Overview of Florida’s State Small Business Credit Initiative (SSBCI) Programs

1. Overview of Florida’s State Small Business Credit Initiative (SSBCI) Programs Jay Robinson Director, Capital Programs November 9, 2011

2. Outline of Presentation • Overview of Enterprise Florida • Background of Florida’s SSBCI Program • Eligible & Ineligible Loan/Investment Purposes • Eligible & Ineligible Participants • Florida’s SSBCI Programs & How to Apply • Florida Capital Access Program (FL-CAP) • Small Business Loan Support Program • Florida Venture Capital Program • Questions?

3. Overview of Enterprise Florida • Enterprise Florida is Florida’s principal organization devoted to statewide economic development. In collaboration with a statewide network of regional and local economic development organizations, Enterprise Florida helps to improve Florida's business climate, ensuring the state’s global competitiveness. • Enterprise Florida assists companies confidentially with their expansion and location plans by providing: • Site selection services • Demographic information • Incentive information • Trade leads • Capital programs • Much more

4. Background of Florida’s SSBCI Program • Created as part of the Small Business Jobs Act of 2010, SSBCI was designed by the federal government to help states strengthen existing loan and equity programs and/or create new programs that support financing small businesses. Florida received an allocation of $97,662,349. • The primary objective of SSBCI is to leverage private capital for Florida's small businesses. At the end of the five-year program, Florida must show that, taken together, $10 in new small business lending or investment was generated by every $1 in SSBCI funding (known hereafter as the "10:1 private capital leverage ratio"). • Accordingly, Florida's SSBCI programs must generate at least $976,623,490 in new private capital for Florida's small businesses.

5. Florida’s SSBCI Program Florida’s allocation from the U.S. Treasury will implement the following three programs: Florida Capital Access Program $20,662,349 Small Business Loan Support Program $33,500,000 Florida Venture Capital Program $43,500,000 $97,662,349 • Florida’s SSBCI Programs will be available on or before November 24, 2011. • The portal for accessing the SSBCI-related applications and program information will be through www.eflorida.com/ssbci.

6. Eligible Participants The list of eligible companies is exhaustive. Some examples include, but certainly are not limited to: • Business Services • Contractors • Distributers • Exporters • Insurance Brokers • Real Estate Brokers • Service Companies • Trucking Companies • Wholesalers

7. 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.

8. 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.

9. Eligible Purposes 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

10. 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. • Support unguaranteed potions of SBA-guaranteed or other federally guaranteed loans

11. Florida’s SSBCI Programs Florida Capital Access Program Small Business Loan Support Program Florida Venture Capital Program

12. Florida Capital Access Program (FL-CAP) The Florida Capital Access Program (FL-CAP) will not be managed by Enterprise Florida, but by the Bureau of Economic Development of the State of Florida’s Department of Economic Opportunity. For additional information on FL-CAP, please contact Stephen Heiman at Stephen.Heiman@deo.myflorida.com.

13. Florida Capital Access Program (FL-CAP) • FL-CAP is a loan portfolio insurance program that enables lenders to make riskier loans to small businesses in Florida by making cash contributions to a reserve fund for each enrolled CAP loan. • When a loan is originated, the Borrower will contribute a percentage of the loan (between 2 - 7%) into a reserve fund held by the lender. FL-CAP will match that contribution by depositing cash into the lender held reserve fund. • Each CAP reserve fund will be available to the financial institution as cash collateral to cover losses on all loans within its FL-CAP portfolio. • $5,000,000 maximum loan amount; no minimum loan amount.

14. Florida Capital Access Program (FL-CAP) Application Process for FL-CAP • Applications and the list of participating lenders will be available on or before November 24, 2011. • Once applications are available at the Bureau of Economic Development, Enterprise Florida will have a link to their FL-CAP website on www.eflorida.com/ssbci.

15. Small Business Loan Support Program • The Small Business Loan Support Program is designed to provide Florida small businesses with credit enhancement and other tools to better access commercial bank and export financing. • Each transaction will require at a minimum, a matching concurrent private capital investment or other credit assistance ($1 - for - $1 match). • To achieve the required 10:1 private capital leverage ratio, the greatest emphasis will be toward transactions that provide the strongest co-investment and follow-on private capital investment opportunity. • The following are subsets of the Small Business Loan Support Program: Loan Guarantees, Loan Participations, Export Loan Guarantees & Export Direct Loans

16. Small Business Loan Support Program Loan Guarantees & Loan Participations • Loan guarantees and loan participations are available to qualified businesses that demonstrate adequate historical and/or proposed cash flow coverage and other credit underwriting metrics. However, these transactions will be undertaken to help mitigate any perceived credit weaknesses. • Loan guarantees and loan participations will be targeted for transactions ranging from $250,000 - $5,000,000. The typical loan guarantee or loan participation will range between 5 - 20% of the total required financing. Only in exceptional circumstances would loan guarantees or loan participations up to 50% of the total required financing be permitted. • The maximum loan term permitted is five years. • Interest rates and fees are negotiable.

17. Small Business Loan Support Program Export Loan Guarantees • Export loan guarantees for Florida's exporting small businesses are available to assist in facilitating lower-cost export financing. • An average export loan guarantee of $500,000 or less is targeted, with greater export loan guarantees permitted in exceptional circumstances. The maximum term permitted for export loan guarantees is 12 months and the fee(s) are negotiable. Export Direct Loans • Export direct loans of $500,000 or less are permitted, with greater export loan amounts permitted in exceptional circumstances. The maximum term permitted for export loan guarantees is 12 months and the fee(s) are negotiable.

18. Small Business Loan Support Program Application Process for Loan Guarantees & Loan Participations • To apply for a loan guarantee or loan participation, the Borrower's lending institution must first e-mail Enterprise Florida at ssbci@eflorida.com to obtain a two-page pre-qualification application. Borrowers requesting pre-qualification will be directed to identify a lender to make the request for the pre-qualification application. Enterprise Florida stands willing to assist companies in identifying lenders in their area. • Once it is determined that the transaction fits the general parameters of the program, Enterprise Florida staff will work with the Borrower's lending institution regarding the guarantee structure/rates/fees for the proposed transaction and complete the application. Enterprise Florida will require copies of the complete underwriting analysis and related corporate and personal financial information prior to approval by Enterprise Florida.

19. Small Business Loan Support Program Application Process for Export Loan Guarantees or Export Direct Loans • To apply for an export loan guarantee or export direct loan, the Borrower must first e-mail Enterprise Florida at ssbci@eflorida.com to request an application. • Export loan guarantees will be underwritten by Florida Export Finance Corporation, working in conjunction with Enterprise Florida. • Applications will be available on or before November 24, 2011.

20. Florida Venture Capital Program • Via the Florida Venture Capital Program, the Enterprise Florida-managed Florida Opportunity Fund will provide equity investments and convertible debt instruments to emerging Florida companies (or companies locating in Florida) with perceived long-term growth potential. • Emphasis will be toward transactions within Florida's targeted industries, which include: • Aviation & Aerospace • Information Technology • CleanTech • Life Sciences • Financial & Professional Services • Advanced Manufacturing • Homeland Security & Defense

21. Florida Venture Capital Program • Equity investments and convertible debt instruments ranging from $1,000,000 - $5,000,000 will be targeted, although larger transactions will be permitted in exceptional cases. • Each equity investment will require at a minimum, a matching concurrent private capital investment or other credit assistance. To achieve the required 10:1 private capital leverage ratio, the greatest emphasis will be toward transactions that provide the strongest co-investment and follow-on private capital investment opportunity. Application Process for the Florida Venture Capital Program • For application information, please e-mail Florida Opportunity Fund at jennifer@floridaopportunityfund.com. • Applications will be available on or before November 24, 2011.

22. Questions? Please direct all inquiries to: www.eflorida.com/ssbci ssbci@eflorida.com