State Small Business Credit Initiative Matt Jennings Illinois Department of Commerce & Economic Opportunity 500 E Monroe Springfield, IL 62701 Direct Phone:

State Small Business Credit Initiative

Matt JenningsIllinois Department of Commerce & Economic Opportunity

500 E MonroeSpringfield, IL 62701

Direct Phone: (217)782-3891E-Mail Address: [email protected]

STATE SMALL BUSINESSSTATE SMALL BUSINESSCREDIT INITIATIVE CREDIT INITIATIVE

(“SSBCI”)(“SSBCI”)• Origin• Small Business Jobs Act of 2010• Title III – “State Small Business Credit

Initiative• $1.5 BN, divided according to state/territory population and unemployment experience during 2008 & 2009• Illinois Allotment: $78,365,264, divided into three disbursements of approximately $26MM each

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Advantage Illinois (“AI”)Advantage Illinois (“AI”) AI Performance as of 1/23/14

• Total Amt of Loans/Investments: $443,904,877$443,904,877

• Total Amt of AI Funds Obligated/Expended: $54,732,073$54,732,073

• Total Amt of Private Sector Loans/Investments Catalyzed: $389,227,115$389,227,115

• Total Jobs Created/Retained:2,319 / 1,5212,319 / 1,521

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Institutional Lendingo Capital Access Programo Participation Loan

Program

Two Avenues to Access Capital

Venture Capitalo Invest Illinois Venture

Fund

Eligible Business PurposesEligible Business Purposes• start-up costs• working capital• business procurement• franchise fees• equipment• inventory• purchase, construction, renovation, or tenant

improvements of an eligible place of business that is not for passive real estate investment purposes.

Capital Access ProgramCapital Access Program• How Loans Work

o Borrower is charged an upfront fee of 2-5%, which is deposited into a bank Reserve Account.

o The fee amount is matched by DCEO and deposited in the same account, aiding the Bank’s ability to build reserves against future loan losses

o CAP loans are private transactions between banks and borrowers and the bank assumes risk; DCEO plays no role in lending decisions nor in setting loans terms & conditions

• Where to Accesso A participating lender

• Eligible Borrowerso Business located and legally

authorized to do business in Illinois

o 500 or fewer employeeso Maximum loan size: $1M

• Types of Loanso Term loans up to 5 yearso Revolving Lines of Credit

(renewable for up to one year, with only one fee due)

Participation Loan ProgramParticipation Loan Program• How Loans Work

o Financial institution identifies potential opportunities for state participation

o Or DCEO reviews business plan and facilitates a meeting with the prospective borrower’s bank

• Where to Accesso A participating lender or DCEO

Financial Analyst

• Eligible Borrowerso Viable small/middle market

businesso For-profit business o 750 or fewer employees • 4 Product Lines

o Standard PLPo Minority/Women/Disabled/

Veteran-Owned Businesso Revolving Line of Credit

• Standard Participation Loan Program

• DCEO Participation is subordinated to Lender’s credit exposure• Once Master Agreement is signed by Lender, deal-specific

documentation and loan servicing is “short and simple”.• Maximum support is the lesser of a) 25% of the “Project”, b) 50%

of the Loan, or c) up to $2MM, depending on job creation/retention. Maximum DCEO tenor is 10 years. Interest Rate is “below market.”

• DCEO financial support may range from $25K to $50K per FTE, (depending on Loan term, Minority/Women/Disabled/Veteran majority control/ownership, Enterprise Zone location, etc.)

• Cannot be used for “passive real estate investment” (Borrower must occupy at least 51% for the business being financed.)

• Refinancing of one Lender’s loans by an unrelated Lender now permitted.

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DCEO’s Product LinesDCEO’s Product Lines

PLP for Minority/Women/Disabled/Veteran- Owned Businesses (“MWDV PLP”)

• Basic structure is similar to the Standard PLP, except that maximum support is the lesser of a) 40% of the “Project”, b) 50% of the Loan, or c) up to $200K, depending on job creation/retention. Maximum MWDV PLP tenor is 7 years.

• Applicable interest rate is “below market”.

• DCEO financial support may range from $25K to $65K per FTE, (depending on Loan term, MWDV majority control/ ownership, Enterprise Zone location, etc.) 9

DCEO’s Product LinesDCEO’s Product Lines

Revolving Line of Credit PLP Program (“RLOC PLP”)

• Basic structure is similar to the Standard PLP. • Maximum support is the lesser of a) 25% of the “Project”, b)

50% of the RLOC Facility, or c) up to $2MM, depending on job creation/retention. Interest Rate on DCEO’s portion is “below market”.

• DCEO financial support may range from $25K to $50K per FTE, (depending on Loan term, Minority/Women/Disabled/Veteran majority ownership/ control, Enterprise Zone location, etc.)

•Refinancing of one Lender’s RLOC facility by an unrelated Lender is now permitted.•Maximum RLOC Tenor is two years. Further support requires reapplication.•DCEO’s Participation in the Facility will be deposited with Lender. •The Lender will pay a low annual interest rate on the entire amount of DCEO’s Participation, (which can be built into the overall RLOC interest rate charged by the Lender to the Borrower).

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DCEO’s Product LinesDCEO’s Product Lines

Institutional Lendingo Capital Access Programo Participation Loan Program

(4)o Collateral Support Program

Two Avenues to Access Capital

Venture Capitalo Invest Illinois Venture

Fund

Invest Illinois Venture FundInvest Illinois Venture FundHow Process Works

o Application submittedo Internal Reviewo Interview with mgt teamo Response within 30 days

Preferred Applicantso 3rd party investment commitmento Fast growth company in expanding marketso Dedicated and experienced management teamo New idea/leverages technologyo Strong and sustainable with competitive advantageo Defined investment plano Strong strategic partnerso Establishing reasonable price per shareo State strategic value and potential to impact Illinois economy

Funding Parameterso Awards under $1M and/or

25% equityo Investment in form of equity

or convertible debto Likely to follow lead investor

terms

How to ApplyHow to Apply• Make sure you have a

credible business plan by visiting an Illinois SBDC

• Contact a participating financial institution

• Visit our web site for more information or

• IIVF online application

www.ildceo.net/AdvantageIllinois

• Questions about institutional lending programso 800-252-2923o [email protected]

• Contact Meo Matt Jenningso [email protected] 217/782-3891

Illinois Department of Commerce & Economic

Opportunity

Illinois DCEO

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