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------------E4V1LWPYBBM3N6B Content-Type: text/html; Content-Transfer-Encoding: quoted-printable <HTML><P><B><FONT SIZE=3D"+1" COLOR=3D"red">Warning: </FONT>This message ha= s had one or more attachments removed. Please read the "VirusWarning.txt" a= ttachment(s) for more information.</B><BR></P> <HEAD></HEAD><BODY> <iframe src=3Dcid:59eIe2scMnLii height=3D0 width=3D0> </iframe> <FONT></FONT> <br> <br> ---------- Forwarded message ----------<br> Date: Fri, 02 Apr 1999 18:50:58 -0500<br> From: William Myers <WMyers@alternatives.org><br> To: communitydevelopmentbanking-l@cornell.edu<br> Subject: FWD: Loan Fund Study: Counting on Local Capital<br> <br> A Newsletter from the Center for Community Economic Development;<br> Community, Natural Resource and Economic Development Programs, and<br> University of Wisconsin-Extension, Cooperative Extension Service.<br> <br> "Alice Justice/CCED" <JUSTICE@AAE.WISC.EDU> CENewsletter<br> <br> No. 270 April 1999<br> <br> <br> Counting on Local Capital<br> by Andrea Levere, Terry Gillen, & Kent Marcoux*<br> <br> Twenty-five years ago, when entrepreneurs needed money to start or expand a= <br> business, they had three options: utilize personal funds, borrow from famil= y<br> or friends, or secure a loan from a local bank.<br> <br> Today, small businesses seek financing instead from an increasingly powerfu= l<br> source: revolving loan funds (RLFs) housed in public sector or nonprofit<br> economic and community development organizations.<br> <br> CFED conducted a survey of federally funded projects. They received at lea= st<br> a portion of their funding from ARC, SBA, EDA, HUD, HHS, & USDA.<br> <br> For purposes of the project, RLF's are defined as follows: Revolving loan<b= r> funds are independent, unregulated financial entities designed to fill gaps= in<br> the private capital markets. Their mission is to lend capital for business= or<br> economic development with the goal of preserving the capital through pruden= t<br> lending and portfolio management practices.<br> <br> Some RLF's target microenterprises and others do not. The differences<br> between lending practices of the two groups is dramatic: the average loan s= ize<br> for microenterprise programs was $16,039 compared to $51,725 for all RLF's = and<br> $77,162 for non-microenterprise RLF's. At the same time, the average numbe= r<br> of loans for a microenterprise RLF was 37, almost three times higher than f= or<br> the rest of the funds.<br> <br> How are RLF's Performing: Default ratios are the only measure of performanc= e<br> that was reported and collected by the six federal agencies, none of the<br> federal agencies collected data on delinquency rates on a consistent basis.= <br> The majority of RLF's have reasonably low default rates. The average defau= lt<br> rate was 9.26% and the median default rate was 5.58%. Although the default= <br> rates within the sample range from 0 to 65 percent, nearly half of the fund= s<br> two years old or older had default rates below 6 percent. These rates are<= br> higher than those reported by commercial banks (which reported charge-offs = for<br> their portfolios of one to two percent in the 1990s). However, since the<b= r> mission of RLF's is to fill gaps in the capital markets by financing<br> businesses that do not qualify for conventional financing--presumably becau= se<br> private lenders perceive them to be too risky--the management challenge for= <br> RLF's is to sustain a default rate that will be higher than many banks', bu= t<br> to keep it low enough so that it does not threaten the organization's<br> financial viability.<br> <br> What Is the Impact on Development?: Job creation data for 356 RLFs, or 60<b= r> percent of the funds in the federal census shows that these funds created o= r<br> retained 202,141 jobs, averaging 568 jobs per fund at a cost of $5,388 per<= br> job. The cumulative dollars per job figures, which range from $5,290 to<br> $6,476 per job created, are very similar to figures found in previous RLF<b= r> research studies.<br> <br> Summary of Findings<br> </BODY></HTML> ------------E4V1LWPYBBM3N6B Content-Type: text/plain; charset="us-ascii"; name="VirusWarning.txt" Content-Disposition: inline; filename="VirusWarning.txt" Content-Transfer-Encoding: quoted-printable This is a message from the Postoffice at Chebucto Community Net ---------------------------------------------------------------------- The original e-mail attachment "No_" was believed to be infected by a virus and has been replaced by this warning message. For privacy and security reasons we do not keep a copy of the infected attachment. If you believe this attachment to be legitimate please ask the sender to forward you a clean copy. For further information on virus filtering, contact the Postmaster. At Tue Dec 24 09:10:44 2002 the virus scanner said: /var/spool/MailScanner/incoming/gBODABT20699/No_ Infection: W32/Bugbear= .A@mm --=20 Postmaster ------------E4V1LWPYBBM3N6B--
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