#41: How to Do the Undoable Deal

We spent the last few CRA tips talking about community development finance. Today’s episode focuses on filling the gap when a seemingly undoable deal is before you. Our commercial lenders were trained to manage risk for the bank and to manage that risk based on various regulations, including the safety and soundness provisions. When a community development project is not quite doable, it may be up to you to recommend a path forward. Sometimes our commercial lenders haven’t had the range of experiences you have and may not know what loan enhancements might be available to them. This is where your role as a CRA professional comes in. It’s your responsibility to be involved in the community, to know who the key stakeholders are, and to understand who your go-to partners are when it comes to best serving the credit and social needs of disadvantaged communities. Here are a couple of ways you might consider approaching the financing gap by bringing flexible capital and equity sources to the table. • Participation Loans• Bank Financing-Debt-Conventional• CDFI-Debt (flexible debt)• Bonds (cheaper debt)• And more!Although these sources of capital can be powerful, many sources are obtained through a competitive application process and/or through various initiatives that take time to curate. But great things come to those who are patient, yes? These projects have the power to make significant impacts in the communities in which we serve, so they are worth the wait! Quotes• “If you partner with your commercial lenders more often or train them often, they might come to you then when you have a deal that might not be quite be bankable, but you can partner together, in community, to make it work.” (02:28-02:47)• “There are so many different ways that you can bring partnerships to the table to make the undoable deal doable.” (04:40-04:49)Want to learn more about the CRA? Sign up for CRA Today’s free course: https://hub.cratoday.com/freecourseLinksConsumer Compliance Handbook (Page 852-854): https://www.federalreserve.gov/boarddocs/supmanual/cch/cch.pdf CRA Today Website: https://cratoday.com/ For more information on the CRA Hub, a membership for bankers to connect, inspire, and master the art of CRA: https://cratoday.com/hub/ Copyright © 2021 by CRA Today LLC(No claim to original U.S. government material)All rights reserved. No part of this podcast may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, including electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the author and publisher.This podcast is a periodic publication of CRA Today LLC and is intended to notify and inspire recipients of new developments in the Community Reinvestment Act. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.Podcast production and show notes provided by HiveCast.fm