South Dakota development corporations are not seeing the same economic pattern that is happening nationally. We hear of layoffs and rising unemployment in other parts of the country, along with foreclosures and declining home values. In South Dakota, the challenge is finding workers to fill the job demand and finding affordable homes for that new labor force. There are exceptions, but on the whole we're weathering the current economic storm fairly well. But South Dakota is not an island-what happens nationally and globally will have an effect on our local economies.

In most cases the primary assets on local development organization's balance sheet are loans or real estate. Protecting your assets and your customer's assets is a priority, as they are the tool to service your liabilities. What can you do to help your organization and your local businesses through these economic times?

1. Review every loan file and make sure your collateral is perfected. I regularly see UCC filings which have been allowed to expire.
2. Make sure you have documented modifications being implemented on loans where your organization agreed to extend the term or modify the payment.
3. Make sure that your documents allow you to collect financial information, at least annually, over the life of the loan. If not, visit with the borrower/business to modify the agreement so that you can collect the information at the same time they provide it to their bank.
4. Do an annual review with the business: collect the data, including financial statements and tax returns; review collateral that includes inventory, accounts receivable, equipment or other moveable or highly depreciable items, and visit with the borrower to understand what they are experiencing so that you can determine how you might assist them. If you meet resistance, explain that your job is not only to help them get started or expand but to stay financially healthy.
5. Make sure your development organization has a risk rating system in place in order to analyze the information collected and determine a risk rating to be reported to your development board along with the recommended loan loss reserve you will need on each individual borrower. We recommend a minimum of 5% loan loss reserve on the aggregate amount of all loans outstanding. This could be higher depending on the level of risk you have determined.
6. Check with your local county treasurer on all real estate that you either have leased or have a mortgage on to ensure that the taxes have been paid.
7. If you have leases outstanding on your balance sheet, review those leases to see if your lease allows collecting financial data as discussed above.

Most of you are doing the things I've suggested-and more. If you would like to share your good ideas with other communities, please get in touch with me and I'll pass them on. If you have questions or want me to visit your organization, please contact me through South Dakota Rural Enterprise, or 605-350-1371.

2008 AUTUMN REPORT
	Entrepreneur Fairs focus on the future
	South Dakota heritage will serve us well today
	Development Institute provides creative networking opportunities
	CVAC communities are building success
	SAVE THE DATE
	Positive actions for troubled economic times
	Qualifying is easier for the 2008 Dakotas America New Markets Tax Credit allocation
	New Markets Tax Credit Low Income Communities by County
	Gregory and Lakota Fund receive "Success Stories" awards