USDA Community Facility Relender (CDFI)

FI Consulting

USDA Community Facility Relender (CDFI)

A New Loan Program Designed to Facilitate the Flow of Capital for Community Facility Projects in Rural Areas

Challenge: FI was tasked with building the credit parameters and the underwriting capability to implement this new program so as to ensure effective management of risk in this new borrower population.

Solution: FI provided financial management and due diligence services to assist CF with the planning, development, and implementation of the CF Relender Program. FI formulated a rating system and a set of metrics to gauge the financial strength of an applicant pool comprised of a wide array of community development organizations with varied structures and operating profiles. FI assembled a team of senior underwriters with expertise in lending and community development finance to aid in the assessment of program applicants. FI was able to design and implement process controls to ensure a well-documented, actively managed workflow with measured and responsive analysis of each application from submission to credit committee review/decision. FI prepared a comprehensive credit memorandum for each applicant which detailed the results of the due diligence effort and provided cogent and well documented recommendations to RD’s credit committee regarding the disposition of CF Relender Program applicants.

FI Impact: USDA’s Rural Housing Service amended the CF Direct Loan Program regulations to enable the Agency to make loans to qualified mission-oriented lending institutions who in turn will relend these funds for projects in or serving persistent poverty counties or high poverty areas eligible under the CF Direct Loan Program. The Notice of Solicitation of Applications (NOSA) was published late in the government fiscal year, compressing the time line for application intake, credit review and presentation to the Community Facility (CF) Credit Committee to 5 weeks. In less than 5 weeks, FI helped USDA implement a new loan program designed to facilitate the flow of capital for community facility projects in rural areas with high or persistent poverty and which are currently underserved by traditional banking institutions.