SBA 504 Loan Program Training Seminar

SBA 504 Loan Program Training Seminar Community Capital Development Corporation SBA 101 FY 2011

SBA 504 Loan Program Welcome! n CCDC Staff" n Please Ask Questions"

Why 7(a) and 504?! Access to Capital vs. Incentive Financing! 7(a) Access to Capital (Lender of Last Resort)" Businesses that cannot access conventional financing! Typically undercapitalized! Lacking in experience/track record! Specialized collateral/lack of collateral! Marginal historic cash flow! 504 Incentive Financing (Economic Development Financing)" Stimulate private sector investment in long term fixed assets! Increase productivity! Create new jobs! Increase and/or stimulate local tax base! Long term, low down payment, reasonably priced financing " to healthy, expanding businesses that have a " high probability of successfully creating new jobs. "

Why 7(a) and 504! 7(a)! n Working Capital" n Receivables" n Inventory" n Fixtures" n Equipment" n Building & Land" 504! n Land" n Acquisition of Building" n Remodel" n Construction" n Equipment" n Professional Fees" n Contingencies"

History of the 504 Program! n! n n n Created in October 1980; Section 503 of the Small Business Investment Act! 503 Program funded loans through the sale of Debentures to the Federal Financing Bank (a part of the U.S. Treasury)! 504 Program funds loans through the sale of Debentures to the Private Capital Markets! Since 1980, over 40,000 loans have been made representing financing of over $20 Billion, resulting in the creation or retention of over 1 million jobs!

503/504 Loans by Industry Type! Construction 5% Transportation 3% Others 5% Wholesale Retail 32% Services 33% Manufacturing 22%

Certified Development Companies (CDC)! n Licensed and regulated by the Small Business Administration (SBA)" n SBA grants geographic boundaries" n All CDC s operate Statewide, some are multistate" n Most are non-profit organizations" n Some are affiliated with public entities, or other non-profits " n CDC s have a Public Purpose - Economic Development"

CDCs...! n Must have professional staff available to:! n Market the Program" n Package and Process Loans" n Close Loans" n Service Loans" n Liquidate Loans! n Many CDC s administer other finance programs! n Revolving Loan Funds (CDBG, City, County)" n Other State and Local Programs " n SBA 7(a) Loan Packaging" n Microloan"

Certified Development Co.! n Certified Development Companies (CDC)! n Certified by SBA to market, process, underwrite, and close 504 loans" n Must service their portfolio" n Must continually produce an adequate number of loans to retain certification"!

Goals of the 504 Program! n n n n n Create Economic Development Opportunity in a Community" Provide Affordable Long Term Financing For Business Expansion" Give a Financial Incentive to encourage Private Lender Participation" Give A Financial Incentive to Stimulate Business Capital Investment" Provide Access to Public Capital Markets for Small Business" DEVELOPMENT COMPANIES ASSIST SBA BY STRETCHING SBA S LIMITED RESOURCES

Higher Collateral Risk In Exchange for Economic Development! The 504 loan program was created to meet economic development financing objectives. Its structure is specifically designed to be an incentive for lenders to participate in financing those businesses that will meet certain economic development criteria. "

Higher Collateral Risk In Exchange for Economic Development! Because of the unique economic development purposes of the program, it is appropriate to have different collateral requirements for 504 loans than those imposed on 7(a) financings. Generally, the primary CDC/SBA collateral will be a lien, subordinate to a third party lender, on the project property."

Higher Collateral Risk In Exchange for Economic Development! SBA will go out on the collateral limb farther than a conventional lender or than allowed under 7(a), in exchange for the economic development benefit that results from the financing."

Model 504 Financing Structure! CDC/SBA 40% Equity Injection 10% Private Sector Lender 50%

Structure Guidelines! n Private Sector Participants! n Usually a Bank; must have experience at this type of lending." n May take the priority lien on assets pledged as collateral." n Must offer term of 10 years if debenture is 20 years (or 7 if debenture is 10 years)." n May set rate and fees (legal and reasonable)." n Their loan cannot be guaranteed by SBA. "

Structure Guidelines! n CDC/SBA Participation! n Maximum is usually 40% of eligible project costs" n Takes a lien subordinate to the private sector lender on assets pledged as collateral for the loan" n Can offer either a 10 or 20 year term (depending on the assets financed)" n Provides a fixed interest rate loan" n CDC issues a debenture (bond) that is guaranteed 100% by SBA. "

Structure Guidelines! n Equity or Local Injection! n Minimum is usually 10%" n Limited use or Start Up 15%; Both 20%" n In the form of cash or equity in real estate" n Usually required of the borrower" n May be a loan from CDC or other lender (rare); if secured, it must be subordinate to CDC/SBA and private sector lender. (Term should be same or longer)"

Advantages of a 504 Loan! n For the Borrower! n Low Down Payment" n Fixed interest rate second mortgage loan" n Long Term Financing" n Rate of private sector financing usually more favorable (Low LTV)" n In credit crunch - getting a loan at all" n Collateral usually limited to project assets"

Advantages! n n For the Private Sector Lender! n Excellent Loan to Value " n Mitigates risk" n US. Government as Subordinate Lender" n Minimal restrictions on rates: rate must be reasonable" n Less paperwork and red tape than a 7(a) loan" n 504 first mortgage secondary market" For the Community! n Jobs" n Capital Investment; Tax Base Increase" n Stimulation of Other Development" n Greater Access to Capital for underserved markets!

What they may not like...! n For the Borrower" n Prepayment Penalty for the first half of term of CDC loan" n 504 financing limited to fixed assets" n Slightly higher fees/closing costs" n For the Private Sector Lender! n Bank Participation Fee (0.5% of bank loan, may be passed on to the borrower)" n The SBA process is tightly defined and there is little wiggle room to change the process"

Debenture Pricing Model! 10 Year Treasury " " "2.01%"" + Spread to Investor" " "0.86%"" = Debenture Rate " " "2.87%!! + SBA subsidy cost " " "1.04%"" + CSA fee " " " "0.10%"" + SBA Guarantee Fee " "0.125%" + Minimum CDC Servicing fee "0.625%" "" Full Term Effective Rate!!4.76%!!

Prepayment Penalty (20 Year)! YEAR! % % Of Principal Outstanding! 1 100% 104.76% 2 90% 104.28% 3 80% 103.81% 4 70% 103.33% 5 60% 102.86% 6 50% 102.38% 7 40% 101.90% 8 30% 101.43% 9 20% 100.95% 10 10% 100.47% After 10 0% 100.00%

Prepayment Penalty (10 Year)! % Of Principal! YEAR!!!%! Outstanding! 1 100% 103.76% 2 80% 103.00% 3 60% 102.26% 4 40% 101.50% 5 20% 100.75% After 5 0% 100.00%

Basic Eligibility for 504 Financing! n Be an Operating Business (Except for loans to Eligible Passive Concerns)" n Be organized for Profit" n Be Located within the United States" n Be Small Under the Program Size Standards" n Demonstrate the need for the desired financing" n Meet an economic development objective of the program"

Liquid Personal Resources! EXCESS PERSONAL RESOURCES MUST BE INJECTED INTO THE PROJECT PRIOR TO DISBURSEMENT OF ANY SBA FINANCING.! n If the Total Financing Package" n Based on the size of the project: personal liquid assets can not exceed the size of the project. If they do then the borrower may have to inject additional equity"

Additional Personal n LIQUID ASSETS: " Resources! n Cash or cash equivalent" n Savings Accounts, CD s, Marketable Stocks and/or Bonds" n Cash Surrender Value of Life Insurance" n Applies to personal resources of owner(s) of 20% or more" n IRA or other Retirement Accounts; Real Estate and Other Personal Property are Exempted." n Consider each owner separately. "

Additional Personal Total Financing Package =" " + First Mortgage" + GROSS Debenture" + Equity Injection" Resources! + Any other financing associated with but not included in 504 project"

Credit Not Available Elsewhere! SBA requires Lender or CDC to show that the desired credit is unavailable to the applicant from non-federal sources without SBA assistance.!! This must be indicated in the bank commitment letter and in the CDC credit memorandum.!

Credit Not Available Elsewhere! n FACTORS WHICH MAY PREVENT FINANCING FROM BEING AVAILABLE WITHOUT SBA ASSISTANCE.! n Repayment capability requires maturity period that exceeds bank s policy." n Bank s legal lending limit would be exceeded" n Bank s liquidity is insufficient without proceeds of secondary market sale of the loan, which is made possible by participation with SBA" n Uniqueness or value of available collateral is unacceptable to the bank" n Risk associated with the start-up nature of the business exceeds the bank s normal credit policy" n Any other factors relating to the credit in the lender s opinion cannot be overcome except for participation with SBA"

ECONOMIC DEVELOPMENT CRITERIA! n Jobs " and/or" n Community Impact" and/or" n Public Policy Goals" Community Impact and Public Policy Goals can only be used for Economic Development Eligibility when the CDCs Portfolio as a whole creates one job per $65,000 or better."

JOBS! n Create or retain one full time equivalent job for every $65,000 of SBA Guaranteed dollar in the project." n For Manufacturing businesses, create or retain one Full Time Equivalent Job for every $100,000 of SBA Guaranteed dollar in the project. " n Job Creation would take place in the first TWO YEARS after project placement." n Retained Jobs are jobs that would be lost BUT FOR the project."

Community Impact" n Improve, diversify or stabilize the economy of a locality" n Stimulate other business development" n Bring new income into the community" n Assist Manufacturing Firms" n Assist businesses in a Labor Surplus Area"

Public Policy Goals (aka National Objectives)" n n n n n n n n Revitalize a Business District of a community with a written and defined Revitalization or Redevelopment Plan" Expand Exports (10% or more of annual gross revenues from exporting)" Expanding Minority Enterprises Development (51% ownership; 8a definition)" RURAL Development (communities under 20,000 or with District approval)" Increase Productivity and Competitiveness (retooling, robotics, plant modernization, competition with imports)" Modernizing or upgrading facilities to meet health, safety and environmental requirements" Assisting Communities affected by Federal Budget Reductions including Base Closures or loss of Federal Contracts" Expanding business ownership opportunities for veterans and women"

Maximum Loan Amount! n An eligible entity may borrow up to 40% of the project or a total SBA guaranteed portion of $5 million." n An eligible manufacturing company may borrow up to 40% of the project or a total SBA guaranteed portion of $5.5 million." n If applicant (or affiliates) has existing SBA loans, the total guaranteed portion must not exceed the maximums stated above."

Minimum Loan Amount! n The debenture should be no less than $50,000. That translates to a project size of about $125,000." n With special permission from District Office, the debenture can be less, but can never be less than $25,000."

504 Size Standards! Tangible Net Worth of no more than $15 million AND Net Profit after Tax (2 year average) of no more than $5.0 million" -or-" Use 7(a) size standards as an alternative" " (Size standards increase by 25% in " Labor Surplus Areas)"

Ineligible Types of Businesses! n Non-Profit Institutions" n Finance Businesses (Banks, Finance Companies, Insurance Companies, etc)" n Real Estate Development and other Speculative Business" n Business Located in a Foreign Country [Legal Permanent Resident LPR]" n Pyramid Sales Distributions" n Businesses deriving more than 1/3 of Gross Annual Revenues from Legal Gambling" n Businesses that limit membership for reasons other than capacity"

Ineligible Types of Businesses! n Government Owned Entities (Except Tribal)" n Businesses Principally engaged in Teaching, Instructing, Counseling or Indoctrinating Religion or Religious Beliefs" n Consumer Marketing Co-ops (Producers Co-ops OK)" n Businesses earnings more than 1/3 of income from packaging of SBA loans" n Businesses in which the Lender or CDC or any of its associates owns an equity interest" n Businesses primarily involved in political or lobbying activities."

Ineligible Types of Businesses! n Businesses which present live performances of a Prurient Sexual Nature or derive more than de minimus gross revenues from the sale of products or services of a prurient sexual nature" n Unless, waived by SBA, businesses that have previously defaulted on a Federal loan or Federallyassisted financing" n Businesses where an associate is incarcerated, on probation or parole, or has been indicted for a Felony or crime of moral turpitude" n Businesses engaged in any illegal activity"

Eligible Use of Proceeds!! n Acquisition of Land" n Land Improvements" n Purchase of one or more existing buildings " n Operating Company must occupy 51%" n 504 Projects funds cannot make tenant improvements" n Remodel, convert, expand or renovate existing building(s)" n Refinancing of existing loan (not SBA) with some restrictions and for a limited time "

Eligible Use of Proceeds!! n Construction of New Building! n Operating Company needs to occupy at least 60% with plans to occupy 80% within 10 years. Can lease up to 20% indefinitely. Must plan to utilize the remaining 20% within 3 years.

Eligible Use of Proceeds!! n Acquisition of Machinery & Equipment (generally with a 10 year useful life)" n Contingency Reserve, not to exceed 10% of construction costs" n Professional Fees" n Repayment of Interim points, fees and interest" n Community Improvements up to 5% of construction costs"

Eligible Use of Proceeds!! n NINE MONTH RULE: Costs incurred within 9 months of the date of application to SBA can be included in project costs. " n Waivers available for good cause" n Land costs can always be included." n After two years, equity determined by appraisal. Otherwise, cost is always the basis."

Ineligible Use of Proceeds! n Working Capital" n Counseling Fees" n Incorporation or Other Organizational Costs" n Commitment Fees; Finance Broker Fees; Origination Fees for Private Sector Financing" n Franchise Fees"

Ineligible Use of Proceeds! n Equipment or Furnishings with less than a 10 year useful life, unless..." n They are an integral part of the project and/or" n They are a minor portion of the project" n Automobiles, Trucks, Airplanes" n Advertising" n Borrower Closing Legal Fees" n Goodwill"

CAN I DO THIS?! A customer is building a new grocery store facility in a rural community. Our Bank wants to lease space in the new store for a retail branch. We are planning a 15 year lease. The borrower also wants to lease small amounts of space within the store for a dry cleaner; a Fast-Foto processing company and a Pharmacy. "

CAN I DO THIS?!

CAN I DO THIS?! I have a customer that wants to hold title to his land and building is his and his spouse s name, and then lease it to his corporation. "

CAN I DO THIS?!

Eligible Passive Concern (EPC)! A small entity or trust which does not engage in regular and continuous business activity, rather it leases real or personal property to an Operating Company for use in the Operating Company s business."

Eligible Passive Concern (EPC)! n An EPC must use loan proceeds to acquire or lease and/or improve real or personal property that it leases to an Operating Company" n Any ownership structure or legal form may qualify as an EPC" n The EPC (with the exception of a trust) and the operating Company each must be small businesses under the appropriate size standards. They may or may not be affiliates depending on circumstances.

Eligible Passive Concern (EPC)! n Lease including options must have a remaining term equal to the term of the loan" n Operating Company will be a guarantor unless the loan proceeds are used to acquire personal property - then the OC is a co-borrow" n Each holder of an ownership interest of 20% or more of the EPC and/or the OC must guaranty the loan. Trustee shall execute a guaranty on behalf of the trust" n Rent paid by OC to EPC limited to PITI & maintenance"

CAN I DO THIS?! I have two customers who want to share ownership of a building for their businesses. One is an Air Conditioning Contractor and the other is a very successful Plumbing Contractor. In fact, the two sometimes work on projects together. They want to hold title to the building in an LLC, in which they are 50/50 members. The LLC would lease space to both businesses. "

CAN I DO THIS?! Jones AC is a Sole Proprietorship owned 100% by Bob Jones." Bill Smith Plumbing Inc. is a Corporation owned 90% by Bill Smith and 10% by Ray Roberts."

CAN I DO THIS?!

CAN I DO THIS?! Two dentists in rural California have decided to build an office facility which they would own jointly. For liability reasons, they want to maintain individual dental practices. Steve Hansen, DDS, PC is a professional corporation owned 100% by Steve Hansen. Julie Summers, DDS, PC is a professional corporation owned 100% by Julie Summers." They propose to own the real property in a Limited Liability Company, BRUSH and FLOSS LLC. The members of the LLC are the two corporations: Steve Hansen DDS PC (50%) and Julie Summers DDS PC (50%). BRUSH and FLOSS LLC would lease to the two individual practices (two OC s). They would also like to lease space to an unrelated third party, Cal Dental Labs. "

CAN I DO THIS?! Steve Hansen and Julie Summers must lease 100% of the project from Brush and Floss LLC, and then may sublease to Cal Labs.!

Additional Injection Requirements! Effective 10/1/1996, statute requires ADDITIONAL INJECTION to reduce the SBA s exposure for projects with perceived higher credit risk, namely..." n New businesses" n Limited-use property" n If an existing business changes ownership it is considered as a startup and requires additional injection"

Additional Injection Requirements! NEW BUSINESS BORROWER" n Business in Operation less than 2 years" n Add an additional 5% injection" 50% "Bank " " "$ 500,000" 35% "CDC/SBA " "$ 350,000" 15% "Local Injection "$ 150,000" Total Project Costs " "$1,000,000"

Additional Injection Requirements! LIMITED USE FACILITY" n Facility being financed by the 504 loan is a Limited Use or Special Purpose Facility" A limited market property with unique physical design, special construction materials, or a layout that restricts its utility to the use for which it was built " n Add an additional 5% injection" n Appraiser is the final arbiter if there is a disagreement as to status"

Additional Injection Requirements! For a project for both a new business & a" limited use facility, add 10% to the minimum" injection, for a total of 20% " (Max CDC participation drops to 30%)" 50% "Bank " " "$ 500,000" 30% "CDC/SBA " "$ 300,000" 20% "Local Injection "$ 200,000" Total Project Costs " "$1,000,000"

504 Credit Criteria! What We Look For In A Borrower! n Good character" n Management expertise and commitment" n Sufficient funds to operate the business on a sound financial basis." n Feasible business plan" n Adequate equity in the business" n Adequate cash flow to make loan payments" n Sufficient collateral"

504 Credit Criteria! Repayment Ability The overall strength of the borrower, including its track record and cash flow, will generally be more important that the value of the project collateral... "

504 Credit Criteria! Repayment Ability! n Based upon existing financial statements of the applicant. Can the additional debt be paid based on historical cash flow?" n Generally a cash flow coverage ratio of 1.25:1 or better is considered desirable." n Lease income may be included but should be verified" n Non-recurring expenses and discretionary officer salary may be added"

504 Credit Criteria! Collateral! Generally if the 504 loan is being made to an existing business with proven management and a strong consistent cash flow that is more than minimally adequate to support the new debt, and if the project is a logical extension of the applicant s current operations, you may approve a loan without requiring an equity injection greater than the minimum required by statute or collateral other than the appropriate lien(s) on the project assets being financed... "

504 Credit Criteria! Collateral" Second Mortgage (Trust Deed) on Real "Property" Second lien on Personal Property (SBA " would prefer a first lien on mixed use " projects)" Personal Guaranty required of any 20% " or more owner (of EPC and OC)"

504 Credit Criteria! Secondary Collateral! If above conditions are not met, SBA must consider these alternatives: Pledge of additional collateral including personal residence or other real property" Borrower to inject more equity than statutorily required minimum." " If Borrower is unable or unwilling to provide additional collateral, loan may be declined"

504 Credit Criteria! Secondary Collateral! Avoid taking a lien on inventory, accounts receivable and assets not eligible for 504 financing in order to preserve the firm s ability to finance working capital."

504 Credit Criteria! Other Issues! Life Insurance: May be required if management does not display appropriate depth and succession." Environmental Issues: Environmental Questionnaire, Transaction Screen Analysis or Phase I/II necessity is determined by Lender and CDC. Certain industries require a Phase 1 analysis." Appraisals: Must be addressed to Lender, SBA and CDC. Ordered by Senior Lien holder."

Process: Loan Packaging & Approval! 1. Borrower makes contact with Bank & CDC. CDC screens for eligibility & credit, while Bank screens for credit." 2. CDC works with Bank and Borrower to begin preparation of application package including:" " "Contractor Bids" " "Equipment Suppliers Bids" " "Appraisal and Environmental reports" 3. Upon receipt of complete package, CDC and Bank structure final financing package and go to respective committees for approval." " "Bank approves subject to SBA final approval" " "CDC Committee/Board approved & submits to SBA" 4. Upon SBA credit approval, and legal review approval, an Authorization for Debenture Guaranty is issued. Funds are ordered and committed through SBA Processing Center " 5. With Authorization signed by SBA, CDC and Borrower, construction can begin (or interim loans can fund to close escrow)." " ""

Process: Loan Closing and Funding! 1. CDC counsel prepares or reviews CDC loan closing documentation and supporting materials. (One to three weeks)" 2. Upon finalization of loan closing documentation, issuance of Title Commitment and receipt of Notice of Completion / Certificate of Occupancy, CDC submits documentation to SBA Legal Counsel for review. SBA Legal Review. (About two weeks)" 3. CDC Counsel makes any changes required by SBA Counsel." 4. Documentation is forwarded to Colson Services for pooling and issuance of Development Company Participation Certificates." 5. Upon funding, Colson Services distributes funds as instructed; interim loan is reduced -or- escrow is funded. "

90% One Loan Closing! 1 0.8 0.6 0.4 0.2 0 Bank CDC 2nd/Int 0.4 0.4 1st 0.5 n Bank advances 90%; Secured by 1st" n CDC records 2nd" n 504 proceeds pay down interim balance" n Bank modifies interim note" n No future advance " Where Bank advances 90%, other collateral can be taken to keep Bank within LTV advance policy. The other collateral is usually released upon CDC/SBA loan funding."

50% / 40% Loan Closing! 0.6 0.5 0.4 0.3 0.2 0.1 0 Bank Bank CDC n Bank advances 2 notes & records 2 Deeds or Mortgages" n CDC records and pays off the Bank s 2nd note." n Bank cancels interim note and mortgage" 2nd/Int 0.4 0.4 1st 0.5

90% Interim Loan/ 2 Permanent Loans Closing! 1 0.8 0.6 0.4 0.2 0 Bank A Bank B CDC 2nd/Int 0.4 0.4 1st 0.5 0.5 n Lender A advances 90% interim loan." n Lender B advanced 50% Permanent Loan" n CDC records 3rd" n CDC proceeds combined with Lender B pay off Interim Loan from Lender A"

Multiple Interim Lenders! 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 Bank A Bank B CDC 2nd/Int 0.2 0.2 0.4 1st 0.5 n Bank A advances 70%" n Bank B (or other lender) advances 20%" n CDC records 3rd" n CDC loan pays down Bank B and part of Bank A loan." n Bank cancels interim note and mortgage"

New Construction - Bank Financing! n Land and/or Purchase of Existing Bld." "$100,000" n New Construction/remodeling" " "$800,000" n Machinery & Equipment " " "$ 0" n Appraisal, Architect, Environmental " "$ 4,000" n Contingency, Construction " " "$ 25,000" n Total Project" " " " "$929,000" n Small Business Concern " " "$185,800 20% "" n Bank " " " " "$743,200 80%" n Total" " " " " "$929,000" This is an example of a project, assuming bank only financing at an 80% advance rate."

Same Project - Alternative Structures! n Land and/or Purchase of Existing Bld." "$100,000" n New Construction/remodeling" " "$800,000" n Machinery & Equipment " " "$" n Appraisal, Architect, Environmental " "$ 4,000" n Contingency, Construction " " "$ 25,000" n Total Project" " " " "$929,000" Small Business Concern " Land Injection from City" Bank" CDC " TRADITIONAL $185,800 20% $ 0 0% $743,200 80% $ 0 0% $929,000 504 $ 92,900 10% $ 0 0% $464,500 50% $371,600 40% $929,000 504 & GRANT $ 0 0% $ 92,900 10% $464,500 50% $371,600 40% $929,000

Bank/504 Financing with Land Gift & Grants! n Land and/or Purchase of Existing Bld. "$ 24,000" n New Construction/remodeling " "$ 600,000" n Machinery & Equipment " " "$ 397,000" n Appraisal, Architect, Environmental " "$ 2,000" n Contingency, Construction " " "$ 23,000" n Total Project" " " " "$1,068,000" n Small Business Concern " " "$ 0 " n Land Gift from City " " " "$ 24,000 2.3%" n Grants (City, State, etc) " " "$ 200,000 18.7%" n Bank " " " " "$ 470,200 44.0%" n CDC " " " " "$ 373,800 35.0%" n Total " " " " "$1,068,000" Existing Business & special purpose, City provided land and grant while the State provided grants. This structure reduced the SBC s cash injection by $160,200, preserving working capital."

Lender Participation Fee! n To assist in reducing the Government s subsidy cost, non-federal (private) lenders in a lien position superior to SBA pay a ONE TIME Participation Fee of 50 Basis Points (0.5%) of their term loan." n The Participation Fee is collected by the CDC at closing. " " One Time! 50% "Bank " " "$ 500,000 x.005 = $2,500" 30% "CDC/SBA " "$ 300,000" 20% "Local Injection " "$ 200,000" Total Project Costs " "$1,000,000"

Loan Origination! Bank Note Borrower SBC Note SBA Guaranty CDC Debenture Investors

Pooling Debentures! SBA CDC Guaranty Debenture DCFC Fiscal Agent DCPC - Pool Creation Offering Circular Investors Underwriters Merrill Lynch/ First Boston

Flow of Funds at Closing! SBA CDC Fees $ Interim Lender Proceeds $ $ Underwriters Merrill Lynch/ First Boston $ D C P C Guaranty DCFC Fiscal Agent Colson Services Bank of NY Investors

Flow of Funds via Monthly Payments! CDC SBA $ Fee Reporting Guaranty Verification and Make Good " $ Colson Services Bank of NY! $ Semi Annual Pmt" SBC $ Bank Investors!

CCDC Community Capital Development Corporation Thank You!

CCDC s Area of Operations Each of CCDC s loan programs operate in different areas:!! SBA 504: Statewide" Ohio 166: Statewide " Child Day Care Microloan: Statewide" City of Columbus: Within the city limits of Columbus and Neighborhood Commercial Revitalization (NCR) areas" Franklin County Growth Fund: Franklin County, not the City of Columbus" "

Nationally: 504 Top 10! n Eating Places Except Food Services Institutional" n Hotels & Motels" n Military & Aerospace Equipment Manufacturers" n Grocery Stores" n Gasoline Service Stations" n Child Day Care Services" n General Automotive Repair Shops" n Offices & Clinics of Dentists" n Offices & Clinics of Doctors of Medicine" n Motor Vehicle Dealers"

Community Capital Development Corporation 614-645-6171 Contact List 614-645-8588(fax) Carrie Paul! Missy Renner! Loan Officer" Carrie.paul@ccdcorp.org" 614-645-3937" 614-806-2763 cell" Columbus" Loan Officer" Missy.renner@ccdcorp.org" 937-665-0581" 937-776-1772 cell" Dayton"!!! "