WHEDA State Small Business Credit Initiative 2.0 Overview

Slide Note

WHEDA, the Wisconsin Housing and Economic Development Authority, collaborates with various entities to provide low-cost financing programs aimed at stimulating the state's economy. Through initiatives like the Loan Participation Program (LPP), Collateral Support Program (CSP), and Capital Access Program (CAP), WHEDA offers support to small businesses by buying interests in loans, providing collateral support, and offering portfolio insurance. The LPP process involves loan sourcing, application for participation, verification, funding, repayment, and data submission for compliance. Terms of the LPP include loan originations, varying participation levels, interest rates, terms, and flexibility for the primary lender to repurchase. WHEDA's mission is to enhance residents' quality of life by facilitating affordable housing and business financing opportunities.

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STATE SMALL BUSINESS CREDIT INITIATIVE 2.0 WHEDA CDFI ROUNDTABLE

AGENDA 1. 2. 3. 4. 5. 6. 7. Who is WHEDA? WHEDA SSBCI Products Application Process CDFI Compliance Requirements How to Participate Call to Action Q&A

WHO IS WHEDA? WHEDA works closely with lenders, developers, local government, nonprofits, community groups, and others to implement its low-cost financing programs. Mission WHEDA s mission is to stimulate the state s economy and improve the quality of life for Wisconsin residents by providing affordable housing and business financing products. Vision We provide the tools to help people and communities realize their hopes and dreams.

Overview of WHEDA-funded SSBCI Products Loan Participation Program (LPP) WHEDA will buy an interest in loans made by participant lenders to small businesses Collateral Support Program (CSP) WHEDA will make a collateral support contribution of up to 20% of the total, which will collateralize the Borrower s loan, enabling start-ups to help their businesses grow Capital Access Program (CAP) Program administered by WHEDA in collaboration with Milwaukee Economic Development Corporation (MEDC) that provides portfolio insurance in the form of a loan loss reserve fund to lenders that make small business loans

LOAN PARTICIPATION PROGRAM (LPP)

Loan Participation Program (LPP) HOW IT WORKS 1. CDFI sources the loan 2. Applies to WHEDA for participation with SSBCI funds 3. WHEDA verifies SSBCI eligibility 4. Loan Participation Agreement is signed 5. Loan is funded 6. CDFI remits principal repayments, quarterly 7. CDFI remits program data required for SSBCI compliance, quarterly

Loan Participation Program (LPP) TERMS Primary Lender originates loan, WHEDA purchases up to 10% of loan WHEDA's participation may vary from time to time based on program liquidity targeted participation range is $25,000 - $200,000 Rates, fees, and terms are established by Primary Lender WHEDA participation will be at 0% interest to provide better DCR. WHEDA's maximum loan term is seven years WHEDA loan will be in first loss position, and Primary Lender will have first claim to all recoveries Primary Lender has option to repurchase participation sold to WHEDA at any time

COLLATERAL SUPPORT PROGRAM (CSP)

Collateral Support Program (CSP) HOW IT WORKS 1. CDFI sources the loan 2. Applies to WHEDA for collateral support with SSBCI funds 3. WHEDA verifies SSBCI eligibility 4. Primary Lender closes the loan 5. CSP funds are provided to Primary Lender to be held in a Lender held account until prepayment or maturity, at which point funds are returned to WHEDA 6. CDFI remits program data required for SSBCI compliance, quarterly

Collateral Support Program (CSP) TERMS Primary Lender originates loan, WHEDA makes a collateral support contribution of up to 20% of total to collateralize Borrower's loan . WHEDA's maximum deposit is $75,000 Underwriting and servicing performed by Primary Lender, underwriting is shared with WHEDA for review and approval prior to commitment Funds will be held in an account at Primary Lender's institution while deployed Funds will be returned to WHEDA after initial term or upon repayment of loan. Maximum term is 7 years In the event of a loss of the lead lender's of program funds, the lead lender must liquidate all available collateralized assets before accessing the collateral reserve funded by WHEDA

CAPITAL ACCESS PROGRAM (CAP)

Capital Access Program (CAP) HOW IT WORKS 1. Program will be administered by WHEDA in collaboration with Milwaukee Economic Development Corporation (MEDC) 2. The Primary Lender applies to MEDC and submits a loan fee 3. MEDC applies to WHEDA for capital access funded by SSBCI 4. WHEDA verifies SSBCI eligibility 5. The Primary Lender completes a Participation Agreement with MEDC 6. Capital access funds are provided to MEDC to be placed in loan loss reserve account at Primary Lender institution 7. MEDC remits program data required for SSBCI compliance, quarterly

Capital Access Program (CAP) TERMS Loan is underwritten by Primary Lender using their own terms SSBCI fund may be used to match between 3% and 7% depending on the loan size, or the combined total of the lender/borrower contribution Funds will be used to establish loan loss reserve account at lender institution Funds are not returned to MEDC/WHEDA upon loan pay off or maturity. They remain in the loan loss reserve account at the lender institution to be recycled as loan loss reserve for subsequent SSBCI-eligible loans The Primary Lender can make claims of charged off loans from the CAP account for shortfalls on collections. Recoveries must be re-deposited into the reserve account

COMMUNITY REINVESTMENT FUND EXC HANGE PLATFORM

HOW TO PARTICIPATE Indicate interest in serving as a lender in the program, and WHEDA will provide an onboarding questionnaire Upon approval, each Lender will be onboarded to CRF s web-based Exchange platform, which will be utilized by participating lenders for the following: Inputting loan applications for WHEDA approval Ongoing reporting and compliance required under the SSBCI program Current Treasury guidance requires quarterly and annual reporting requirements Repayment reporting