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Revolving Loan Fund Best Practices

Revolving Loan Fund Best Practices

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Revolving Loan Fund Best Practices

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  1. Revolving Loan Fund Best Practices Catherine Bergman Hamilton County S.E.E.D.

  2. Loan Fund Background • Down Payment Assistance • Use for down payment and closing costs • Initially set up for 1st time home-buyers • Business Start-up and Expansion • New businesses • Expanding businesses • Business retention • Upper Story Renovation • Second floor conversion to apartment

  3. Loan Fund Statistics • Down Payment Assistance • 1991 IFA grant $50,000 • 1996 IFA grant $50,000 • Sixty-one loans made since inception • $117,210 loaned • Two losses totalling $1250

  4. Loan Fund Statistics • Business Start-up and Expansion • County Board of Supervisors contributed $28,000/year to reach $300,000 • Thirty-four loans made since 1993 • $356,090 loaned • 115 jobs created as a result • Five losses: $28,127

  5. Loan Fund Statistics • Upper Story Renovation • 2002 Community Development Fund grant of $40,000 • Seven loans made • $58,000 loaned • No losses

  6. Payment Process • Clients are given amortization at closing • Payment books are created and mailed one month prior to beginning of payments • Notice is sent when client nears last payment so that he/she does not over or under pay

  7. Late Payments • 1-2 months past – letter is sent • 2-4 months past – 2nd letter is sent • 4-6 months past – 3rd letter is sent • Deadline to respond is about 14-20 days • This is sent Certified Mail • Small Claims • Most respond immediately • Garnishment • Have only had to garnish one client’s wages

  8. Tips for Program • Build relationship with lenders and realtors • Applications are available for download on our web site • www.develop.hamiltoncountyiowa.com • Annual mailing with applications, brochures, business card • Post cards about down payment program • Provide brochure racks so lenders will put out • Distribute at home show(s)

  9. Tips for Program, cont. • Word of Mouth has been the best way to promote the program • Previous clients • Mayors • Development Groups • Keep community informed of your programs & their successes • City Hall • Development Groups • Realtors

  10. Tips for Getting Paid • Build a relationship with the client • During the loan closing • Periodic communication • I’m in this with you attitude • Stay on top of the payments • Catch them before they get too far behind or it’s too hard to catch up • Keep file information current

  11. Tips for Getting Paid, cont. • Be cognizant of the “rules” of contacting clients so you aren’t harassing them • If you can’t reach the client, go back to the banker • Fear of ruining their credit • Collections threat is huge

  12. Contact Information • Catherine Bergman Hamilton County S.E.E.D. P.O. Box 474 Webster City, IA 50595 515-832-9575 hamcseed@wmtel.netwww.develop.hamiltoncountyiowa.com