Business Electricity Loan (BEL) Program, Policy & Procedures. Version May 27, 2008

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1 . Business Electricity Loan (BEL) Program, Policy & Procedures Program Purpose/Use of Loan Funds: Version May 27, 2008 The purpose of the program is to provide loan assistance to needy businesses to help pay the sudden increase in the price of electricity during the current electricity crisis emergency period. Eligibility: Applicant must meet all the following criteria to be eligible (eligibility does not guarantee receiving a loan): Legally registered to conduct business in Juneau, Alaska as of April 15, Business and owner declined similar amount of financing by a conventional lender, including the Small Business Administration. Repayment plan through AEL&P (required) must be inadequate to meet financial needs of business. In good standing with payment of city property tax and sales tax. Demonstrate financial need. Applicant must agree to coordination of financing and forbearance agreement among AEL&P, JEDC and others, including SBA. Complete application process and present all pre-requisites. Loan Terms: Maximum Loan Amount: Lesser of $10,000 or 70% of the actual AEL&P emergency cost of power adjustments billings starting in May and not to exceed August 31, Applications for loan assistance will be considered while loan resources last or the program is terminated, but no later than September 30, Unsecured. No loan or application fees. If credit report obtained, applicant will pay that cost.

2 Repayment: No payments due until rates return to normal (after the emergency COPA period ends) and then balance fully amortized over agreed upon term. The term of the loan will be typically 24 months. Loan terms can range from 12 to 36 months. Interest rate: The rate will be 3% fixed interest accrued from date of disbursement. In the event of extreme hardship, a business which is still deemed viable and otherwise eligible may be offered a lower interest rate. Late charges of 5% of scheduled payment or $25 whichever is more at 10 days past due. Fees for returned checks, declined credit card or ACH transactions are $25 each occurrence. No prepayment penalty. Marketing: Brochures/flyers at banks, AEL&P, bulletin boards and at public events such as the Community Energy forum. Applications at banks and AEL&P, downloadable from JEDC website based on the SBA Community Express application. PSAs on radio, GCI cable scanner channel, newspaper article, etc. Links to program info/application on and Juneau Unplugged sites Info on remaining fund availability will be updated on JEDC website, number of loans made, and if available at reasonable cost, aggregate conservation impacts of program. Application Process: 1. Applicant contacts JEDC for loan. 2. Applicant is interviewed to determine total need and likelihood of obtaining conventional financing. 3. All applicants will be referred to AEL&P for level-billing program or other restructure offered by AEL&P. 4. Applicants may be referred to SBDC or SBA for assistance in preparing loan application for conventional financing (including SBA loans) or other technical assistance including cash flow management, break-even analysis, etc. 5. Applicant gets info on ways to reduce electricity cost.

3 6. Applicant gets BEL application and checklist of required application documentation including: BEL loan application, documentation of financial position, decline letter, AEL&P 12-month history, current utility bills, documentation of AEL&P level billing agreement or other restructure/forbearance agreement, and documentation of business entity (business license, articles of incorporation, bylaws, etc.). 7. Applicant may be required to pay for credit report. Underwriting/Approval/Closing Process: 1. JEDC will not perform conventional credit analysis or underwriting based on evaluation of projected cash flow. Loans will be approved primarily, though not entirely, on the basis of eligibility. Applicants which otherwise eligible but which JEDC believes cannot or will not repay the loan, will be declined. Borrowers who are otherwise eligible but which JEDC believes have reasonable access to financing, will be declined. 2. JEDC will contact AEL&P to determine if current bill reflects level billing agreement and/or any other forbearance terms that have been agreed to by AEL&P. 3. JEDC will contact CBJ to determine if there are delinquent sales and/or property taxes due. CBJ will respond in writing within 1 business day. 4. JEDC will search State of Alaska database to determine if corporation or LLC Applicant is in good standing, verify ownership and legal entity name. 5. If JEDC believes Applicant has more access to financing than disclosed, JEDC will contact lender which declined credit to determine if the declined application was for a loan which reasonably approximates the amount and terms of the BEL loan request and/or if the decline was requested by the Applicant. 6. JEDC will order a credit report if it appears the Applicant s credit is expected to indicate the business is not viable. 7. JEDC will review the 12-month AEL&P history and interview the Applicant to determine whether the maximum loan amount can be based on the past year or whether some other basis should be used to determine the maximum amount of the Applicant s loan. (This determination will be the basis for the promissory note amount. Actual loan amounts may be less if the borrower s AEL&P bills are less than expected. Monitoring unfunded commitments will be required to ensure availability of funding for the loans approved do not exceed the amount available from CBJ.). 8. JEDC will prepare an approval recommendation summary sheet for all Applicants. 9. JEDC Revolving Loan Fund Director may decline applications. 10. JEDC Executive Director will approve or decline applications recommended for approval.

4 11. All declined Applicants will be sent a decline letter, stating one or more reasons for the decline. 12. Loans approved will be documented with a borrowing resolution as appropriate, a promissory note and personal guaranty of all members, partners or shareholders owning more than 20% of the business. Loan Funding/Disbursement and Payment Processing: 1. Upon execution of loan documents and presentation, JEDC will or fax a request for loan funding to CBJ Finance Director with a list of Loan numbers, borrower names, loan amount and requested advance. 2. CBJ will wire funds into JEDC s designated BEL account within 48 hours. 3. JEDC will disburse loan proceeds to AEL&P for the Borrower s accounts. 4. JEDC may make multiple disbursements from loans until Borrower s electricity costs are reduced to prevailing hydro-electric power rates. 5. When electricity costs are reduced, and it is determined no more advances will be made, JEDC will:. a. Remit the balance of any previously requested and undisbursed funds to CBJ; and b. Commence calculation of fully-amortized loan payments reflecting note rate, electronic payment discounts, prepare loan coupons, notify borrowers of payment due date, maturity date, etc. in the order of the borrowers AEL&P billing cycle dates. 6. The loan accounting system will be updated to reflect monthly payment, next payment due date, maturity date, interest rate and any other changes to borrower contact info on a current basis. 7. Payments will be applied as of the date payment is received. All payments will be credited to the BEL designated deposit account. 8. Paid promissory notes will be marked paid and returned to the Borrower with a printout of the loan transaction history. 9. Paid loan files will be archived by JEDC for three years after termination of the BEL program or transferred to CBJ at CBJ s direction. Collection Process: 1. Past due notices mailed at 10 and 20 days. 2. Borrower contacts and conversations will be documented in writing. 3. Certified letter mailed at 30 days stating amount due, warning of default and acceleration of balance at 45 days.

5 4. Demand, balance acceleration at 45 days. 5. JEDC may approve temporary forbearance agreement which will not increase the total loan amortization period by more than 120 days. 6. JEDC may waive late charges, fees or reduce interest if deemed necessary to help borrower repay loan principal. 7. Loan documents and loan transaction history transferred to CBJ or collection agency at CBJ s option at 60 days past due. Termination process: 1. JEDC will prepare unpaid loan files for transfer to CBJ. Files will include up to date loan history statement, calculation of principal, accrued interest and fees outstanding, borrower deposit and credit card account numbers used to perform electronic payment processing. 2. JEDC will notify all borrowers with outstanding balances to direct future payments as instructed by CBJ. 3. JEDC will provide final reporting of status of loans, accounting of funds received and collected, remit all CBJ funds in the ECBALP account. 4. JEDC will endorse and transmit all payments received after the termination date as instructed by CBJ. 5. JEDC will invoice CBJ with final costs within 60 days of termination.