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                                                   GLOSSARY
                              Definitions used in July 2007 Funding Announcement
                                   Nebraska Microenterprise Development Act
                               Nebraska Microenterprise Partnership Fund (NMPF)

                  All definitions are adapted from the "Micro Enterprise Glossary of Terms," Association for
                  Enterprise Opportunity, April 1994, and the “Core and Intermediary Component Glossary,”
                  US Treasury, CDFI Fund, [undated]; and publications of the Opportunity Finance Network
                  and The Aspen Institute. Underlining indicates a definition which is included in the Glossary.

Client: A client is someone who had an active outstanding micro loan or other micro financing product with the program
    during the FY and/or received at least 10 hours of microenterprise related training or technical assistance from the
    program during the FY.
Co-oped Loans: Co-oped loans are those loans a program makes possible by referring a customer to another program
    through a formal agreement between the programs-i.e. the loans GROW makes possible by referrals to REAP.
Core I programs: Those micro lending or training/TA programs which meet the minimum performance record of 7 micro
    loans or 25 training/TA clients during the 12 month period July 2006 – June 2007.
Core II programs Those high performing programs that demonstrate a past record of 15 new micro loans or 75 new trainees,
   during the 12 month period of July 2006-June 2007, who have shown significant and proportionate projected increases in
   service delivery that advances the legislative goal of “equitable access by all geographic areas” and target services to
   low-income, distressed, or unserved geographic populations.
Debt capital:    See Total adjusted notes payable.
Default rate: A defaulted loan is a loan which has been charged off or one in which any portion of the loan is past due
    more than 120 days. The amount defaulted is the total unpaid dollar amount collected subsequently. A program's micro
    loan default rate is the total defaulted dollar amount of all defaulted micro loans as a percentage of the dollar value of all
    micro loans made since the date the first micro loan was made by the program.
Delinquency rate: See Portfolio-at-Risk.
Deployment ratio: Total outstanding loan portfolio divided by total capital. The Deployment Ratio indicates the extent to
   which a microlending program’s lending capital (debt and equity) has been deployed into the field as business loans. In
   the case of a micro lender which also makes business loans over $35,000, two deployment ratios should be calculated.
   The first should be restricted to micro loans only and the second should use all business loans in the total outstanding
   loan portfolio.
Distressed geographic area: All core programs must meet the general targeting requirement (see this Glossary). The
    micro program sets out the distressed geographic criteria to be followed i.e. loss of population, income at or below 80%
    of county or metro median income, environmental problems, federal or state enterprise zones, hot zones, Indian
    reservations, loss of jobs, etc.
Draw-down: Forty percent of any evergreen loan amount is distributed after the evergreen loan agreement is signed. The
   second installment (60%) can be drawn down by the program-borrower as soon as half of the first installment (plus half
   of any eligible match) is loaned out as micro loans. In the event that the second 60% is not drawn down by the borrower
   within time limits established in the loan agreement, NMPF may redeploy these funds in response to the needs and
   program capacities of other programs waiting for lending capital.
Earned Income: Program earned income is income generated from lending, training, and TA services provided to clients.
Evergreen loan: This is a five-year, interest-only (currently 4%), renewal loan. This type of instrument allows the program-
    borrower greater flexibility to plan and to keep funds revolving in the community for the intended purposes. Evergreen
    loans over $10,000 require a 1-to-1 match, and are disbursed in two performance-based draw-downs.
General targeting: NMPF requires that activities of all core programs be principally targeted (60% of client base) to
   “distressed geographic areas” or “low-income populations.” This means either: (a) that a majority of the program’s
   borrowers and/or training clients reside or have businesses in a distressed area or (b) be members of a low-income
   population using federal indices of low-income. See also this Glossary for: “distressed geographic area,” and “low-
   income population.”
Inquiries: The number of telephone or drop-in inquiries themicroenterprise program received in the FY. This number
    includes number of participants and number of clients.

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Investment Area: A Target Market made up of a Geographic Unit or contiguous Geographic Units that: 1) Are entirely
    located within the geographic boundaries of the US and either: 2) meet at least one of the criteria of economic distress as
    defined under 12 CFR S1805.201 (b) (3) (ii) (D) and has significant unmet needs for loans, Equity Investments, or
    financial services, as described under 12 CFR S1805.201 (b) (3) (iii) (E): or 3) encompasses or is located in an
    Empowerment Zone (EZ) or Enterprise Community (EC) designated under Section 1391 of the Internal Revenue Code
    of 1986, 12 CFR S1805.104 (cc). An Investment Area will be considered distressed if it meets at least one of the
    following criteria of economic distress: 1) has a high concentration of poverty; 2) has a low median family income, or 3)
    has a high rate of unemployment (2-4-03).
Leveraged capital: This is “off-balance-sheet” source of financing available from another organization, with loans
    guaranteed by your organization. An example is a line of credit at a bank of $100,000 available for loans for your clients
    that is backed by a $50,000 loan loss reserve from your organization. The leveraged capital amount would be $100,000.
Loan loss reserves:   Funds set aside as cash reserves or through an accounting-based accrual reserve to protect against
   future losses.
Low-income population: (See also General targeting) For purposes of general targeting, this term means, any identifiable
   group of people which have low or moderate incomes (as defined by HUD definition of 80% of median income for
   county) or are unable to access commercially available business credit.
Match: Evergreen loans require that an equal amount of the program-borrower’s total capital is dedicated to micro lending
   and comes from non- NMPF sources or appropriations from the State of Nebraska. The dedicated Match can come from
   previously existing total capital or from committed but unreceived funds. In the latter case, the first installment of the
   evergreen loan will not be distributed until at least that amount has been received. For evergreen loan applications of
   $10,000 or less, no match is required.
    NMPF grants require a minimum of 10% hard match, with a total match of 1:4. (For every dollar of state grant funds,
    the grantee program will provide a $.25 match.)
Micro business (or microenterprise): Means any small business that is run by the owner and has five or fewer total
    employees including the owner. This definition includes most home-based, part-time, and start-up businesses.
Micro loan: (Micro lending) The NMPF defines micro loan as any business loan under $35,000 that typically cannot be
    accessed by a micro business owner through commercial lenders. Two or more loans made to the same business during
    the same calendar year will be regarded as one loan. For purposes of counting micro loans for meeting the minimum
    performance record , “micro loans made” are loans which have been irrevocably committed as part of the applicant’s
    internal process, and it assumes that disbursement of the loan amount has occurred or will automatically occur shortly.
    Different programs may use different terminology, but normally, “loans approved” (or other similar early states in the
    loan making process) cannot be counted unless they meet this test.
Minimum performance record: Core program applicants must meet specified performance thresholds established for each
   funding round. For the July 2007 Funding Announcement, these minimums are 7 micro loans originated in 2006–07
   (July 2006 – June 2007) or 25 new trainees. Micro lending core programs are expected to have maintained a
   delinquency rate under 16% and a default rate under 7%.
New Program: An organization that does not have a proven track record of working with Nebraska micro businesses.
Participants: Program participants are individuals who received less than 10 hours of service from the microenterprise
    program during the FY. They could include people who attended only a short-term workshop or who received some
    technical assistance not associated with a financing product. They should also include those who you count as clients.
Past due loans: Total micro loans with payments 30 days or more past due. Loans should be considered past due if any
    part of the payment is past due.
Portfolio-at-Risk: The total dollar amount of loans with payments 30 days or more past due divided by the Total
    outstanding loan portfolio. Past due loans include the entire outstanding balance of loans with payments that are past
    due. This formula measures the percentage of the micro loan portfolio that is potentially at risk because of past due
    payments. It is also known as the Delinquency rate.
Re-lending: Investments or loans to the NMPF are "re-lent" as $10,000-$100,000 loans to micro lending programs which
    in turn lend the money as micro loans ($100 to $35,000) to small business borrowers served by their programs. Since the
    Partnership loans the money at 4.0%, and the recipient program lends the funds out at near commercial rates (say 11%),
    the recipient program retains the interest differential for its own use.
Self-sufficiency: Represents a program’s ability to cover operating costs with internally generated income. Self-sufficiency
     ratio is calculated by dividing earned income by total microenterprise program operating costs, not just the LB327
     portion.
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Sound portfolio record: Core program micro lending applicants must have maintained a default rate under 7% and a
   delinquency rate under 16%.
Trainees: For the purpose of Microenterprise Development Act applications, trainees are individuals who have satisfied an
    applicant’s training/TA delivery standards (minimum of 1 hour) for classroom training, counseling, or membership.
    Business management is the main focus of training and technical assistance.
Training & technical assistance (Training/TA): Non-lending activities that are an integral part of micro lending delivery
    services. Such training services are delivered in different ways by different organizations, including (1) classroom
    training, (2) one-on-one counseling, and (3) training/TA delivered as part of membership services. Training/TA
    programs do not need, themselves, to provide direct microlending services, however, they must have documented
    understandings with micro lenders or commercial lenders.
Total capital: The sum of Total debt capital and Total equity capital available.
Total debt capital: This is the total dollar amount of any loans that an organization has borrowed for purposes of supporting
    lending.
Total equity capital: This is the total dollar amount of capital coming from grants, donations, etc. for which the program is
    not liable to repay.
Total outstanding loan portfolio: The total dollar amount of micro loans receivable as reported in an organization’s
    statement of financial condition or balance sheet. For new micro lending programs, this can be any internal listing,
    maintained by your organization, which accurately shows the total dollar amount of outstanding micro loans. 




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