Consensus of the meeting: Best practices for borrowers (small businesses and nonprofits)

• Work with partners (SBA, municipalities, public and quasi-public agencies, CDFIs, CDEs).
  
• It’s never too early to start talking with potential partners.
  
• Current economic conditions require creativity.
  
• Balance priorities of various partners.

  “We believe in partnerships. We must bring our energies together in a coordinated way.”

  Chris Sikes, Common Capital

  
  
• Have a business plan, understand your industry and competition and assess near- and long-term obstacles.
  
• Look at your board composition and governance practices.
  
• Tap the knowledge of consultants, attorneys, accountants.
  
• Green projects are attractive.
  
• Communicate at all stages of the deal.
  
• Expect to succeed, although the road to financing may be long.

Consensus of the meeting: Best practices for lenders

• “The more we know about the risks associated with your business, the better we can mitigate them as we structure the loan.”

  Marian Poe-Heineman, PeoplesBank

  Treat these loans as good business for the bank, not merely a way to satisfy CRA requirements.
  
• Partnerships with SBA, community development financial institutions and community development entities can provide financing and structure that makes loans bankable.
• Collateral may not be equal to loan value, so management experience is vital.
  
• Small business owners may need to work with an accountant to substantiate the business cash flow.
• Encourage business owners to hire experienced attorneys, accountants and advisors.

 

About the presenting organizations

• Children’s Investment Fund, a community development financial institution (CDFI), provides grants, early-stage loans and technical assistance for childcare facilities.

  “It’s about more than rehabbing a building that is about to fall down. It’s about creating a community and long-term success for residents.”

  Catherine MacKinnon, Mutual Housing Association of Greater Hartford

  
  
• Common Capital (formerly Western Massachusetts Enterprise Fund), also a CDFI, makes loans from $500 to $300,000 in order to create jobs and eliminate blight.
  
• Federal Home Loan Bank provides wholesale funding for member banks to make community development loans and offers technical assistance to nonprofits.
  
• MassDevelopment, a quasi-public agency, provides direct loans, guarantees and technical assistance. Loans and participations can be as much as $5 million.
  
• Mutual Housing Association of Greater Hartford borrows to advance its mission to provide affordable housing and stabilize 29 communities around Hartford.
  
• Nuvo Bank & Trust is a community lender in the Pioneer Valley. Maximum loan size is about $1.5 million.
  
• PeoplesBank lends to many nonprofits in Western Massachusetts. Loans cluster around $4 million or $5 million.

Agenda

The Springfield meeting brought together organizations that provide financing at different stages and showed how they fit together. One affordable housing project, for example, had 16 participants, including 3 banks.

Slides, handouts and meeting summary.

Welcome

• DeAnna Green – Director, Financial Institution Relations & Outreach (FIRO), Federal Reserve Bank of Boston

Panel I: Business Opportunities in Small Business and Nonprofit Lending
“Getting to Yes”

• Jeff Sattler – Nuvo Bank & Trust
• Chris Sikes – Western Massachusetts Enterprise Fund
• Marian Poe-Heineman – PeoplesBank
• Charlene Golonka – MassDevelopment

Panel II: Investment Opportunities in Community Development
“The Collaborative Path to the Deal”

• Mav Pardee – Children’s Investment Fund
• Catherine MacKinnon – Mutual Housing Association of Greater Hartford
• Kenneth Willis – Federal Home Loan Bank