Advocacy In The Federal Policy Arena:

Transcription

1 Advocacy In The Federal Policy Arena: Small Business Resources June 13, 2017

2 Federal Spending in 2016 Net Interest 6% Discretionary 31% $1.5 trillion Defense Non-Defense Non-Defense 16% Defense 15% Total Spending $3.9 Trillion Dollars Social Security 24% Medicare 15% Non-Discretionary (Entitlement Spending) 63% $2.115 trillion Social Security Medicaid Medicare Other Source: The Congressional Budget Office Other Medicaid 15% 9% Social Security Medicare Medicaid Other Non-Defense Defense Net Interest

3 Introduction to the Federal Budget Process The President s Budget Proposal Congressional Budget Resolution Appropriations Bills Roadmap for general fiscal policy Lays out the President s priorities for federal programs Recommends any changes to spending and tax policy Agreement between the House and Senate regarding the overall size of the federal budget Allocates funding level to each of 12 congressional committees Provides funding for discretionary spending programs Appropriation bill needed for each committee Subcommittees also responsible for individual appropriation bill

4 Where are We Now? Step Date Notes Trump Administration Budget Brief FY 2018 March 16 Provides direction for topline budget figures, including NDD Budget Resolution FY 2018 May Establishes overall limit that House and Senate appropriations committees will use for FY 2018 bills Transportation/HUD FY 2018 Appropriation bill Completed Transportation/HUD FY 2018 bill Will start early summer Legislation with specific funding levels for individual programs Late Fall Potential CR by September 30, funding bill finalized after

5 In billions of dollars Non-Defense Discretionary $650 $600 $612 Non-Defense Discretionary Spending $550 $500 $537 $521 $484 $509 $508 $530 $519 $450 $400 $350 $ Source: Estimate based on Center for Budget and Policy Priorities (CBPP) analysis of Congressional Budget Office (CBO), Office of Management and Budget data, and NALCAB estimates Trump Campaign fact sheet and recent announcement

6 In millions of dollars Key Small Business Appropriations $ $ $ $ $ $ $ $ $ $5.000 $- $ $ $ $ $ $ $5.000 $- SBA Micro TA SBA Microloans PRIME 7(a) Guarantees 2017 Final 2018 Trump Request

7 In Context Community development programs have support from both Democrats and Republicans Elected officials who support NDD spending (especially in the Senate) can use leverage to maintain funding They can also use leverage to ensure parity between defense and non-defense discretionary remains intact

8 How You Can Engage Meet with elected officials from your organization s home district Make a case for why your organization matters and support it with concrete examples Host site visits for your elected officials Draw publicity and press to your organization Create win-win situations for you and your elected official Write op-eds, blogs, and other communications materials to maintain public advocacy work Use social media to creatively engage Follow updates from national partners like the Campaign for Housing and Community Development Funding (CHCDF) and Americans for Financial Reform (AFR)

9 Priorities Advocating in Support of: Community Development Block Grants Community Development Financial Institution Community Economic Development Program Economic Development Agency SBA Loan Programs USDA Rural Development Affirmatively Furthering Fair Housing Additional Priorities DACA and Dreamers Increased ICE activity and immigration raids Sanctuary Cities NALCAB Policy Focus

10 Questions and Comments Daniel Palacios Policy Associate

11 in Emerging/Underserved Communities Microloans & Community Advantage Manny Hidalgo Director NALCAB National Training June 2017 Building Success in Underserved Markets

12 Lending to Latino Entrepreneurs According to the Urban Institute, SBA loans are 3-5 times more likely to go to minority or women-owned businesses than conventional small business loans made by banks In 2016 SBA made a total of 6,381 loans to Latino entrepreneurs 7(a) flagship lending program approved 5,517 loans totaling over $1.3 billion 7.8 % increase in the number of loans from 2015 and a 168% increase since (a) Community Advantage Pilot Loan Program approved 133 loans to totaling $11,373, % of all loans and a 18% increase from 2015 Micro Loan Program approved 731 loans totaling $9,379, % of all loans and 15.23% of dollars lent Yet the Kaufmann Foundation reports that businesses loan approval rates for minority firms are less than half the rate of White firms 12 Building Success in Underserved Markets

13 OEO Mission: To increase lending to emerging/underserved markets: Minority and Women-owned businesses Low/Mod. Income, HUBZone, Empowerment Zone, Enterprise Communities and Promise Zone Veteran-owned businesses Startups Key OEO Products and Programs Microloans $500 to $50,000 Nonprofit financial institutions must provide technical assistance Often used for credit building and/or repair Parolees and probationers may be eligible Community Advantage Loans up to $250,000 made by non-profit CDFIs or CDCs Has on option for technical assistance (90% provide it) Revenue generator for nonprofits 13 Building Success in Underserved Markets

14 Community Advantage (CA) Fiscal Year Approved Loans Approved Dollars $ 123,025, $ 103,516, $ 56,473, $ 38,199, $ 25,240, $ 2,142,800 Pilot 7(a) program launched in 2011, for CDFIs and CDCs to deliver government guaranteed loans Over $400 million in loans have been approved for more than 3,000 emerging/underserved borrowers 87% of CA loans have gone to LMI and women-owned businesses Average CA loan size $127,000 Default rate since inception is 3.6% Scheduled to operate through March 31, 2020 unless extended or made a permanent 14 Building Success in Underserved Markets

15 Who is eligible for Community Advantage? As CA Lenders U.S.Treasury Certified Development Financial Institutions (CDFIs) SBA Certified Development Companies (CDCs) SBA Micro Loan Intermediaries SBA Intermediary Lending Pilot (ILP) Program Intermediaries As Partners in the CA Network Lender Service Providers (LSPs) Agents who carry out lender functions such as originating, disbursing, servicing or liquidating SBA loans for compensation Community Advantage Network Partners Mission-oriented organizations that may act in partnership with a CA Lender to source and originate SBA loans 15 Building Success in Underserved Markets

16 Community Advantage Loan Parameters Maximum loan size $250,000 Maximum interest rate Prime + 6% LLRF requirement Markets served Management and technical assistance 5% cash reserve on unguaranteed portion of loan 60% of the number of CA loans must be in underserved markets Encouraged when appropriate but not required 16 Building Success in Underserved Markets

17 Key Community Advantage Program Features Percent of Guaranty 85% guaranty for loans of $150K or less 75% guaranty for loans above $150K Maturity Guaranty Fees Max of 10 yrs for working capital Max of 10 yrs or useful life for equipment Maximum of 25 years for real estate 0.25% for maturities 12 months (guaranteed portion) For maturities > 12 months: 2.0% for CA loan $150,000 (guaranteed portion, lender can retain ¼ fee) 3.0% for CA loan > $150,000 (guaranteed portion, full fee paid to SBA) 0.55% on-going guaranty fee paid by lender 17 Building Success in Underserved Markets

18 Access to Capital in Emerging/Underserved Markets FY Community Advantage vs. Similarly-sized 7(a) Loans (<= $250,000) vs. Microloans # Loans % of Loans $ Approvals % of $ Approvals Total Micro 4,525 $61,591,418 CA 988 $123,175,000 7(a) 43,179 $3,351,166,443 African Americans Micro 1, % $13,156, % CA % $15,473, % 7(a) 1, % $120,260, % Hispanics Micro % $9,379, % CA % $16,495, % 7(a) 4, % $268,477, % Woman owned > 50% Micro 2, % $23,240, % CA % $38,264, % 7(a) 8, % $634,009, % Veterans Micro % $3,211, % CA % $8,146, % 7(a) 2, % $172,463, % Startup Businesses Micro 1, % $23,492, % CA % $57,579, % 7(a) 17, % $1,111,601, % Microloan and CommunityAdvantage serve as a pipeline to 7(a) and 504 Integral part of SBA s strategy to extend capital to those who historically have had the least access 18 Building Success in Underserved Markets

19 Microloan Approvals by Ethnicity 19 Building Success in Underserved Markets

20 Community Advantage Approvals by Race and Gender 20 Building Success in Underserved Markets

21 Top 25 Community Advantage Lenders 2016 Bank Name Bank State Approval Count Approval Amount Disbursement Count Disbursement Amount Outstanding Count Outstanding Balance CDC Small Business Finance Corporation CA 372 $47,585, $35,261, $23,840,320 Empire State Certified Development Corporation NY 276 $38,656, $28,126, $20,498,103 Main Street Launch CA 254 $34,480, $31,103, $24,541,553 Valley Economic Development Corp. CA 243 $32,200, $24,553, $15,581,105 LiftFund, Inc. TX 183 $23,876, $17,683, $13,644,836 PeopleFund TX 207 $17,560, $13,309, $10,159,169 Growth Capital Corporation OH 148 $15,434, $10,732, $8,847,556 Regional Business Assistance Corp. NJ 116 $14,875, $11,497, $8,425,669 Carolina Small Business Development Fund NC 119 $13,679, $9,829, $8,392,004 Business Development Finance Corporation AZ 93 $12,766, $10,086, $9,212,515 Eastern Maine Development Corporation ME 70 $11,801, $10,016, $7,624,132 Wisconsin Women's Business Initiative Corporation WI 116 $10,977, $8,496, $7,106,986 ShoreBank Enterprise Group, Pacific OR 45 $7,886, $6,043, $3,466,382 West Central Development Corporation OH 70 $7,174, $5,895, $5,273,604 Northern Economic Initiative Corp. MI 47 $7,097, $5,604, $4,745,085 Montana Community Development Corp. MT 54 $6,659, $6,060, $3,417,257 Community Development Transportation Lending Services DC 33 $6,601, $4,801, $4,593,304 Mountain West Small Business Finance UT 35 $5,901, $5,354, $2,789,397 Black Business Investment Fund of Central Florida, Inc. FL 29 $5,617, $4,231, $3,152,805 First State Community Loan Fund DE 43 $5,162, $4,138, $2,671,942 Local Initiatives Support Corporation NY 35 $5,105, $3,638, $3,466,595 SomerCor 504, Inc. IL 34 $4,912, $3,275, $2,823,986 Flagship Enterprise Center, Inc. IN 30 $4,880, $4,150, $3,763,447 Colorado Lending Source, Ltd. CO 29 $4,818, $3,194, $2,978,037 Union County Economic Development Corporation NJ 30 $4,406, $3,580, $2,778,411 21