Economic Development Finance - Rural Economic Development - Lecture Slides, Slides of Development Economics

Download Economic Development Finance - Rural Economic Development - Lecture Slides and more Slides Development Economics in PDF only on Docsity! Economic Development Finance Docsity.com Overview • Introduction • Players & Roles – Public Sector Involvement – Public Sector Goals & Programs – Types of Businesses – Private Sector Lending Institutions Docsity.com Introduction • Wide array of finance tools • Core tool • Specialized knowledge – Staff – Manage – Partnerships Docsity.com Players & Roles • Public Sector Involvement – Bridge capital gaps – Leverage private lenders – Benefits outweigh risks – Should not supplant private sector Docsity.com Players & Roles • Public Sector Goals & Programs – Lower cost of borrowing • Subsidies • IDBs – Lower the risk • Guarantees • Investment programs • Loan Packaging • Primary, subordinate Docsity.com Public Sector VS. Private Sector • Two main forms of financial capital – Debt – Equity • Public Sector • Private Sector Docsity.com Business Financing • Why Businesses Need Financing – Fixed assets – Working capital – Capital for new businesses – Growth – International Docsity.com Debt Financing ¢ Loans ¢ Transfer of capital * Bonds Docsity.com Short-term Secured Loans • Accounts Receivable • Inventory • Time Sales or Lease Sales Financing Docsity.com Medium and Long-term Secured Loans • Term Loans • Construction Loans • Real Estate Mortgage Loans Docsity.com Unsecured Loans • Forget about it! Docsity.com Bank Review • Credit Analysis – Dunn & Bradstreet – Good credit risk – Five Cs of credit – Net worth – Ability – Ratios Docsity.com Risk Factors • Credit Analysis – Debt coverage ratio – Loan to value ratio – Validity of guarantees – Personal integrity of borrower Docsity.com Lending Process • Marketing • Screening • Underwriting/approving or denying • Loan documentation or servicing Docsity.com Lending Process • Underwriting/approving or denying – Working with lenders – Loan review – Five Cs of credit • Character • Capacity • Collateral • Cash Flow • Conditions – Structuring the loan Docsity.com Lending Process • Loan documentation or servicing – Loan documentation • Commitment letter • Qualify security and liens – Loan servicing • Pay on time – ok • Restructure if necessary Docsity.com State & Local Financing Tools • Direct Lending – Revolving Loan Funds • Georgia-unique program • DCA Funds provide basis • Three percent interest Docsity.com State & Local Financing Tools • Department of Community Affairs – Employment Incentive Program – Community Development Block Grants – State Tax Credits • OneGeorgia – Equity – EDGE • Georgia Department of Economic Development Docsity.com Federal Financing Programs • Small Business Administration – Loan Guarantees • 504 Loan Program • 7(a) Small Business Loans • Small Business Innovation Research • Economic Development Administration – Infrastructure Grants – Strategy grants Docsity.com Federal Financing Programs • Department of Housing & Urban Development – CDBG – Enterprise Zones – Rural Housing Docsity.com