State Small Business Credit Initiative ( SSBCI )

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1 Broward County Mayor Sharief Business Loan Seminar Thursday, April 17, 2014 State Small Business Credit Initiative ( SSBCI )

2 Overview of Enterprise Florida Enterprise Florida (EFI) is Florida s principal public-private economic development organization devoted to statewide economic development. EFI works in collaboration with the Florida Department of Economic Opportunity and a statewide network of regional/local economic development organizations to promote job creation and diversify Florida s economy. EFI focuses on a wide range of industry sectors, including clean energy, life sciences, information technology, aviation/aerospace, homeland security/defense, financial/professional services, and manufacturing.

3 SSBCI Funds Allocation to FL Created as part of the Small Business Jobs Act of 2010, the State Small Business Credit Initiative (SSBCI) is managed by the U.S. Treasury Department to help states either strengthen existing loan and equity programs or create new programs. $97MM Venture Capital Loan Support Capital Access Program

4 How it works Small Business Lender Bank Credit Union CDFI SSBCI Loan Support Loan Guarantee Loan Participation

5 Loan Guarantee Provides a lender with a partial guarantee as the credit enhancement required to ultimately approve a loan. Typical guarantee will be between 5-20% of the loan amount, up to a maximum 50% (1:1 min) Maximum guarantee is $1,000,000 Total private financing cannot exceed $20,000,000. Maximum guarantee term is five (5) years, typical term is three (3) years (cash flow stabilization). Interest rate is determined by the lender Up-front fee is 1.50%, annual fee is 1.00%.

6 Loan Participation With CDFI s (small loans) Provides funding for 50% of the loan 504 Bridge Loan Bridges the SBA participation (2 nd mortgage) in an SBA 504 loan Mainly for RE / Equipment financing Typical loan participation is 100% of second mortgage note Minimum $250,000 loan amount; maximum $5,000,000. Typical term between 3 to 18 months (until SBA take-out) Interest rate typically mirrors rate on 1 st mortgage Fee is typically.25% of participation Any Certified Development Company (CDC) can participate

7 Results Began in 2012 Committed $15.5MM for 22 loan guarantees Committed $24.5MM for 28 loan participations 1,035 Jobs induced

8 Eligible Participants The list of eligible companies is exhaustive. Some examples include, but certainly are not limited to: Business Services Contractors Distributors Exporters Service Companies Trucking Companies Wholesalers

9 Ineligible Participants Additionally, the company cannot participate if it is: a business engaged in activities that are prohibited by federal law or applicable law in the jurisdiction where the business is located or conducted. (Included in these activities is the production, servicing, or distribution of otherwise legal products that are to be used in connection with an illegal activity, such as selling drug paraphernalia or operating a motel that knowingly permits illegal prostitution); or a business engaged in gambling enterprises, unless the business earns less than 33% of its annual net revenue from lottery sales.

10 Ineligible Participants The company cannot participate if it is: a business engaged in speculative activities that develop profits from fluctuations in price rather than through normal course of trade, such as wildcatting for oil and dealing in commodities futures, unless those activities are incidental to the regular activities of the business; a business that earns more than half of its annual net revenue from lending activities; a business engaged in pyramid sales, where a participant s primary incentive is based on the sales made by an ever-increasing number of participants.

11 Eligible Loan Purpose The loan/investment proceeds must be used for a business purpose. A business purpose includes, but is not limited to: Startup costs Working capital Business procurement Franchise fees Equipment Inventory Owner-occupied real estate Purchase, construction renovation or tenant improvements of an eligible place of business that is not for passive real estate investment purposes

12 Ineligible Purposes The loan/investment proceeds may not be used to: acquire or hold passive investments such as commercial real estate ownership, purchase of securities; or financing lobbying activities, repay delinquent federal or state income taxes unless the borrower has a payment plan in place with the relevant taxing authority; or repay taxes held in trust or escrow, e.g. payroll or sales taxes; or reimburse funds owed to any owner, including any equity injection or injection of capital for the business continuance; or support unguaranteed potions of SBA-guaranteed or other federally guaranteed loans.

13 Questions? David Rodriguez Manager, Capital Programs (407)