What is an ecommunity 

What is an E-Community?

A NetWork Kansas E-Community has made a commitment to cultivating an entrepreneurial environment by identifying and developing resources to help local entrepreneurs start or grow businesses. Selected communities partner with NetWork Kansas to establish a locally-administered loan fund to assist entrepreneurs with capital, to increase connectivity to resources available to assist entrepreneurs and small businesses, to initiate activities to generate entrepreneurial development, and to participate in a statewide partnership with other E-Communities.

The E-Community Partnership has grown from six communities in 2007 to sixty through 2017. More than $15.4 million has been loaned to over 480 businesses leveraging an additional $75 million of additional capital (bank loans, owner down payment, resource partner loans, etc.).

Goals of the E-Community Partnership

  • Grow a flourishing, sustainable entrepreneurial environment supportive of business startups and expansions
  • Engage and/or develop entrepreneurial resources to meet identified community and business needs
  • Create a revolving loan fund to provide matching loans to entrepreneurs and small businesses with local control of decisions and terms
  • Forge a community vision centered around entrepreneurship as a tool for economic development

Components of an E-Community

A NetWork Kansas E-Community has made a decision to proactively pursue entrepreneurship as an economic development strategy.  The following components are present in all 60 E-Communities:

  • Local leadership teams, committed to meeting regularly to provide the overall direction and leadership for the E-Community and to discuss ways to create a flourishing environment
  • Local financial review board, tasked with acting as the loan committee for E-Community loan applications
  • Locally-controlled revolving loan fund
  • Active engagement with local sources of public and private funding
  • Access to a statewide network of over 500 partners, focusing on connecting entrepreneurs and small business owners to the education, expertise and economic resources they need
  • Access to entrepreneurship programming designed to benefit different types of businesses
  • A marketing fund to support the development and/or implementation of special projects and initiatives

E-Community Impact


FAQs about the E-Community Program

Question: Are there restrictions to the funds, and/or what projects/businesses qualify for an E-Community loan?

Answer: The funds must be utilized to provide matching loans to for-profit businesses in the geographical parameters of the E-Community, as per the E-Community Award Agreement.

The annual loan fund max, loan max per business and other restrictions and explanations of Level 1, 2 and 3 can be found in Appendix A of the E-Community Award Agreement.
 
NetWork Kansas has determined that the following are eligible uses for E-Community loan funds, as long as they are tied directly to the business/project in the loan application: purchase of land, real estate, inventory, equipment, as well as blue sky (in the instance of the purchase of an existing business) and working capital.  The above is just a guideline.  The E-Community has autonomy to determine that any of the above uses are not eligible.  
 
NetWork Kansas has determined that at a minimum, the following are NOT approved uses for E-Community loan funds:  paying off or refinancing debt, salary or owners draw, payroll taxes, non-profit businesses, building/storefront renovation that is not tied to a specific business (i.e. renovating a building/storefront in hopes it will be easier to rent/lease/sell is not an acceptable use of funds. However, if a business has agreed to rent/lease/purchase the building/storefront if certain renovations or leasehold improvements are made, and that is document in the E-Community loan application, that is an acceptable use of funds), tearing down or renovating a building to create apartments, and housing (if the result of the E-Community loan will be a business with apartment/loft above or attached, NetWork Kansas must give prior approval or it is considered an unacceptable use of funds).  The E-Community has autonomy to determine additional types of businesses and/or uses that are ineligible for E-Community funds. 

E-Community, Appendix A, Summary of Benefits by Level (PDF)


Question: 
What is meant by matching loans?

Answer: The following scenario depicts a matching loan.  Assume the applicant needs a total of $60,000.  Also, assume the applicant is providing $10,000 of their own capital.  Of the remaining $50,000 needed, the E-Community can provide no greater than 60% of that gap (in this case, the E-Community funds could be no more than $30,000 of the $50,000 needed).  The other 40% minimum (in this case, $20,000 of the $50,000 needed) must come from a financial institution (defined as a bank or credit union) and/or a local/regional public source of capital (defined as city/county revolving loan fund, microloan, Certified Development Company funds, USDA, IWW Main Street, Community Foundation).  In this way, the E-Community funds "match" other loans.

Note: A line of credit at a bank can count as the match, however, the only amount that can qualify as the match is the amount that is drawn down at the time of the E-Community loan application. (This tends to cause confusion so please ask your E-Community coach for further explanation).
 
The annual loan fund max, loan max per business and other restrictions and explanations of Level 1, 2 and 3 can be found in Appendix A of the E-Community Award Agreement.


Question:
 If selected as an E-Community, where do the funds go?

Answer: NetWork Kansas has established three regional loan funds/bank accounts (western, central and eastern).  See map below.  The funds remain in the regional account until an E-Community has approved a loan (or approved using loan funds for a board certified program) and requests a portion of their allotted funds from NetWork Kansas by submitting a formal check Check Request and all necessary documentation.  As the business makes loan repayments, those repayments go back into the regional account. 


EComm Map - 2017


Question: Is the annual loan fund max, as listed on Appendix A of the E-Community Award Agreement, a hard cap?

Answer: If an E-Community approves a loan (or approves using loan funds for a board certified program) and that one approval would cause them to exceed their annual loan fund max, they are allowed to fully fund that loan approval (or program).  At the point that loan approval or program is funded, they will be considered to be at their annual loan fund max.

The annual loan fund max, loan max per business and other restrictions and explanations of Level 1, 2 and 3 can be found in Appendix A of the E-Community Award Agreement.

Question: When an E-Community has approved a loan application, how do they request funds?

Answer: Go to networkkansas.com/ecommunities, click E-Communities and select Resources for E-Communities from the menu that appears. Follow the procedures underneath the heading: Steps for Requesting E-Community Funds. Another way to access this information is by selecting this direct link: www.networkkansas.com/ecommunities/e/resources-for-e-communities.

Question: If a business defaults on their loan, is the E-Community responsible for reimbursing the bank account?

Answer: No. The E-Community has the discretion to pursue collection or legal action, at their expense, and if funds are recovered, they are to be returned to the E-Community regional bank account.  If the E-Community has made good-faith efforts to pursue past due payments, and the Leadership Team votes to allow it, NetWork Kansas will assist by sending a letter to the business requesting payment.  If that letter isn't acknowledged by the business, and the Leadership Team votes to allow this next step, NetWork Kansas attorneys will send a registered letter to the business demanding payment and/or outlining the steps NetWork Kansas will take if payment isn't received.  If the E-Community chooses not to pursue collection or legal action, the E-Community regional account balance will be negatively affected by the default but the E-Community will not be liable for the balance of the defaulted loan. However, unrecovered funds will affect the E-Community Portfolio Score (see FAQ What is the E-Community Score).  Legal fees can be reimbursed to Administrative Support Organization before recovered funds are deposited back into the E-Community regional account.   

Question: How will tax credits be allocated?

Answer: NetWork Kansas will handle all tax credit donations. E-Communities will not be expected to raise funds through tax credit donations. E-Communities will have access to funds similar to those previously known as "marketing/admin" funds beginning July 1.

Question: How quickly must our E-Community loan funds be disbursed?

Answer: There is no timeframe specified. Our philosophy is that funding decisions should be made based upon each business's prospects for success and its ability to enhance the community in terms of economic and/or community benefits. Therefore, the disbursal rate for loan funds varies based upon individual conditions. However, as you can see in the question below, "What is the E-Community Score", loan usage is a factor. 

Question:  If the E-Community Administrative Support Organization is a local bank, how does the check process (both to the customer and repayment back to NetWork Kansas) work?

Answer: The bank must set up a separate account that will be used as a pass-through account (i.e. "'Name' E-Community"). The check to be written by NetWork Kansas for approved E-Community loans will be made payable to the account name on the pass-through account. The bank would deposit the NetWork Kansas check into the account and then issue a check to the business. When repayment by the business begins, the business must make the check payable to the account name on the pass-through account. The bank would deposit the business's repayment check into the account and then issue a check to NetWork Kansas for the amount due on the loan. NetWork Kansas is not allowed to write a check directly to the business or receive a check directly from the business.

Question: 
What is the E-Community loan dashboard?

Answer: 
The monthly loan dashboards provide a snapshot of the E-Community's loan portfolio. These include timely information like loans that are past due so communities know which businesses to reach out to. The dashboards provide historical information about the number of loans made and the average loan amount and interest rates for the community. Many leadership teams use them as a guide for making loan decisions by comparing their portfolio to the rest of the state. They can look at state-wide status of loans, (current, past due, failed, and paid in full) as well as average interest rates and loan amounts to add further context to loan decisions to entrepreneurs.

Question: 
What is the E-Community Score? 

Answer: The E-Community Score is calculated by the combination of the Loan Portfolio Score and the Entrepreneurship Activity Score.  See the following slides for further explanation: E-Community Score Slides (PDF)

Question: How do I improve my E-Community score/level and/or what are some examples of entrepreneurship activity NetWork Kansas is looking for?

Answer: The level was determined through a scoring process that takes into account both the E-Community's loan performance and entrepreneurship activity. (see FAQ What is the E-Community Score).  It is important to remember that a level of 1, 2 or 3 does not mean great, good and bad (or whatever words you want to use).  This is simply NetWork Kansas' way of evaluating the partnership and perceived priority level of entrepreneurship-led economic development in each of our 60 E-Communities.  It is a work in progress and we will continue to learn and make modifications as we go forward with this annual evaluation process.  Please reach out directly to your E-Community regional coach to discuss your score and how NetWork Kansas can play an active role in helping your team meet its goals for the next year, whether it be to move to a different level or continue as we have been.