RD230 - Virginia Small Business Financing Authority (A Component Unit of the Commonwealth of Virginia) Management’s Discussion and Analysis and Basic Financial Statements and Supplementary Information for the years ending June 30, 2014 and 2013

Executive Summary:
This section of the Virginia Small Business Financing Authority’s (the “Authority”) annual financial report presents management’s discussion and analysis of the Authority’s financial performance during the fiscal years that ended June 30, 2014 and 2013. Please read it in conjunction with the Authority’s financial statements, which follow this section. The annual financial report consists of three parts, management’s discussion and analysis, the basic financial statements and the notes to the financial statement.


The following information represents a comparative analysis of key financial aspects of the Authority’s operations between the years ended June 30, 2014 and June 30, 2013.

• The Authority received its second tranche under the SSBCI from U.S. Treasury during 2014.

• Clawbacks from inactive CAP banks totaled $360,528 for VCAP and $63,967 for TCAP.

• The funds received from the VCAP clawbacks were transferred back to the VSBFA operating account to refund the Authority for previous fundings that occurred over the life of the VCAP.

• Net assets went from $41,759,350 to $48,755,881 due primarily to the receipt of the SSBCI funds.

• Loans receivable outstandings dropped over $1.2 million dollars. Loan repayments exceeded loans disbursed during 2014.

• Allowance for doubtful accounts was lowered from 5% of outstandings down to 2% of outstandings based on the quality of the portfolios and their performance during the Great Recession.

• Cash Collateral Program has grown during 2014 and the VSBFA had $5.2 million in collateral accounts at a number of participating banks.

• Revenues increase from 2013's $1,417,766 to 2014's $1,733,185 due primarily to the aforementioned clawbacks. These revenues from clawbacks are used primarily for program enhancement, not operating expenses.

• Bond fee income dropped from $912,929 to $829,576. We expect this source of revenue to continue to drop as bonds pay down. The VSBFA is feeling the impact of the MOU it entered into in March of 2012 in which the VSBFA must share 40% of its bond fee revenue from issuances to non-profits with local EDA’s. In addition, the VSBFA is seeing fewer bond requests due to changes in the federal tax laws since 2010.

• Expenses increased from $724,276 to $752,078 due primarily to a charge-off in the Microloan program.

• The VSBFA entered into a MOA to provide up to $2 million in funding from the SSBCI funds to add to the state's venture capital fund - the Gap Fund – in partnership with Virginia’s Center for Innovative Technology (CIT).

• In January 2014 the host agency, the Department of Business Assistance was abolished and merged with the former Department of Minority Business Enterprise to form the new agency, the Department of Small Business and Supplier Diversity. There were no changes to the staff of the VSBFA.