2005
NH 6
?
ME 12
VT 8
WA 7
ND 6
MA 2
MT 13
MN 28
OR 14
NY 11
WI 7
ID 6
SD 16
MI 9
RI
WY 2
CT
PA 17
IA 22
NJ 2
OH 8
NE 6
NV 1
IN 1
DE 1
WV 9
IL 9
IL 7
MD 10
UT 5
CO 3
VA 3
CA 19
KS 4
KY 17
MO 7
NC 16
TN 14
SC 8
OK 13
NM 3
AZ 4
AR 9
GA 9
MS 8
AL 7
AK 2
LA 11
TX 3
WP 1
FL 3
PR 3
HI 2
VI 3
gt100,000 - 3M
gt3M - 6M
gt6M - 9M
gt9M-12M

gt12M - 20M
gt20M

Total Borrowers 403
Total Loans Closed 529,246,826
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IRP Loans Made in Oregonby Fiscal Year
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Oregon IRP lenders bigger, fewer
One small IRP lender was absorbed by a larger one.
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Oregons average IRP balance sheet
? Lots of RLF funding is idle in fact, 13
million! ? RLFs are not growing, but they
exceed IRP debt.
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IRP overall, very good news

• No delinquencies
• The IRP funds are all solvent IRP assets gt IRP
  liabilities
• All of the IRP funds have 6 loss reserves
• Most of the IRP intermediaries are diversified
  organizations that have other revenue streams
  assets
• Experienced, professional IRP loan officers with
  strong ties to their business communities.
• About 13 MM in revolved IRP funds available for
  lending.

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The need for rural business financing
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Now, we need a RLF revolution!
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Every successful revolution needs a

• Paul Revere!

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Ours is named . . .

• Paul Cormier
• starts November 10
• paul.cormier_at_or.usda.gov
• 503-414-3365

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Guiding RLF principles . . .

• Simplicity flexibility
• Pursuit of opportunity
• Coordination cooperation
• Prudent activity

? Prosperity!
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• 1. Simplicity Flexibility

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Simplicity Flexibility

• What is keeping RLFs from revolving most
  effectively?
• Put the funding we have to work.
• Remove USDA barriers streamline systems empower
  RLF lenders
• Implement streamlining ideas we can readily agree
  upon
• Simpler paperwork for processing requests
• Improved reporting formats
• Other opportunities?

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Speak up for Simplicity

• Comment on proposed IRP rule change!
• YOU MUST COMMENT BY OCTOBER 28!
• Ineligible borrower if gt10 revenue from lottery?
• Added reporting on assistance to low-income
  persons and displaced farmers?
• Other?

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Finding Solutions

• A solution for FDIC-insuring your IRP accounts
• www.cdars.com
• Full FDIC insurance through a single bank
• Over 25 Oregon banks offer CDARS accounts

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• 2. Pursuit of Opportunity

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Pursuit of Opportunity

• What is keeping RLFs from accessing more s?
• Win more funds access more programs.
• Accessing more IRP funds
• Better understanding of scoring to help craft
  competitive applications
• Access underutilized programs
• REDLG
• Explore new Farm Bill programs
• Rural Microentrepreneur Assistance Program

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Accessing more IRP funds?

• Little change in IRP program funding levels
• FY2005 34 MM (18 MM not earmarked)
• FY2006 34 MM (20 MM not earmarked)
• FY2007 34 MM (20 MM not earmarked)
• FY2008 34 MM (20 MM not earmarked)

BUT EARMARKS ARE NOT ALWAYS USED!
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FY2008 IRP dissected a typical year
Includes nearly 10 MM unused from Mississippi
Delta, EZ/EC, and Native American set-asides
pooled 6/30
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Competing for IRP funds?

• Match your applications with the funding cycles
• Understand the IRP scoring system
• Design your application for a score of 140

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Alternate route to RLF resources?

• Rural Economic Development Grant (RED Grant)
• Rural electric (or telephone) coop acts as
  intermediary though IRP intermediary can
  administer the fund
• 300,000 RED grants are available to set up RLFs
• Requires 20 match

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Another route to RLF resources?

• Rural Microentrepreneur Assistance Program (RMAP)
• A new Farm Bill program slated to be unveiled
  sometime in the FY2008
• Stay tuned for details

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• 3. Coordination Cooperation

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Coordination Cooperation

• How can we leverage our strengths commitment?
• Seek build partnerships to make Oregon RLFs
  stronger.
• Encourage cooperation between Oregon RLFs
• Cross-lending among RLFs
• Improve coordination among RLF funders
• CDBG SBA EDA OECDD
  ODOE
• Other opportunities?

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• 4. Prudent Activity

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Prudent Activity

• Increase RLF lending activity while sustaining
  strong, viable RLFs
• Increase rural Oregonians access to business
  credit.
• Learn from past experience
• Develop best practices

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• ? Rural Prosperty

www.RuralOregon.biz