CED Application Reviewer Training Module 3: Business Plan June 2012.

CED Application Reviewer Training

Module 3: Business PlanJune 2012


Module Outline

Module 3 includes:– The basis for scoring the Business Plan criterion– Guidance on evaluating each Business Plan sub-criterion

• Project Implementation• Project Viability• Financial Strategies

– Direction on how to score each sub-criterion– Quiz questions to gauge what you’ve learned

3.1 BUSINESS PLAN – PROJECT IMPLEMENTATION



Business Plan – Project Implementation

Basis for scoring: The extent to which the application demonstrates that the project is well planned and ready to be implemented at the time of award.– 20 points possible– Discussed on p. 39-41 of FOA



Section FOA Evaluation Criteria Criterion is Fully Met if the Application…

1

Clear and well-conceived overall approach to the project, with a sound and feasible implementation plan that is consistent with the expectations described in the FOA and covers all years of the project, including specific milestones to be achieved.

– Shows clear effort to align project with program goals and rules

– Has a clear, detailed and realistic explanation of how project will be implemented

– Includes a credible explanation of how it will achieve CED goals

– Identifies milestones and links them to project outcomes




1 (cont)

Clear and well-conceived overall approach to the project, with a sound and feasible implementation plan that is consistent with the expectations described in the FOA and covers all years of the project, including specific milestones to be achieved.

– Includes a credible explanation of how each milestone will be achieved

– Discusses potential obstacles, with strategies to address them

– Includes a quarterly timeline covering all years of the project and identifying when the specific milestones will be achieved




2

Positions will be created in a viable industry with promising short- and long-term job outlooks.

– Presents a credible market analysis of the business to be developed and its industry, that supports a positive short- and long-term job outlook and identifies any critical risks relating to the specific business and/or industry, backed up by data from relevant published sources not more than five years old




3

The business will be viable in terms of competition, anticipated market, customer base, and market trends.

– Includes the results of sound market research analyzing competition, estimated market share and sales; and analyzing customer base by market segment, market size and trends; using data from published sources no more than 5 years old




3 (cont)

The business will be viable in terms of competition, anticipated market, customer base, and market trends.

– Clearly demonstrates the market analysis for the project area and makes sense for the given industry




4

Sound and reasonable recruitment strategy and tracking system to obtain and document low-income referrals with TANF, child support agencies, and other sources that will result in 75% of the new positions being filled by TANF recipients or other low-income individuals.

– Recruitment strategy appears realistic

– Strategy aims to have at least 75% of the created positions held by low-income people

– Jobs clearly counted by the number of positions created, not the number of individuals hired to fill them over the course of the grant




5

Willingness to participate fully in Federal evaluation(s) and allow evaluation protocols established by ACF or its designee contractor.

– Willingness to participate in any Federal evaluation activities is clearly stated




6

The physical facility and other equipment required to operate the project will be secured in ways that are consistent with the expectations described in the FOA.

– For projects involving real property acquisition, new construction or renovation, the application includes acceptable evidence of site control, such as a deed of ownership or a ratified purchase contract, option to purchase, or signed long-term lease agreement, with an effective term of sufficient duration as to cover the period of time to fully implement the project




6 (cont)


– Provides documentation of third-party financing commitments with effective time limits and reasonable terms and conditions for closing to fully fund the applicant’s total development cost of real property projects




6 (cont)


– For projects involving the funding of equipment purchases, the application provides evidence that that applicant has procurement policies and procedures in place to assure compliance with applicable federal procurement and property management requirements




7

Number and types of new full-time positions are appropriate for the project and will provide starting wages, wage growth opportunities, and employee benefits that will allow families to achieve self-sufficiency.

– Shows that the type and size of proposed project will reasonably require the projected type and number of new full-time, full-year, non-seasonal positions

– Shows that the type of newly created positions is realistic for target population to fulfill




7 (cont)

Number and types of new full-time positions are appropriate for the project and will provide starting wages, wage growth opportunities, and employee benefits that will allow families to achieve self-sufficiency.

– Includes job titles and descriptions showing livable starting wages and benefits (for example: paid time off, 401k, health care)

– Discusses projected wage growth opportunities, career ladder or career growth potential, how the positions will contribute to employees’ skill development




8

Positions will be sustained for at least 1 year after the end of the grant period by including the steps that will be taken to set up the project solidly and position it for continued success after the end of the grant and provides a discussion of the continued need for the positions after the end of the grant period.

– Reasonable effort has been made to explain how the project will position itself to retain the positions after project funding ends (e.g. a growth plan that shows that the operation will continue to need the positions and be able to cover the costs)

– Shows a relationship between the job creation targets in this section and the financial planning in the Financial Strategies section of the application




9

Confidential or sensitive information from staff, project participants and/or project beneficiaries will be protected during the project and disposed of after grant has ended.

– Indicates that reasonable efforts will be made to ensure that confidential or sensitive records will be properly collected, stored, and disposed of




10

For Loan/Revolving Loan Projects: Ensures loans will be made in accordance with program rules.

– Describes the initial loan(s) to be made from the grant including the name of the specific business(es) receiving the loans, the type(s) of the business(es), and business development plan(s)

– Includes draft copies of the loan agreement(s) showing the terms and conditions of the loan(s), a commitment by the borrower(s) to create new, full-time, full-year jobs - at least 75 percent of which will be filled by low-income individuals - and an interest rate to be charged that will be at or below market rates




10 (cont)


– Describes strategies to ensure that all loans, either initial loans or subsequent future loans, from any revolving loan fund will go to eligible recipients for business development activities

– Indicates that the interest rate charged will be at or below market rate

– Indicates that copies of executed loan agreements will be submitted to ACF upon establishing such loans with program participants




10 (cont)


– Indicates that any interest accrued on revolving loan funds will be used to continue or expand the activities of the originally approved project during the grant period; and that any repaid principal on such loans that is no longer needed for the originally authorized purpose of the project will revert to ACF



Narrative question: Overall, does the project present a clear and well-conceived implementation approach that is likely to achieve the project’s goals?



Points Available:

Scoring Guidelines: – 0 points = Implementation plan not feasible, unclear on

how goals will be achieved, or not provided– 10 points = Implementation plan potentially feasible but

not clearly explained and/or parts of the concept are problematic

– 20 points = Clear, well-conceived, sound and feasible implementation plan

Minimum

0Maximum

20


Self-Review Quiz

1. The criterion that positions be created in a viable industry with promising short- and long-term job outlooks is met by which of the following?a) A credible market analysis of the business to be

developedb) Identifies any critical risks relating to the specific

business/industryc) Supporting data that is not more than 5 years oldd) All of the above


Self-Review Quiz

2. The application must show the proposed project will have sustainable positions for how long after the end of the grant period?a) At least 6 Monthsb) At least 1 yearc) At least 2 yearsd) At least 3 years

3.2: BUSINESS PLAN – PROJECT VIABILITY



Business Plan – Project Viability

Basis for scoring: Whether the application demonstrates that all necessary resources will be available to implement the project as described in the business plan at the time of the award.– 15 points possible– Discussed on p. 41-42 of FOA




1

Adequate resources are available for project viability.

– Identifies all of the activities necessary for the success of the project

– Shows these activities are consistent with the project’s scope, scale and projected outcomes

– Demonstrates the staffing, facilities, equipment and supplies, and funding identified to support each activity appear reasonable




1 (cont)

Adequate resources are available for project viability.

– Identifies all sources of the staffing, facilities, equipment and supplies, and funding necessary for the project

– Demonstrates that any competing activities that might reduce the availability of the resources for this project have been identified

– Identifies competing activities that might reduce the availability of resources for this project and how these will be managed




2

Project will have the capacity to responsibly manage and adequately protect any Federal funds awarded for the project through a financial management system that complies with 45 CFR Part 74.

– MUST SHOW: Includes documentation such as financial statements from the last 2 years showing an operating budget consistent with the amount of funds requested and that demonstrates capacity to manage funds responsibly (for new entities, application can include a statement from an organization official attesting to the applicant’s financial health and the systems to be implemented)




3

For Projects that Involve Partners that will Directly or Indirectly Spend CED Funds: Procedures are in place to ensure that any project partner will comply with all program requirements.

– Provides project partner agreement signed by all parties and addresses compliance requirements for all duties to be undertaken by the partner

– Clearly shows compliance requirements include specific mention of income documentation, interest rates for revolving loan funds, use of accrued interest, funds management, record-keeping and/or monitoring requirements




3 (cont)

For Projects that Involve Partners that will Directly or Indirectly Spend CED Funds: Procedures are in place to ensure that any project partner will comply with all program requirements.

– Provides a compliance plan which describes roles and responsibilities and convincingly addresses program requirements from FOA:

At least 75% of positions filled by low-income/TANF

Low-income eligibility determinations Retention strategies Expenditure documentation Monitoring Reporting on positions created




4

For Projects that will require non-CED funds, the extent to which: Commitment for outside funding is provided and the degree to which future program income is necessary.

– Demonstrates evidence of firm commitments for loans, municipal or State tax credits, equity stock investments, or other supporting grants (i.e.: signed letters of commitment from lenders, investors, donors, and grantors)

– Demonstrates that the signed letters of commitment from lenders, investors, donors, and grantors explicitly state an unconditional financial commitment to the project totaling at least the amount of non-CED funds necessary




4 (cont)

For Projects that will require non-CED funds, the extent to which: Commitment for outside funding is provided and the degree to which future program income is necessary.

– Demonstrates that future program income is not necessary for the implementation of the project design as outlined in “Business Plan – Project Implementation”




5

For Projects that Involve Partners that will Directly or Indirectly Spend CED Funds: Demonstration of the project partner’s role, financial viability and ability to track and report on federal funds, as well as a signed partnership agreement.

– Outlines the role of the project partner and describes the relationship between the applicant and the project partner

– Provides a copy of the signed partnership agreement between the applicant and each project partner that includes a description of roles and the relationship between the applicant and project partner




5 (cont)

For Projects that Involve Partners that will Directly or Indirectly Spend CED Funds: Demonstration of the project partner’s role, financial viability and ability to track and report on federal funds, as well as a signed partnership agreement.

– Demonstrates that all project partners that will be responsible for directly or indirectly spending CED funds are financially viable and have the capacity to manage responsibly any federal funds by:

Discussing the partner’s history as an organization and financial stability

Discussing the partner’s experience managing federal funds

Demonstrating that the partner has a financial management system that complies with 45 CFR Part 75, is in place, or there is a specific plan for procurement




6

For Equity Stock Investment Projects: Project will comply with 45 CFR Part 74.36 concerning intangible property and application provides clear purpose(s) for which stock investments will be made.

– Demonstrates that the stock investment agreement fully complies with intangible property rules (45 CFR Part 74.36)

– Demonstrates the purpose(s) for which stock investments will be made

– Demonstrates the type of equity stock transaction

– Presents the cost-per-share and basis on which it was arrived




6 (cont)

For Equity Stock Investment Projects: Project will comply with 45 CFR Part 74.36 concerning intangible property and provide clear purpose(s) for which stock investments will be made.

– Presents the number of shares the applicant will purchase and the percentage of ownership in the business (investment must be at least 25% of the businesses’ assets on balance sheet)

– Presents the term or duration of agreement

– Shows board representation (it must be clear that the grantee will have appropriate representation)




7

For Loan/Revolving Loan Fund Projects: Demonstrates compliance with all terms of 45 CFR Part 74.21 concerning intangible property and provides draft copies of agreements demonstrating key loan terms.

– Provides a model agreement demonstrating how each agreement will include:

The purpose(s) for which loans will be made Interest rates and other fees Loan period Repayment schedule Collateral security required Default and collection procedures Signatures of authorized officials of the lender

and borrower Compliance with intangible property rules



Narrative question: Does the application have all necessary resources to be successful, and does the application show that all partners will comply with the program requirements?



Points Available:

Scoring Guidelines: – 0 points = Adequacy of resources and compliance plan not

demonstrated or secured– 8 points = Adequacy of resources and compliance are not

fully documented – 15 points = Clearly demonstrates adequate resources and

plan for program compliance

Minimum

0Maximum

15


Self-Review Quiz

1. To demonstrate that adequate resources are available for the project that application must show which of the following?a) Identification of some activities necessary for the success

of the projectb) Demonstration of the staffing, facilities, equipment and

supplies, and fundingc) Identification of competing activities that might reduce

the availability of resources for the projectd) B and Ce) All of the above


Self-Review Quiz

1. To demonstrate that adequate resources are available for the project the application must show which of the following?a) Identification of some activities necessary for the success

of the projectb) Demonstration of the staffing, facilities, equipment and

supplies, and fundingc) Identification of competing activities that might reduce

the availability of resources for the projectd) B and Ce) All of the above


Self-Review Quiz

2. To illustrate an adequate financial management system, the application must show which of the following?a) Financial statements showing an operating budget

consistent with the amount of CED funding requestedb) Financial statements showing revenues consistent with

the amount of CED funding requestedc) Financial statements showing expenses consistent with

the amount of CED funding to be spentd) All of the above

3.3 BUSINESS PLAN – FINANCIAL STRATEGIES



Business Plan – Financial Strategies

Basis for scoring: The extent to which the application demonstrates sound and reasonable financial strategies that have a high likelihood of leading to the success of the project.– 10 points possible– Discussed on p. 42 of FOA




1

Project is ready to be implemented and will be economically feasible by the end of the grant period, and for at least one year thereafter. Project costs and organizational expenses are reasonable and necessary.

– Includes actual past (and/or forecasts of) profit and loss statements, comprehensive sources and uses of funds statements (showing both CED and non-CED sources), cash flow statements, and balance sheets showing detailed costs and expenses




1 (cont)


– Includes detailed narrative explanations and assumptions in the financial documentation

– Shows no need for additional cash infusions from outside of operations by year three (non-construction) or five (construction projects), as well as ongoing operations in year four (non-construction) or six (construction)




1 (cont)


– Allows for analysis of the financial plan, and that analysis demonstrates that the assumptions in the forecasts are reasonable (for example, the percentages used for income and expense increases over time)




1 (cont)


– Contains financial documentation showing that costs are necessary and are within reasonable market rates

Note: if insufficient financial documentation was provided to allow for any financial analysis, points cannot be awarded for this section




2

Financial estimates for project are reasonable.

– The application clearly demonstrates that the financial estimates are grounded in solid assumptions

– The application demonstrates the necessity, reasonableness, and allocation of the proposed costs




3

Cost per full-time, regular position will not exceed $20,000 for non-construction projects and $25,000 for construction projects.

– Clearly demonstrate the cost per position will not be greater than $20,000 for non-construction projects and $25,000 for construction projects. Cost per position can be calculated by dividing the funds requested by the number of proposed positions created.




4

For Construction Projects:Costs for construction activities are necessary and within reasonable market rates.

– Includes sufficient documentation to enable the reviewer to analyze proposed costs for property acquisition, predevelopment, architectural/ engineering services, environmental study, permits, occupancy, hard costs; and reviewer concludes that costs appear reasonable and necessary




5

For Loan or Revolving Loan Fund Projects: Demonstrates CED Funding will be used appropriately pertaining to beneficiaries and interest rates.

– Provides strategies to ensure that loan funds go to low-income borrowers for business development activities

– Ensures loans will be provided at interest rates lower than traditional loans

– Demonstrates that loan agreements will show how the applicant will comply with all terms of 45 CFR 74.36 concerning intangible property



Narrative question: Overall, does the application demonstrate an economically feasible financial plan and fulfill CED programmatic requirements?



Points Available:

Scoring Guidelines: – 0 points = Costs unreasonable, no plan for self-sufficiency,

no system identified– 5 points = Costs reasonable, plan for sustainability

minimally adequate, or system identified but not in place– 10 points = Costs reasonable, plan realistic,

tracking/reporting system in place

Minimum

0Maximum

10


Self-Review Quiz

1. The basis for scoring the Business Plan – Financial Strategies portion of the application is what?a) Whether the project’s financial plan is reasonableb) Whether the project fits within CED’s cost per position

requirementsc) Whether the project will be sustainable by the end of the

grant period and for one year thereafterd) All of the above


Self-Review Quiz

2. What is the maximum cost per position for non-construction projects?a) $15,000b) $20,000c) $23,000d) $25,000


Self-Review Quiz

3. To demonstrate that the project will be economically feasible, the application should include what?a) An illustration that the cost per position is allowableb) Documentation from project partners indicating that

they will match funds provided by the CED programc) Profit and loss statements, sources and uses statements,

cash flow statements, and balance sheetsd) All of the above


Self-Review Quiz

3. To demonstrate that the project will be economically feasible, the application should include what?a) An illustration that the cost per position is allowableb) Documentation from project partners indicating that

they will match funds provided by the CED programc) Profit and loss statements, sources and uses

statements, cash flow statements, and balance sheetsd) All of the above


Module 3 Wrap-up

What you’ve learned…– The basis for scoring the Business Plan criterion– Guidance on evaluating each Business Plan sub-criterion

• Project Implementation• Project Viability• Financial Strategies

– Direction on how to score each sub-criterion What’s next?– Module 4: Organizational Capacity

CED Application Reviewer Training Module 3: Business Plan June 2012.

Documents

Transcript of CED Application Reviewer Training Module 3: Business Plan June 2012.