Patrick Waggoner and Mitchell Harrison, of the U.S. Economic Development Administration, provided this presentation on the impact of revolving loan funds during Create, Challenge, Change: Economic Development Conference for the Denver Region in August 2016.

1. 1
Performance Metrics and
Measuring Success
Economic Development Conference for the
Denver Region
August 2, 2016

2. Performance Measures
What is your Impact?
…you can't know where you are going,
until you know where you have been.
How does your RLF measure success?
How do you collect performance metrics?
What tools do you use to record your impact and tell your story?
What other metrics are available to analyze your performance and impact?

3. Performance Measures
What is your Impact?
The importance of measuring and setting goals:
• Annual reporting to stakeholders
• Growing your programs through additional funding
• Reporting to Federal agencies and investors
• Marketing your loan fund
EDA context:
• CEDS and RLF Plan
• Grant application
• GPRA reporting and RLF semi-annual reporting

4. University Centers
Public Works
Planning
Local Technical Assistance
Research & National Technical Assistance
Economic Adjustment
Trade Adjustment
Assistance for Firms
PROGRAMS
Investment Programs
Revolving Loan Fund

5. Revolving Loan Fund
RLF Purpose:
…provide regions with a flexible and
continuing source of capital,
to be used with other economic
development tools,
for inducing private investment and
creating jobs
that will contribute to long-term economic
stability and growth.

6. EDA RLF PROGRAM:
…from Compliance to Performance
Revolving Loan Fund
MEASURING SUCCESS:
…a survey of Performance Metrics
STORY TELLING WITH DATA:
…what measures & tools do you use?

7. EDA RLF PROGRAM:
…from Compliance to Performance
Revolving Loan Fund

8. Revolving Loan Fund
EDA RLFs established for business lending.
– Economic Adjustment Assistance Grants to
capitalize or recapitalize RLFs most commonly
fund business lending, but may also fund
public infrastructure or other authorized
lending activities. [see 13 CFR § 307.7]
RLF Numbers Denver All EDA
No. of RLFs 104 541
Capital Base $88M $813M
Loans Made 4,800 36,000
Jobs Created
and Retained >75,000 650,000
Investment Leveraged $2.7B $18B

9. RLF Compliance
RLF Grant Administration
 Matching requirement (grant terms and conditions)
 Disbursement phase vs. Revolving phase
 Single/Program audit
 Semi-annual reporting
Federal Interest remains in perpetuity

10. RLF Compliance
Current Monitoring Tools
 RLF Semi-Annual Financial Report (Forms ED-209, ED-209I)
 Single Audit & Site Visit
 RLF Plan Review
Capital Utilization Standard
 Via the Regs: “…at all times at least 75% of the RLF Capital is loaned or committed.”
 After two consecutive reporting periods of non-compliance, EDA may require the RLF
“Sequester” excess cash, which could result in sending $$ back to U.S. Treasury.
Default Rate
 High default rate can result in deterioration of the portfolio.
 Portfolio review; Corrective Action Plan

11. RLF Performance
EDA RLF guiding principles
 Gap financing for economic development purposes
 Leverage Private capital (private : RLF :: $2 : $1)
 Job creation (RLF $ lent per job created/saved)
 Fixed Assets and/or Working Capital
 Start-up, Expansion, or Retention
 Use of RLF Income for administrative costs
 Capital Utilization Standard (75% or greater)
Federal Interest remains in perpetuity

12. RLF Performance
RLF Standard Terms and Conditions
RLF Plan [§ 307.9]
 Consistency with CEDS or EDA-approved E.D. plan
 Part I – Revolving Loan Fund Strategy
 Part II – Operational Procedures
 Updated every 5 years
Prudent Lending Practices

13. Revolving Loan Fund
MEASURING SUCCESS:
…a survey of Performance Metrics

14. Performance Measures
CAMELS Framework:
Federal Financial Regulatory Agencies, since 1979
 Capital
 Assets
 Management
 Earnings
 Liquidity
 Sensitivity
Examples:
• Ability of management to control
and monitor risk.
• Appropriateness of products and
services in relation to community
need.
• Quality and sources of earnings

15. Performance Impact
Impact Investments, (Treasury) CDFIs perspective
Seek new sources of capital to spur positive investment in the community
Standardize metrics to communicate impact
Attract investors to mission focus
Generate social and environmental impact,
alongside a financial return.
Examples: Economic Security
• Number of businesses assisted
• Number of loan reported to credit bureau
• Jobs at loan closing, jobs at end of FY

16. Performance Measures
2 CFR Part 200 [December 19, 2014]
Subpart D—POST FEDERAL AWARD REQUIREMENTS
Standards for Financial and Program Management
§200.301 Performance measurement
…Federal awarding agency should provide
recipients with clear performance goals,
indicators, and milestones…

17. Performance Measures
Department of Commerce Strategic Plan
…set the conditions for more and faster economic growth
and job creation.
Strategic Goals:
Trade and Investment
Innovation
Environment
Data
Operational Excellence
How do RLFs contribute?
Objective 2.2:
Increase the capacity of U.S.
regional economies to
accelerate the production of
value-added goods and
services by providing services
to and investments in
businesses and communities

18. Performance Measures

19. Performance Measures
Overall Position of the Fund:
 Capital Base Index
RLF Capital Base / Award Amount
Has you fund grown from the initial investment?

20. Performance Measures
Summary of Loan Performance:
Default Rate
Loan Amount in Default / Loan Amount Outstanding
Default Rate Over Time
Number of consecutive reporting periods over
the past three years where rate is > 20%
Loan Write-Off Rate
Number of loans written off / Number of loans made
Dollars Written-Off
Dollar amount of loan losses / Dollar amount of principal paid

21. Performance Measures
Organizational Performance:
Management Tenure
Tenure of Executive Director, Loan Officer, Financial Personnel
Loan Committee
Expertise and turnover of lending committee members
Reporting
Timely preparation and submission of:
- ED-209 Report,
- Single/ Program-specific Audit,
- RLF Plan

22. Performance Measures
Subsidizing Costs of Lending:
Income/Expenses
Total program income / Total administrative expenses
Lending Strategy and Interest Rates
Balance between economic development mission
and generating income.

23. Performance Measures
Organizational Performance:
Cash Available for Lending
Balance Available / Capital Base
Cash Available over Time
Number of reporting periods where Balance Available is greater than
Capital Utilization Rate
Deals with deploying loan fund and managing cash.
Different regions have different environments
(i.e. an urban market might have
higher demands than rural)

24. Performance Measures
Investment Impact (RLF Plan targets):
Cost per Job
RLF dollars loaned / Number of jobs created
Leverage Ratio
Amount of investment leveraged / RLF dollars loaned
Banks look at “sensitivity” metrics:
Interest rate risk and more advanced banking issues.
EDA RLFs are more concerned with mission impact and
economic development results.

25. Revolving Loan Fund
STORY TELLING WITH DATA:
…what measures & tools do you use?

26. Discussion
What is your Impact?
…you can't know where you are going,
until you know where you have been.
How does your RLF measure success?
How do you collect performance metrics?
What tools do you use to record your impact and tell your story?
What other metrics are available to analyze your performance and impact?

27. Patrick Waggoner, Economic
Development Specialist
Denver Regional Office, EDA
pwaggoner@eda.gov
303.844.4088
Thank you.
Mitchell Harrison, Program Analyst
Performance and National Programs
Division, EDA
mharrison@eda.gov
202.482.4696