Technical Assistance

Technical assistance (TA) is the coaching, training and advice that goes along with a loan. A borrower might get help writing a business plan, setting up bookkeeping, pricing a product, managing cash flow or repairing credit. It can happen before an application, as a condition of approval or during repayment. CDFI rules call this kind of borrower support development services.

The term has a second meaning. Funders also give TA awards to lenders themselves, to build staff and systems. The CDFI Fund's CDFI Program, for example, offers TA grants for capacity building and to help emerging lenders become certified.

Several programs expect lenders to provide TA to borrowers:

• To earn CDFI certification, a lender must show a track record of development services alongside its financing. It can deliver them directly, through an affiliate or through a contractor.
• In the SBA Microloan Program, intermediaries receive grants to give microloan borrowers marketing, management and technical assistance. Some of it can go to prospective borrowers.
• Many foundation and state programs ask lenders to report how many borrowers were coached and what followed.

Why it matters for lenders

For a mission lender, TA is part of the credit strategy. A first-time owner with a thin credit file may become a sound risk once she has a cash flow plan. Coaching can also catch trouble early. A call after a first missed payment can lead to a fix before the loan goes deeply delinquent.

TA also creates compliance and reporting work. If coaching is a condition of approval, the file must show it happened. If a funder pays for TA, the lender must show hours, topics and results. Coaching notes often hold sensitive personal details about income, health or family, so access must be limited to the people who need it.

How it works in practice

A loan fund approves a $15,000 loan to a food truck owner, on condition that she completes two sessions on cash flow planning. The condition is written into the approval. The coach logs each session against the borrower record: date, length, topic and next step. When a partner business center runs a workshop, its staff use a short form that writes to the same record.

At year end, the fund can report how many borrowers received coaching and how many hours were delivered. It can also compare how coached borrowers repaid against others, read with care. Funds that track coaching in calendars and personal notes often struggle to prove the service happened at all. That weakens both their impact reporting and their certification reviews.