Loan Participation Program (LPP)

Building Sustainability

Thomas Wall

Director SSBCI

NC Rural Center

June 8, 2017

Loan Participation Program 

Building Sustainability
North Carolina SSBCI Programs

$46 million of funding allocated to 3 programs

• Loan Participation Program largest and most active

• Capital Access Program serves as bridge and door opener

• Fund of Funds Program provides ROI to support sustainability

Loan Participation Program 

Building Sustainability
 LPP Market penetration

• Build on CAP programs awareness

• Work with bankers to ensure program fit

• Help address an underwriting issue

• Simple to use, quick turnarounds

• No impact on borrower

• Waive fee-share enhancing lenders’ yield

• Create demand-pull through business community

• Multi-level sale

• Bank C-levels

• Credit officers and lenders

• Strategic positioning with CDFIs

Loan Participation Program 

Building Sustainability
 LPP Maintaining momentum

• Adjust participation levels toward equilibrium...

20%/$500,000 reduced to 15%/$200,000

...to ensure constancy of funds availability 

• Create bad-debt reserve from program income

• Recycle principal payments and net income

• No fees for prepayments

• Make good loans! (and diversify)

• “Manage” interest rates

• Ongoing communication – maintain “mindshare”

Loan Participation Program 

Building Sustainability
 LPP Increasing the trajectory

• Reinvesting net program income and ROI from 

Fund of Funds program

• Accessing USDA Intermediary Relending 

Program

• Pursuing mission-related capital sources

• Investigating becoming a CDFI

Loan Participation Program 

Building Sustainability
• Over 300 participations purchased from 22 

 lenders, mostly community banks

• Average size declined from $233k to $89k

• $ 9 million of recycled funds committed

• 22% loan dollars in LMI Census Tracts

• Private dollar leverage 10.4 X

• 6373 jobs created/retained

• Loans in 62 of 100 counties, 39% rural 

LPP Trends & Impacts

Loan Participation Program 

Building Sustainability
Contact info:

Thomas Wall

twall@ncruralcenter.org

919-250-4314 

www.ncruralcenter.org

Loan Participation Program 

Building Sustainability
Loan Participation Sustainability

John Saris

June 8, 2017
Loan Participation Sustainability

• Oregon Business Development Fund

– Second development finance program established 

in Oregon

– Support of traded sector (manufacturing) 

industries

– Financial need

• Historical Capitalization and Performance

– Appropriations

– Portfolio Performance

– Program Impacts
Keys to Sustainability

• Program Income

• Due Diligence

• Collections

• Risk Rating
Program Income

• Application Fee

• Closing Fee

– Referral Fees

• Interest Income

• Loan Repayment

• No Prepayment Fees
Due Diligence

• Underwriting

– Staffing

– Financial review

• Debt service cover

• Global cash flow

• Strength of guarantor

• Discounted value(s) for collateral securing the loan
Collections

• Value of ACH Payments

• Weekly and Monthly Review and Reporting

• Workout Objectives

• Use of State Department of Justice (Attorney 

General)
Risk Rating & Allowance for Loan 

Loss

• Routine Periodic Reviews

• Purpose and Value of an Allowance for Loan 

Loss (ALL)

• Risk Rating Criteria

– Subjective criteria for establishing the ALL

• Other Best Practices

– Work with SAG Lenders
Long Term Opportunities

• Benefits of Revenue Generating Programs

– Demonstrated financial stewardship

– Improved Legislative and Public Trust

– Ability to influence and recommend new financial 

programs

• Example – Royalty Financing Pilot
Contact Information

John Saris

Business Oregon

Mobile (503) 383-8612

john.saris@Oregon.gov

www.oregon4biz.com