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Program A: Financial Assistance

Program Authorization: R.S. 51:2301 et seq.;R.S. 36:109(N); Act 279 of 1995; Act 17 of 1996

PROGRAM DESCRIPTION

The mission of the Financial Assistance Program is to serve as a catalyst for capital to all Louisiana emerging and existing businesses, enabling new business to form and to provide for sustained economic growth of our state, thus providing an improved quality of life for it's citizens.

The goals of the Financial Assistance Program are:

1. Provide a reliable system of communications, efficient information systems, and well trained human resources to administer LEDC's programs.

2. Provide access to capital for Louisiana emerging and existing businesses, enabling new enterprises.

3. Utilize portfolio management to direct the resources of LEDC to help promote a growing and diverse economy in the state.

OBJECTIVES AND PERFORMANCE INDICATORS

1. The Financial Assistance Program will develop a marketing plan that will increase participation of banks and other financial institutions with LEDC programs by 7% in FY 1998-99.

2. The Financial Assistance Program will achieve a balanced level of risk in LEDC's portfolio with a maximum of 15% tolerance for loss in FY 1998-99.

1 The LEDC Board has determined that it will make more venture capital investments which by their nature are higher-risk than conventional.

LOUISIANA ECONOMIC DEVELOPMENT CORPORATION SIX-YEAR INVESTMENT TOTALS

INVESTMENT TOTALS

FY 91-92

FY 92-93

FY 93-94

FY 94-95

FY95-96

FY96-97

TOTAL

Louisiana Small Business Equity Program

$525,000

N/A

N/A

N/A

N/A

N/A

$525,000

Minority & Women Business Development Program

$247,500

N/A

N/A

N/A

N/A

N/A

$247,500

Small Business Loan Program 1

N/A

$2,514,738

$3,909,933

$1,856,554

$3,520,606

$4,454,498

$16,256,329

Venture Capital Program

0

$0

$0

$350,000

$0

$372,434

$722,434

BIDCO Investment Program

N/A

$2,000,000

$0

$1,000,000

$0

$1,350,000

$4,350,000

Small Business Innovative Research Grant Program

$323,546

$319,590

$70,291

N/A

$0

$0

$713,427

Micro Loan Program

$0

$0

$25,000

$157,000

$0

$26,750

$208,750

Totals

$1,096,046

$4,834,328

$4,005,224

$3,363,554

$3,520,606

$6,203,682

$23,023,440

NUMBER OF APPROVED PROJECTS

FY 91-92

FY 92-93

FY 93-94

FY 94-95

FY 95-96

FY 96-97

Louisiana Small Business Equity Program 1

3

N/A

N/A

N/A

N/A

N/A

Minority & Women Business Development Program 1

1

N/A

N/A

N/A

N/A

N/A

Small Business Loan Program

N/A

14

11

14

17

20

Venture Capital Program

0

0

1

1

0

2

BIDCO Investment Program

N/A

1

0

2

0

1

Small Business Innovative Research Grant Program

8

9

0

0

0

0

Micro Loan Program

0

0

1

6

0

1

Linked Deposit Program

76

50

61

72

92

70

Total

88

74

74

95

109

94

Total Operating Cost/Total Approved Applications

$246,723/88=$2,804

$461,606/74=$6,238

$484,268/74=$6,544

$469,049/95=$4,937

$522,612/109=$4,795

$589,251/94=$6,268

1 1992 legislation combined the Louisiana Small Business Equity Program and the Minority and Women Business Development Program into one program, the Small Business Loan Program.

COLLECTION RATES BY LOAN TYPE AS A PERCENTAGE OF TOTAL DOLLARS: LOANS WITHIN 90 DAYS CURRENT

Loan Type

FY 91-92

FY 92-93

FY 93-94

FY 94-95

FY 95-96

FY 96-97

Guaranty

82.0%

93%

100%

87.4%

96.9%

99.4%

Participation

100%

100%

100%

100%

100%

100%

Direct

73%

83%

94.5%

83%

100%

91.8%

3. The Financial Assistance Program will improve the quality, accuracy, and timeliness of financial reporting with an error rate of less than 10% in FY 1998-99.

4. The Financial Assistance Program will improve accuracy so that there is less than 10% errors, and timeliness of project analysis and reviews are done within 5 working days of receipt in FY 1998-99.

5. The Financial Assistance Program will perform needs assessment of at least three existing financial assistance programs and develop one new program annually that will meet the changing capital needs of the state's business base in FY 1998-99.

SOURCE OF FUNDING

The Financial Assistance program is composed of the activitiy Capital Accessibility. The Capital Accessibility Activity is funded from Statutory Dedications of the Louisiana Economic Development Fund which was established by Act 34 of 1991. (Per R.S.39:32B.(8), see table below for a listing of expenditures out of each statutory dedicated fund.) Act 1186 of 1995 authorized 37% of the vendor compensation deduction to be dedicated to the Louisiana Economic Development Fund through June 30, 1996. Effective July 1, 1996, Act 32 of the First Special Session of 1996 redirected the deposit of vendor compensation collections into the Workforce Development and Training Fund. This fund was established by Act 483 of 1995 and is utilized for the Workforce Development and Training Activity now located in the Office of the Secretary.

ANALYSIS OF RECOMMENDATION

GENERAL FUND

TOTAL

T.O.

 

DESCRIPTION

 

 

 

 

 

$0

$11,909,690

9

 

ACT 18 FISCAL YEAR 1997-1998

 

 

 

 

 

 

 

 

 

BA-7 TRANSACTIONS:

$6,000,000

$6,000,000

0

 

Approved BA-7 - Naval Reserve Force Systems Executive Office for Manpower and Personnel based upon Act 726 of the 1998 Legislature

$1,000,000

$1,000,000

0

 

Approved BA-7 - Funding for the Town of Coushatta, economic development efforts based upon Act 824 of the 1998 Legislature

$0

$4,100,000

0

 

Approved BA-7 - Increase in Capital Accessibility Funding

 

 

 

 

 

$7,000,000

$23,009,690

9

 

EXISTING OPERATING BUDGET - December 10, 1997

($1,000,000)

($1,000,000)

0

 

Non-recurring Carryforward for the Town of Coushatta economic development efforts

$0

($4,100,000)

0

 

Non-recurringCarryforward for Financial Assistance

($6,000,000)

($6,000,000)

0

 

Non-recurringCarryforward for - Transfer of Funding for the Naval Reserve Force Systems Executive Office for Manpower and Personnel to the Office of the Secretary

$0

$6,121

0

 

Annualization of 1997 -'98 Merit Pay Adjustment(s)

$0

$6,453

0

 

1998 -'99 Merit Pay Adjustment(s)

$0

$4,273

0

 

Attrition Adjustment(s)

$0

($2,080)

0

 

Retirement Rate Adjustment(s)

$0

($39)

0

 

Adjustment(s) for Civil Service Training and Other Statewide Interagency Transfer activties

$0

($15,251)

0

 

Reduction(s) in various Expenditure Categories; Including Reductions to fully fund salaries

$0

$1,444

0

 

Risk Management Adjustment(s)

$0

$13

0

 

UPS Adjustment(s)

$0

$4,229

0

 

Other Adjustment(s) Increase in support services for the Office of the Secretary

$0

$500

0

 

Other Adjustment(s) Private Audit Services increases

 

 

 

 

 

$0

$11,915,353

9

 

GRAND TOTAL RECOMMENDED

 

 

 

 

 

($7,000,000)

($11,094,337)

0

 

DIFFERENCE (TOTAL RECOMMENDATION AND EXISTING OPERATING BUDGET)

The total means of financing for this program is recommended at 51.8% of the existing operating budget. It represents 92.0% of the total request ($ 12,954,627) for this program. Reductions in this program are due to the transfer of funding to the Office of the Secretary for the Naval Reserve Force Systems Executive Office for Manpower and Personnel. Additionally, funding was eliminated for the one time expense for the Town of Coushatta's economic development efforts. Reductions were also made to the anticipated level of funding for Financial Assistance required for fiscal year 1998-'99. At the recommended level of funding, this program will provide the level of financial assistance to Louisiana businesses as it anticipates.

PROFESSIONAL SERVICES

This program does not have funding for the Professional Services for Fiscal Year 1998-1999.

OTHER CHARGES

$11,266,507

 

Financial Assistance Programs - La. Small Business Loan Program, Venture Capital Incentive Program, Business and Industrial Development Corporation (BIDCO), Micro-loan Program, Contract Loan Program, Small Business Bonding Guarantees, Miscellaneous Loan related charges

$13,500

 

Independent CPA Audit Services as required by Legislation establishing the Louisiana Economic Development Fund

$10,753

 

Special Marketing Activities - On-site training of Accounting Systems, Financial Assistance Investment workshops, etc.

 

 

 

$11,290,760

 

TOTAL OTHER CHARGES

 

 

 

 

 

Interagency Transfers:

$131,825

 

Reimbursement to the Office of the Secretary for support services

$861

 

Pro-rata share of cost of operations for the Department of Civil Service

$92

 

Pro-rata share of cost of operations of the Comprehensive Public Training Program

$138

 

Pro-rata share of cost of operartions of the Uniform Payroll System

 

 

 

$132,916

 

TOTAL INTERAGENCY TRANSFERS

ACQUISITIONS AND MAJOR REPAIRS

This program does not have funding for Acquisitions and Major Repairs for Fiscal Year 1998-1999.

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