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Loan Application 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.
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.
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?
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?
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?
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?
Does the organization have participatory management? Is it a model for other organizations? How active are coop members?
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.
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?
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?
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.
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?
Our primary financial concern is that the loan will be repaid. We consider the following questions, among others, when evaluating each loan application.
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?
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.