Community Affairs:
Article Archive > Minnesota

Small Loans, Big Returns
Ways to Work (WtW) is a nonprofit, community development financial institution that helps lower-income people. WtW is designed to help borrowers attain financial independence and advance economically by having money to purchase dependable used cars to get to work or school. Since 1996, WtW has originated nearly 12,000 loans for more than $31 million and the average auto loan amounts to an average $3,400. Results of a 2006 WtW evaluation indicate that borrowers reported an average increase of 41 percent in their take-home pay. In addition, 67 percent of WtW borrowers report that they have used conventional financial services subsequent to receiving their WtW loans.

Headquartered in Milwaukee, WtW makes its loans from 43 offices in 21 states: California, Delaware, Florida, Hawaii, Illinois, Indiana, Louisiana, Maryland, Michigan, Minnesota, Missouri, New York, North Carolina, Ohio, Oregon, Pennsylvania, South Dakota, Texas, Virginia, Washington, and Wisconsin.

WtW offices are located in social service agencies affiliated with the Alliance of Children and Families (ACF). ACF agencies screen and provide financial education to borrowers and service the loans. WtW local offices provide financial education to more than three persons for every individual who receives a loan. Investors in WtW include several national foundations, the Community Development Financial Institution Fund of the U.S. Treasury Department, local United Way offices, and financial institutions. Banks can be involved by investing in the national WtW loan fund, by referring to local WtW offices prospective borrowers who do not meet conventional credit criteria, by participating in local WtW loan committees, and by providing grants and in-kind donations to WtW.

For more information, contact President Jeff Faulkner at (414) 359-1448 ext. 2, e-mail him, or visit his Web site.

[Community Developments Investments, Fall 2008]

The Midwest Assistance Program Loan Fund
The Midwest Assistance Program Loan Fund (MAPLF) is a nonprofit organization that provides predevelopment loans to small rural communities in nine Upper Midwest States - Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, South Dakota, and Wyoming. Loans can be used for clean water and wastewater projects that serve lower-income populations. Borrowers from MAPLF are rural communities and other public water or wastewater authorities with less than 10,000 in population.

Established in 2003, MAPLF has closed seven loans totaling $105,000, has $250,000 more in process, and has sustained no losses. Loans have been made in four of the nine states in MAPLF's service region. MAPLF is an affiliate of the Midwest Assistance Program, which provides engineering, training, and other consulting services to help small rural communities plan and implement water and wastewater improvement projects. MAPLF typically funds projects that have multiple layers of funding, including grants and loans from a variety of sources. Originally capitalized with $100,000 from the Midwest Assistance Program, MAPLF also funds its loans with the proceeds of a federal grant, and is actively seeking new investors. Banks can participate by investing directly into MAPLF, by referring prospective borrowers that do not meet conventional credit criteria, and by structuring MAPLF into financing packages in which the banks would like to participate.

For more information, visit www.map-inc.org or contact Tom Kopp at (952) 758-4334 or tkmap@bevcomm.net.
[Published in News from the Districts, Community Developments Investments, Spring 2006]

Community Reinvestment Fund
Community Reinvestment Fund (CRF), USA is a mission-oriented, nonprofit organization that helped pioneer the secondary market for community development finance. CRF buys community development loans from community-based lending partners and pools these loans into asset-backed debt securities. These securities are sold to institutional investors through private placements. This process enables these lenders to extend their reach and further invest in their communities by making more loans. As the recipient of the largest combined allocation of New Markets Tax Credits ($412.5 million), CRF capitalized on its expertise in working with institutional investors to lead the implementation of this federal program to further attract private investors and drive additional capital into the country's most underserved communities. A critical source of funds to replenish the loan capacity of CRF's lending partners comes from institutional investors who make market rate capital investments and socially motivated investors who make direct investments.

For additional information, contact Mary Tingerthal, Senior Vice President, Capital Markets or Warren McLean, Vice President of Development at (612) 338-3050 or visit the organization's website at www.crfusa.com.
[Published in News from the Districts, Community Developments, Spring 2006]

Capital Funds Expand Bank Financing Power
Minnesota Community Capital Fund (MCCF) is a two-year-old, statewide nonprofit organization that makes flexible, subordinated loans to small businesses outside of the Twin Cities area for fixed assets and working capital. All loans from MCCF require a bank as a senior lender - MCCF absorbs risk that banks cannot accept, and helps banks finance projects that otherwise would exceed their legal lending limits. MCCF, which derives its capital from investments made by its 66 members, employs a streamlined underwriting and loan closing process to deliver its financing in a timely manner. It is funded entirely by origination fees and interest. MCCF's membership includes local and county governments, regional economic development agencies, utilities, and revolving loan funds, which join MCCF to expand their economic development impact and to leverage private sector financing for community development purposes. A companion fund, the Twin Cities Community Capital Fund (TCCCF), which began operating in the summer of 2005, provides the same services in the Twin Cities metro area. MCCF and TCCCF have an arrangement with the Community Reinvestment Fund (CRF) of Minnesota under which CRF purchases the loans originated by the two organizations. Banks can participate in MCCF and TCCCF by: (1) structuring their subordinated loans into financing packages for small businesses and other community development projects that the banks are underwriting; (2) serving on the boards of directors of MCCF and TCCCF; and (3) purchasing securities backed by MCCF and TCCCF loans.

For more information, visit http://mncommunitycapitalfund.org/ or http://www.tcccf.org/ or contact Scott Martin at (800) 860-6223 or smartin@mncommunitycapitalfund.org.
[Published in News from the Districts, Community Developments, Spring 2006]

Equity Network in Rural Minnesota
Minnesota Investment Network Corporation (MINC) provides equity financing and business expertise to help small companies located primarily in rural Minnesota grow and prosper, resulting in returns to investors, and jobs for communities. MINC also helps communities develop local capacity to make equity investments by organizing investors into RAIN® funds - a series of investment funds that pool the intellectual and financial resources of local investors to make equity investments in small businesses. Since 1998, MINCORP has raised more than $15 million, made 25 investments and helped start seven RAIN® funds in Minnesota, Iowa and North Dakota, with three more in process. MINC is a certified community development financial institution that seeks competitive returns appropriate for the risks. Banks have referred companies needing equity to MINC, participated as senior lenders in financing companies in MINC's portfolio and have participated in organizing RAIN® funds with MINC . In addition banks have invested directly in MINC to provide equity investment capital to serve small businesses in the banks' market areas.

For more information, contact Steve Mercil at 651-632-2140 or at smercil@mincorp.org. MINC's web site is www.mincorp.org
[Published in News from the Districts, Community Developments Investments, Summer 2004]

Cooperative Financing in the Upper Midwest
Northcountry Cooperative Development Fund (NCDF) is a for-profit, cooperatively owned loan fund that provides financing, training and expertise to small producer, consumer, affordable-housing, worker and land cooperatives in eleven states in the upper Midwest. NCDF today has more than $8 million in assets, has made hundreds of loans to cooperatives since its founding in 1978 and has contained losses since 1978 to 0.27 percent of dollars loaned. Investors in NCDF include banks, cooperatives, religious orders, foundations and others. Certified by the Community Development Financial Institution (CDFI) Fund as a CDFI and as a community development entity, NCDF also has funding from the U.S. Department of Agriculture to help develop and finance rural housing cooperatives, and NCDF last year established a community development credit union that helps members of cooperatives finance their membership shares. Banks are involved with NCDF as co-lenders, as investors and on the board of directors.

For more information, contact Margaret Lund at (612) 331-9103 or at margaret@ncdf.org. NCDF's web site is www.ncdf.org.
[Published in News from the Districts, Community Developments, Summer 2004]

Venture Capital in the Midwest
Venture Capital Fund Hopewell Ventures, L.P. in July 2003 received its "Go Forth" letter from the U.S. Small Business Administration (SBA), a key step toward becoming a Small Business Investment Company. Hopewell, raising up to $150 million of capital, will invest $1 to $5 million in early- to later-stage companies in a dozen Midwestern states -- between Nebraska and Ohio, the Canadian border and Kentucky -- that Hopewell says are underserved by venture capital sources. Banks can invest in Hopewell Ventures as limited partners, can refer companies needing an equity infusion, and can provide banking services to companies in which Hopewell has invested. Hopewell's sister fund, $34 million Adena Ventures, serving Appalachian Ohio and West Virginia, was the first New Markets Venture Capital Company designated by SBA.

Contact: Tom Parkinson at (312) 357-9600; info@hopewellventures.com; www.hopewellventures.com.
[Published in News from the Districts, Community Developments, Winter 2003]

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