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Jigar Shah, Director of the Loan Programs Office, discusses LPO's proactive risk management culture and rigorous due diligence processes.

Video Courtesy of the Department of Energy

How does LPO Manage Risk and Conduct Due Diligence?

The Loan Programs Office provides loans and loan guarantees to help American entrepreneurs and innovators cross the bridge to bankability to full market acceptance.

Every single action that we take here at the Loan Programs Office is really designed to be excellent stewards of taxpayer dollars. In the last ten years, we've added new leadership and a larger organization. This includes a Risk Management Division and Portfolio Management Division staffed with professionals with deep experience in underwriting and monitoring complex transactions for whom responsible stewardship of taxpayer money is a top priority.

We've also put into place specific checks and balances for managing risk at all transaction phases from the due diligence period all the way through conditional commitment, financial close, and finally, loan payoff. We also have robust loan monitoring. Our Portfolio Management Division leads LPO's loan monitoring process through the end of the loan term. This includes monitoring project cash flows to ensure debt repayment and reporting portfolio performance regularly.

We have been monitoring loans for over ten years. We visit the sites regularly. We monitor people to make sure that they're actually using best-in-class practices and best-in-class technology to be able to make sure that the loan can be fully repaid by the end of the term. And over the last ten years, we've put out over $32 billion in assistance to America's innovators and entrepreneurs. We set aside $5 billion in potential losses for that $32 billion in our portfolio and have only realized $1.07 billion of those losses. Today, our portfolio is investment grade, and we expect very few additional losses out of that original portfolio.

It's really important for us to be able to prove that we can actually help America's entrepreneurs and innovators really get across the bridge to bankability to full market acceptance. And that means making sure that every single project is successful or as successful as it can be.

Jigar Shah
Director of the Loan Programs Office
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