The Community Economic Development Program offers discounted advances and letters of credit to help develop and revitalize communities. Funds are available on an ongoing basis to member financial institutions holding stock in the Federal Home Loan Bank of Chicago (FHLB Chicago) and making qualified loans to private for profit, not for profit or public entities to finance commercial and economic development projects. Members' economic development loans qualify for the program if the entity they are financing: Is located in an eligible geographic area (Geographic Beneficiaries); Qualifies as a small business per the Small Business Administration's definitions (Activity Beneficiaries); or Serves or employs income-eligible individuals (Individual Beneficiaries). Members are encouraged to provide favorable rates and terms to borrowers on qualifying activities. The Community Economic Development Program is governed by the Community Investment Cash Advance (CICA) Regulations, 12 CFR Part 952 (.pdf). Community Economic Development Advances and Standby Letters of Credit can qualify under the Community Investment Program (CIP), Urban Development Advance (UDA) or Rural Development Advance (RDA) provisions indicated in the CICA regulations. The FHLB Chicago uses median income guidelines published annually by the Department of Housing and Urban Development to determine income eligibility. Advances Community Economic Development Advances (CEDAs) are priced at the FHLB Chicago's cost of funds for similar maturities. CEDAs provide the flexibility lenders need to link these assets with matching liabilities by offering both a preferential rate and a term from one month to ten years. Rates are listed on the FHLB Chicago's Daily Rate Indications under the CICA column. All advances fall under the credit and collateral policies of the FHLB Chicago. The maximum advance amount is based on qualifying loan balances. Standby Letters of Credit Letters of Credit (LOCs) can be used to provide credit enhancement for the issuance of taxable bonds for community development related activities. CICA LOCs are offered at a fee of 8 basis points per annum plus an upfront administrative fee. Use of the standby LOC may result in a more favorable interest rate for the bonds, reducing the overall cost of the project. (LOCs are also governed by Federal Regulation 12 CFR Part 960.) Eligible Uses Economic development projects may qualify for CICA rates under any one of the following: Geographical Beneficiaries The project/property is located in any one of the following areas: A census tract where median income is at or below 100% of the area median income in urban areas, and 115% of AMI in rural areas; A Champion Community and Empowerment Zone or an Enterprise Community, as designated by the Secretary of USDA or the Secretary of HUD; An Indian area as defined by the Native American Housing Assistance and Self-Determination Act, Alaskan Native Village, or Native Hawaiian Home Land; An area affected by a military base closing and is a "community in the vicinity of the installation" as defined by the Department of Defense; A designated community under the Community Adjustment and Investment Program; or A Federally or state declared disaster area. Activity Beneficiaries   The project meets the Small Business Administration's (SBA) definition of a small business. Small businesses are generally businesses with a maximum of: 500 employees for most manufacturing and mining industries 100 employees for most wholesale operations $750,000 in annual receipts for most crop production activities $6.5 million in annual receipts for most retail and service industries Individual Beneficiaries   At least 51% of the annual salaries of the permanent full and part-time jobs computed on a full-time equivalent basis, created or retained by the project, other than construction jobs, must be at or below 100% (in urban areas) or 115% (in rural areas) of the area median income for a 4-person household; At least 51% of households who otherwise benefit (other than through employment) or are provided services by the project must have incomes at or below 100% (in urban areas) or 115% (in rural areas) of the area median income for a 4-person household; Examples of Eligible Projects   Commercial Loans: retail stores, offices, hotels, wholesale suppliers Agricultural Loans: farm refinance/expansion, equipment acquisition Public Infrastructure Loans: water and sewer system upgrades, bridges, roads Loans for Public/Community Facilities: healthcare facilities, schools, and recreation, daycare, and social service centers Industrial/Manufacturing Loans Application Process   To apply for the FHLB Chicago's Community Economic Development Program, members must submit a completed CEDA Application (.doc) and provide documentation to verify that the loan(s) qualify for the CICA rate. Acceptable documentation may include: The project/property address - to verify location in an income-qualifying census tract., or Salary information for FTE (full time equivalent) employees (e.g. payroll records) - to verify that 51% or more of FTE employees earn salaries at or below the applicable income limit, or Income information for households served by the project - to verify that 51% or more of beneficiaries served by the project earn salaries at or below the applicable income limit, or Documentation of number of employees or annual gross receipts - to verify that the business meets the SBA's definition of a small business. Applications for advances are generally approved within 2 business days. Applications for LOCs are referred to the FHLB Chicago's legal counsel following confirmation of CEDA eligibility. Legal counsel will contact the member directly to complete the LOC process. All CEDA-eligible loans must be originated within 90 days prior to drawing funds with the FHLB Chicago. After the application for CEDA funding is approved, credit is extended for the lesser of 30 days from CEDA approval date or 90 days from the loan's orgination date. If an underlying loan has not been originated, funding with the customer and the FHLB Chicago must take place within 90 days of application approval. If a credit application is not funded within this time frame, it expires. To fund advance applications, members must notify Community Investment staff and submit an Application for Advance (.doc) signed by two authorized signatories. Community Investment staff can provide you with the names of the individuals authorized by your institution to sign for advances.

NORBCO, Inc., a dairy equipment manufacturer, operated out of a small warehouse in upstate New York. NORBCO opened a state-of-the-art facility in rural Tomah, Wisconsin in 2000, positioning itself to better serve the large Midwestern dairy operations. After three successful years in Tomah, NORBCO again needed room to grow. In 2003, NORBCO approached Acuity Bank of Tomah, Wisconsin in search of nearly $800,000 in fixed-rate financing for this expansion. Acuity Bank obtained a Community Economic Development Advance (CEDA) from the FHLB Chicago, which enabled it to provide fixed-rate resources to NORBCO at a competitive interest rate. Click here for complete story.