Contents

A Look Inside…

Investing for Social Equity

Strategic Investments in CDVC Funds

Financing a Small Business: Ryla Teleservices

KHIC: An Experienced Fund Sponsor

Small Business Investment Companies

Rural Business Investment Companies: Designed to Promote Small Rural Enterprises

NMVC: Helping Equity Flow into Distressed Communities

Wells Fargo: Investing with a Passion

CDVC Due Diligence Checklist

More about CDVC

This Just In…OCC’s Districts Report on New Investment Opportunities for Banks

 

Investment Resources for Part 24 Authority

Part 24 Resources on the Web

Common Part 24 Questions

CD Investment Precedent Letters

Investments in National/Regional Funds

Fourth Quarter 2006
Part 24 Investments

Regulation and CD-1 Form

horizontal rule
OCC's Community Affairs Department

(202) 874-5556

CommunityAffairs
@occ.treas.gov

Articles by non-OCC authors represent their own views and are not necessarily the views of the OCC.

 

_

This Just In... OCC's Districts Report on Investment Opportunities for Banks

Looking for new investment ideas? In this article, OCC's District Community Affairs Officers (DCAOs) report on financing initiatives and partnership opportunities in each of the OCC's four districts. While not endorsing specific organizations or programs, DCAOs can provide more information about these and other community development investment opportunities. DCAOs can also consult with national banks in developing successful approaches to community development lending and service delivery approaches.

Click on the map below for the DCAOs in your district

Image map of the four districts

Northeastern District

_Northern District Stamp

Bonita Irving (617) 482-1643
Denise Kirk-Murray (212) 790-4053

Pennsylvania Provides Assistance for Low-Income Communities Across the State

The Pennsylvania Housing Finance Agency recently created a nonprofit corporation, the Commonwealth Cornerstone Group (CCG).  CCG will help expand the development of for-sale housing, community facilities, and mixed use commercial/residential properties in distressed communities. Commonwealth Cornerstone Group was created by the Pennsylvania Housing Finance Agency (PHFA). CCG funds projects that meet the needs of low-income communities in Pennsylvania. The corporation was recently awarded $60,000,000 as part of the New Market Tax Credit Program. It will be a statewide program with 60 percent of the tax credits targeted to major urban areas across the state. The remaining 40 percent will be used in smaller urban and rural areas.  The funds will provide debt and equity for business expansion, mixed-use development, affordable housing, and community facilities.  For further information, contact the PHFA at www.phfa.org.

Payment Reporting Builds Credit (PRBC)

A new consumer reporting agency now collects, stores, scores, and reports bill payment data.  PRBC is the first credit bureau to gather a report on “permissible purpose” data under the Fair Credit Reporting Act.  This new credit tool gives consumers and small businesses a means to build a credit file and demonstrate creditworthiness without going into debt.  Lenders can purchase a PRBC report documenting a consumer’s bill payment history on a standalone basis or merged with Equafax, Experian, and TransUnion credit reports.  Each PRBC report includes a PRBC bill payment score.  To learn more about PRBC and PRBC reports, visit: www.prbc.com or call (877)PRBC-123 or (443)569-8040.

return to top

Central District

_Central District Stamp

Paul Ginger (312) 360-8876
Norma Polanco-Boyd (216) 447-8866

Investing in the Michigan Upper Peninsula

Northern Initiatives (NI), a community development financial institution, in the Michigan Upper Peninsula, believes that healthy community development is a byproduct of stable and growing businesses.  Since 1994 it has provided its customers with information and financial services that support entrepreneurs and enhances business competition.  NI provides business consulting services, entrepreneurial education, and business loans.  Its business loans are targeted to small entrepreneurs that would not qualify for traditional bank loans.  To this end, NI is in the process of further capitalizing its business loan initiatives by offering retail securities beginning in October 2006.  Investors can select their rates and terms of this structured investment.  Previous investments have had rates up to 3 percent and for three, seven or ten years.  The Calvert Fund, a socially responsible investment firm, will administer and track the securities.  For further information, please contact Dennis West, CEO, (906) 226-1671 or dwest@niupnorth.org

Developing High Growth Small Businesses in Iowa

The Entrepreneurial Development Center, Inc. (EDC) is a nonprofit organization that accelerates the development of small businesses with high growth potential, located approximately within 100 miles of Cedar Rapids, Iowa.  EDC connects entrepreneurs with veteran, accomplished mentors who already have developed businesses; with prospective board members who can provide expertise necessary to the development of the company; and with capital from equity and debt investors, such as banks, government sources, and angel investors.  EDC also provides entrepreneurs with networking and educational opportunities.  Since its founding in 2003, EDC has worked with 250 entrepreneurs, 50 percent of whom were pre-revenue.  EDC has raised approximately $2 million in angel capital investments for many of these companies.  Among the companies receiving assistance, two already have grown from $0 in annual revenue to more than $2 million.  EDC’s newest initiative is the development of a seed capital fund that will help capitalize promising businesses in the early stages of development.  Banks can be involved with EDC by referring prospective clients to EDC, accepting referrals of companies from EDC, providing operating support to EDC, and investing in the new seed capital fund.  For more information, visit http://www.edcinc.org/ or contact Miriam Ubben, Vice President of Capital Formation at (319) 369-4955 or mubben@edcinc.org.

return to top

Southern District

_Southern District Stamp

Scarlett Duplechain (504) 828-6555
Karol Klim (678) 731-9723 x252
David Lewis (214) 720-7027

Corporations Launch Gulf Coast Rebuilding Challenge

Leading American corporations have joined ranks to establish a five-year rebuilding initiative, titled the “$1 Billion Gulf Coast Rebuilding Challenge.”  The Challenge is in response to the damage and human displacement caused by hurricanes Katrina, Rita, and Wilma in 2005.  Participating corporations are bringing capital to the damaged Gulf Coast area by depositing funds with local community banks participating in the Certificate of Deposit Account Registry Service® or CDARS®.  Through CDARS, the community bank places the funds in FDIC-insured certificates of deposit (CDs) issued by multiple banks, making the deposits eligible for FDIC insurance in amounts up to $30 million.

The community bank receives matching deposits from other banks, making the full amount available for Gulf-area lending.  Alternatively, with depositor consent, the bank can elect to receive fee income, with the option to receive matching deposits when funds are resubmitted after an initial maturity.  As deposits grow, the pool of funds will stimulate a highly flexible source of liquidity for rebuilding the Gulf Coast.  For further information, contact: Phil Battey at (703) 292-3357 or pbattey@promnetwork.com; or Brian Christie at (703) 292-3456 or bchristie@promnetwork.com.

SBIC Fund in Formation

Petra Capital Partners, LLC is a private equity firm engaged in providing growth capital for companies located throughout the United States.  Petra Growth Fund I, a licensed SBIC formed in 1999, is based in Nashville, TN.  Fund I has invested $50 million in 16 companies since its inception.  Petra is in the process of forming its second fund, also to be a licensed SBIC.   Petra can invest up to $4 million per company from Fund I.  Petra provides capital for organic growth needs, acquisitions, buyouts, and recapitalization, for both private companies and small public companies, as a non-control investor.  The firm looks for high growth companies with revenue greater than $10 million and positive EBITDA (earnings before interest, taxes, depreciation, and amortization) at the time of its investment.  The firm focuses on service companies, with an emphasis on business outsourcing, information, media, communications, technology, and healthcare.  The principals of Petra serve on the boards of directors for each portfolio company and help to position the company for a sale or public offering over a three- to five-year time frame.   To reach Petra, contact Mike Blackburn, Rob Smith or Doug Owen at 615-313-5999 or visit its Web site at www.petracapital.com.

ACCION Texas - $2 Million Small Business Investment Opportunity in Disaster Areas

With the many small businesses forced to relocate after hurricanes Katrina, Rita, and Wilma, ACCION Texas is helping owners with the financing they need to rebuild their businesses and lives. ACCION uses capital provided by regulated financial institutions and philanthropic sources to lend to small and micro businesses in low- and moderate-income areas and disaster areas. Investment opportunities exist for institutions that want to participate in ACCION’s programs.  ACCION is planning to extend its programs to the Louisiana disaster areas and is seeking new partners to support its programs there.

ACCION Texas is a statewide nonprofit community development financial institution (CDFI) specializing in lending to micro and small business entrepreneurs. ACCION provides loans from $500 to $50,000 to businesses that are usually unable to qualify for traditional bank financing. Partnering with ACCION Texas, a participating bank reaches a clientele that it cannot serve with standard bank products.  Banks can support community development and disaster recovery assistance to entrepreneurs, minority- and woman-owned businesses, and low-income communities by providing support in the form of operating grants, loans, qualified investments, and financial services to ACCION Texas.  For more information, contact Janie Barrera at (210) 507-4283 or e-mail jbarrera@acciontexas.org

return to top

Western District

_Southern District Stamp

Susan Howard (818) 240-5175
Dave Miller (720) 475-7670

Alaska Growth Capital

Alaska Growth Capital BIDCO, Inc. (AGCB) is a unique organization that has proven successful in Alaska and is expanding into Montana.  The organization is a for-profit CDFI and has been awarded new market tax credit funds.  AGCB provides loans and investments throughout Alaska and Montana to businesses that can “stimulate and diversify their local economies.”  In addition to its other activities, AGCB is also a business and industrial development corporation (BIDCO), chartered and funded by the state of Alaska, with the ability to make SBA and USDA guaranteed loans.  AGCB provides financing and technical assistance to Alaskan businesses in low-income, rural, and underserved areas.  AGCB provides loans in amounts of up to $15 million with flexible terms, including maturities of up to 25 years based on the use of funds.  Investments require a clear exit strategy, and both start-ups and fast growing companies that meet AGCB’s underwriting criteria may qualify for financing. 

AGCB worked with the CDFI fund to design the New Markets Tax Credit Program, and it was a 2003/2004 NMTC awardee.  AGCB has targeted its NMTC funds for rural areas in Alaska and Montana because both states have similar economies and opportunities, and neither state has a wealth of risk capital available.  Both states also have large Native American populations; substantial underserved, rural geographies; and extensive financing needs.  For more information regarding AGCB, contact Jeff Batton, Vice President of Client Services, at 907-339-6784 or jbatton@alaskagrowth.com.   

The Idaho Housing and Finance Association Provides Investment Opportunities

The Idaho Housing and Finance Association (IHFA) is a nonprofit, self-supporting housing finance association, incorporated in Idaho in 1974.  With assets of more than $2 billion and a statewide scope of operations, the IHFA has provided funding for the purchase of more than 46,500 homes for Idaho families.

As a state authorized affordable housing bonding authority, IHFA receives funding from many sources including private investors; the sale of tax-exempt mortgage revenue bonds; and federal programs.  IHFA raises millions of dollars in the national capital markets and has formed highly productive partnerships with banking and lending institutions throughout the state of Idaho.

For investor information, please contact John Sager, IHFA’s Vice President for Administration & Chief Financial Officer, at (208) 331-4889, or by e-mail JohnS@ihfa.org.  Additional information is also available on IHFA’s Web site at www.ihfa.org.

return to top