"Working with PCG has been very beneficial to our loan fund, primarily because it has allowed us to participate in larger loans that have had a greater impact on our target market. The CEO has helped to build our capacity as a small and emerging loan fund, offering her expertise on multiple issues." Loan Officer of Legacy Redevelopment Corporation, Milwaukee, WI

Benefits of the Network

A participation network provides more capital to local communities and borrowers. The model directly benefits our borrower organizations and the people they serve by providing access to larger loans, loan products that are tailored to their needs, lower cost and seamless product delivery despite involvement of multiple lenders, greater access to financing over the long term by building the capacity and expertise of local CDFIs and building a network of lenders committed, and who have the expertise, to serve nonprofits and double bottom line businesses.

The model benefits our lending partners by:

• Providing access to broader pools of capital
• Enhancing ability to make larger loans and share risk
• Enhancing loan capital liquidity and balance sheet management
• Building capacity to serve targeted sectors through peer learning & information exchange
• Leveraging their limited capital to better serve borrowers
  
  A participation network benefits under-deployed CDFIs that have excess capital available for lending. An under deployed CDFI is a good candidate for buying participations originated by other network lenders. In our multi-lender participations, we play the role of matching transactions with organizations that have the capital to make loans.
  
  By increasing the deployment levels of under deployed CDFIs, the network enhances the earned income and financial viability of all participants. This helps make CDFIs a more permanent presence for borrowers that lack access to the traditional financial services industry. A CDFI that is under deployed today may be over-subscribed at the same time next year. Access to a network will enable CDFIs to better respond to the needs of borrowers when that time comes.
  
  For us, a participation network enhances our ability to achieve our mission and program goals by leveraging our capital and impact through a national network of lenders committed to serving our target borrowers. The result is more capital for borrowers that need it most.

How It Works

We deliver our loan participation products to borrowers via a network of CDFI lending partners whose priorities align with ours. Both organizations hold an interest in the loan on their balance sheets and are legally classified as direct co-lenders. PCG and the CDFI partner negotiate a participation agreement that establishes the types of loans that will be originated, specifies the parameters and roles of the inter-creditor relationship and defines how loans will be co-funded, risk shared, and fees split. We manage the risk of delegating authority by lending on a pari-passu basis, meaning we match loan structure, pricing, collateral and other terms and conditions with our CDFI lending partners, which stresses diligent local partner monitoring of borrowers.

We bring capital and specialized knowledge of our target sectors to our lending partnerships. Our lending partners contribute local market expertise, serve as the primary underwriter and borrower relationship manager, provide one-on-one technical assistance, monitor borrowers and lead joint marketing and outreach efforts.