Our FORMULA

Fund Management

Managing and Reporting

Analyzing, closing and processing the transaction is easy - until it isn't. Inevitably, you will need to manage a distressed loan or investment, or alternatively, the borrowers or investment may ask for help.  There are various friendly (and draconian) strategies to get your borrowers back on track.     

Feedback is critical.  You will want to know and report the quantitative and qualitative benefits of your portfolio.  There are simple processes that can be used to measure success.  Most importantly, you will want your fund to be sustainable for the long-term.  Your budget should accurately estimate losses balanced by competitively-priced products.   

Strategies

Aligning Loan Program Policy

While your program policy should follow some standard commercial industry practices, particularly those that prevent fraud or deter default, policies and procedures will not be identical for all funds.  After all, your fund is filling a unique gap in the commercial market.

But unlike private commercial transactions, your policies should be transparent to provide program accountability and demonstrate fairness among applicants and recipients.  At the same time, these policies should be flexible to respond to changing economic and market conditions, such as rising interest rates or changing demand. These policies should be broad enough to give your decision-makers some discretion.

Analyses

Identify the Gap & Products

It may sound simple, but you should develop a product to meet an unmet need - a gap that the commercial market does not fill.  Perhaps the commercial market does not fill that gap because it is too small for them to care about or perhaps that unmet need is too risky. 

It is possible that the commercial market needs some encouragement. By providing a loan guarantee, you can reduce lender risk and a borrower's interest rate.  Perhaps there are no gaps in the credit market, but borrowers need equity to finance their transactions. That's when an equity investment or a grant fund may be appropriate.

The key? Clearly identifying and defining the "gap" because you want to be sure your product is really necessary.