Loan Review Process

  • CCLF does not make emergency loans. The process for loan approval generally takes six to eight weeks after the application is submitted.
  • CCLF does not make grants. All loans must be repaid, with interest, regardless of the viability of the project.
  • Loan fees of 0% to 2% of the loan amount will be charged to all borrowers. There is an application fee of $250 for for-profit borrowers and $150 for nonprofit borrowers.

REVIEW PROCESS

The Chicago Community Loan Fund considers each applicant’s project feasibility, management and financial strength, as well as social impact criteria, when evaluating loan requests. In reviewing applications, CCLF staff weighs the overall impact of the loan on the community and organization, balancing the depth and breadth of each benefit.

Social Impact

One of our primary concerns is that each project extend significant social and economic benefits to low-income and minority communities, or in the case of community businesses, have an alternative ownership structure such as a cooperative. The following are some of the factors we consider when reviewing each application.

Low-Income Benefits

How does the project benefit low-income people in terms of employment, housing or services provided, and how many people will benefit? Are there any negative consequences of the project’s implementation?

Minority Benefits

How does the project benefit minorities in terms of employment, housing or services provided, and how many people will benefit? Is this reflective of the community in which the project is situated?

Goals

Does the organization have clearly stated goals? Are these goals related to an overall community development strategy? How does the project fit with this strategy?

Community Participation

Does the project and organization have support from members of the community, including the local alderman? Is the Board of Directors representative of the community served? How does the community participate in the organization?

Cooperatives

Does the organization have participatory management? Is it a model for other organizations? How active are coop members?

Organizational Strength

We are interested in ensuring that the organization is able to undertake the project for which the loan is requested. We consider the following questions, among others, when reviewing each application.

Resources

What qualifications do key staff members have? Does the staff have adequate time and resources to complete the project? What resources does the Board of Directors bring to the project?

Previous Experience

Does the organization and current staff have previous experience with a project of this type and size? If so, to what extent were they successful? If not, what factors will enable them to undertake this project now?

Credit History

Does the organization have a record of reasonable creditworthiness as indicated by its credit history? A limited credit history does not necessarily indicate a lack of creditworthiness.

Financial Management

Has the organization shown responsible financial and organization management by budgeting realistically, being able to predict and meet cash flow needs, keeping timely and accurate financial records, and adjusting programs and staffing to meet new contingencies?

Financial Strength

Our primary financial concern is that the loan will be repaid. We consider the following questions, among others, when evaluating each loan application.

Repayment

How viable is the plan for repayment? In the case of a fully amortized loan, are cash flow projections based on reasonable assumptions, which show an ability to repay the loan? In case of a balloon repayment, are there takeout commitments or well-considered plans?

Collateral

Does the project have strong collateral? Where would CCLF stand relative to other lenders? How liquid is the collateral? Some acceptable forms of collateral include: 1st and 2nd mortgages on real estate, bank-secured letters of credit and certificates of deposit.

STEPS IN LOAN APPLICATION PROCESS

1. Loan Inquiry

Before submitting an application, you must discuss your project with a member of CCLF’s Lending Team. Submit a loan inquiry here and a member of the staff will reach out to discuss your inquiry.

2. Application

Fill out the application and return it, with the requested attachments, to CCLF.

The Loan Committee meets up to twelve times a year. CCLF must receive a completed application at least four weeks prior to the meeting date in order for it to be considered at the meeting. Receipt of the completed application within this time frame does not guarantee that the loan will be reviewed at the Loan Committee’s next meeting. Generally, loan applications are considered in the order in which they are received. An incomplete loan application will delay review.

3. Underwriting

During the weeks following receipt of your application, we will visit your project, clear up unresolved issues, check references and obtain any other information needed to present your application to the Loan Committee.

4. Loan Committee Approval

CCLF’s staff sends the loan application and a recommendation to the Loan Committee about a week before their meeting. At the meeting, a decision will be made to either reject the applicant, table the discussion pending more information, or approve the loan, generally with conditions. You will be notified of the Loan Committee’s action shortly after the meeting.

5. Board Approval

Some loans recommended by the Loan Committee may require approval from the Board of Directors, if they are unusually large or risky loan requests. Board meetings are generally held quarterly.

6. Commitment

If financing is approved, you will be notified with a Commitment Letter. This letter will state the specific terms and conditions of the credit. You must return the letter to CCLF within the time period noted in the letter.

7. Pre-Closing Documents

Upon receipt of this signed Commitment Letter, CCLF will instruct our lawyers to prepare all loan closing documents and filings. You will receive various documents, including, but not limited to, a promissory note, security and collateral agreements and escrow instructions for review. Once the agreements are acceptable to all parties, the loan can be closed and the funds disbursed.

You will also receive instructions for submitting a Secretary’s Certificate, which certifies that your Board of Directors has authorized acceptance of the loan and indicates who may sign loan documents. The Certificate must be returned to CCLF with articles of incorporation and organizational by-laws included.

8. Disbursement

Disbursement follows the above procedures, and the timing is dependent on how quickly the borrower fulfills conditions set out in the Commitment Letter and loan documents, the complexity of documents and other factors.

9. Booking, Repayment and Monitoring

Typically, you will be required to make monthly interest and principal payments to CCLF, and submit certain periodic reports and financial statements. These requirements will be detailed in the Commitment Letter and loan documents. We will keep in touch with you via email, telephone, and in person site visits throughout the life of the loan.