Dear Colleagues - I'm not clear on the definition of 'templates.' If you mean loan documents, policies and procedures, compliance and internal controls, etc., then "templates" are useful in terms of understanding the appropriate formats, subject headings, getting a sense of (if done well) internal processes and work flow. However, the specific loan policy and procedures, underwriting criteria, approvals, loan risk rating, post-loan TA, etc. for a loan fund focused on financing energy efficiency and weatherization upgrades for older homes and clean energy projects, is going to be markedly different than for a loan fund focused on immigrant entrepreneurs or affordable housing.
If the goal is to create and/or build a high performance, financially healthy CDFI, I suggest you put templates aside and start at the beginning by developing a Theory of Change - a comprehensive description and illustration of how and why a desired change is expected to happen in a particular context. What outcomes or changes, in a group of people, organizations, or places, do you expect to see as a result of executing your mission? The answers will inform every aspect of operations - from your philosophy about credit and risk tolerance, to the types of financial products and development services you will offer, the sources and types of capital required, your outreach plan, to the people you hire and recruit for your board, and so much more. If you have figured all this out, then great, 'template' will be very useful to help you fill in the blanks.
If you are a pure 'start up' or an existing organization seeking to create a loan fund, the next step is to identify the essential building blocks and tasks required. Attached is a simple spreadsheet of those tasks by category. Many of these 'tasks' require thoughtful, and often intense, conversations among the leadership, board, and other key stakeholders, which then directly inform the 'paper' that guides everything you do. For example, is the task to develop a loan policies and procedures manual? Here are sample questions from standard subjects found in a manual:
- Specification of the lending authority of each loan officer and the loan committee including the maximum amount and types of loan that each person and committee can approve and what signatures are required. Considerations/Questions:
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- How many people does it take to approve a loan?
- Do you want one individual to have loan authority?
- What is approved by the Loan Committee?
- What must go to the Board for approval?
- Lines of responsibility for making assignments and reporting information within the lending division. Considerations/Questions
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- Does your CDFI have a shared database where lenders and staff can read up on prospective borrowers? Existing borrowers?
- Who is responsible for reviewing the loans on a regular basis for risk rating changes?
- Do you have a watch list that is regularly presented to the Loan Committee?
- Operating procedures for soliciting, reviewing, evaluating, and making decisions on customer loan applications.
Considerations/Questions
- Do you specify different underwriting criteria for different types of loans?
- Will you be scoring your loans numerically to derive the risk rating?
- Is the scoring grid included in the policies?
A discussion of every functional area of loan fund operations should generate questions about how, who, when, and why? A sample manual, if truly developed as a 'playbook' for lending, will have this fully explained, but again, based on their specific lending philosophy, borrower profile, risk tolerance, current staffing, and internal controls, etc.
Caveat: In this case, begin that conversation when everyone involved must have a solid baseline understanding of what it takes to build and grow a mission-driven lending institution.
I hope this is helpful in furthering the dialogue!
Note: the purpose of this post is 'knowledge transfer' - to provide observations and learning from direct experience with the intent of speeding the learning curve of mission-driven organizations. It is not intended as a solicitation for consulting services.
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Jason Friedman
CEO
Friedman Associates
Iowa City IA
319-321-5884
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Original Message:
Sent: 02-16-2024 10:05 AM
From: Michael McKinney
Subject: CDFI Application templates?
Good morning, Marissa; I would love a copy as well. Thank you so much for doing this.
Michael
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Michael McKinney
Executive Director/ CEO
Piedmont Business Capital
Greensboro NC
3362569350
Original Message:
Sent: 02-09-2024 12:32 PM
From: Marissa Germain
Subject: CDFI Application templates?
Hello everyone! I am very very new to this space and developing tools and templates for an aspirational CDFI. In looking over the materials from the Fund and a quick search through the site, I haven't identified updated templates that are in alignment with the new requirements. Does anyone have any they can share? If not, would anyone like a copy of whatever I develop?
Thanks!
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Marissa Germain
Consultant
Higher Logics Community Contacts (CDFI CONNECT - DO NOT DELETE)
Orlando FL
4078322937
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