Financing for Renewable Energy & Value-Added Products W. Bruce Crain Crain Consulting, Inc www.crainconsulting.net

1. Financing for Renewable Energy & Value-Added Products W. Bruce Crain Crain Consulting, Inc www.crainconsulting.net

2. Crain Consulting, Inc. is a Jackson, Mississippi based company specializing in securing non-traditional financing for commercial, residential and agribusiness ventures. • Primary focus of our business is renewable energy and biobased product financing. • Founded in 2001, the company has assisted clients in 40 states.

3. Crain Consulting specializes in “layering” multiple financing sources in order to achieve successful commercialization. • We possess expertise in identifying and securing all sources of public & private financing available for renewable energy and bio-based product commercialization

4. Crain Consulting counts the following renewable energy/value-added companies as clients: • A Georgia company utilizing plasma arctechnology create energy from waste material • A Florida-based company manufacturing ethanol from citrus • Connecticut-based renewable energy company • A Louisiana-based biorefinery company • Montana-based biodiesel company • Texas-based company producing building materials from wheat straw • A Georgia company creating carbon negative energy from biomass • A Washington company manufacturing and distributing seed-based lubricants to replace petroleum-based automotive and industrial lubricants.

5. Financing Available to Renewable Energy and Biobased Product Companies • Grants • Equity • Tax Credits • Special Tax Exempt Bond Programs • Government Guarantee Loans • Government Direct Loans • Congressional Earmarks • Federal procurement programs that can be accessed to increase sales and profitability

6. BUSINESS & INDUSTRY (B&I) GUARANTEE LOAN PROGRAM • Provides up to a 90% loan guarantee to banks • Businesses must be in areas of 50,000 in population or less • Primary objective of the program is creation or preservation of jobs in rural areas • Loan proceeds may be used for - working capital (7yr amortization), - machinery and equipment (15yr amortization), - buildings and real estate (up to 30yr amortization) and - certain types of debt refinancing 5. Maximum loan amount is $40 million 6. Personal guarantees required 7. Loans can be fixed rate 8. Requires a minimum of 20% tangible equity for biobased and other commercial ventures and 40% tangible equity for renewable energy companies.

7. Rural Utilities Service (RUS) $200 Million in Direct Loans available • Loans interest rates tied to Municipal Bond Rates • Terms as long as 25 years and can be fixed • Requires cooperative arrangement with local rural electric cooperatives • Technology must be “proven” and “renewable” • Equity requirement is flexible • Available to private utilities as well as electric cooperatives and public utilities

8. VALUE-ADDED AGRICULTURAL PRODUCTMARKET DEVELOPMENT GRANTS • The Rural Business-Cooperative Service now offers grants to help independent producers enter into value-added activities. • The primary objective of this grant program is to help eligible applicants to develop business plans for viable marketing opportunities and develop strategies to create marketing opportunities. • Grants of up to $500,000 available. • All must be producers of agricultural commodities or products, including aquaculture, fish harvesting, and wood lot enterprises. • Grants available for planning and working capital. • Proposals are due to USDA in May.

9. RENEWABLE ENERGY GRANT & LOAN PROGRAM • Type:  Federal Grant Program • Applicable Sectors:   Commercial, Agricultural Producers • Amount:   Grants-25% of eligible project costs; Loans-50% eligible project costs; Grant awards are made on a competitive basis • Terms:  Demonstrate financial need; Loan terms close to B&I loan terms and conditions • $23 million available in FY 2005

10. Biomass Research and Development • USDA/DOE jointly administer (BRDA) to provide assistance for research, development &demonstration of Biomass based products, Bioenergy & Biofuels • Intent is to promote greater innovation and development related to biomass • Technical Topic Areas • Feedstock Development & Production • Biobased Product Development & Environmental and Economic Performance • Integrated Resource Management &Biomass Use • Incentive Analysis for Commercialization • $15 million available for grants in FYs 2005. • Program is authorized through FY2007 to carry out the BRDA of 2000. • Maximum grants of $2 million • Requires a 20% match • Pre-applications due in February • Full applications due in April Lead agency: Natural Resources and the Environment mission area

11. APPLICABLE BUSINESS LOAN PROGRAMS • Grants and loans available to companies that are farmer cooperative owned or partially cooperative owned. • Rural Business Enterprise grants • Community Facility grants, direct loans and guarantee loans.

12. ECONOMIC ACTION PROGRAM • Rural Development: Encourage rural communities through knowledge and seed money to develop natural resource-based opportunities. Emphasis is on addressing community-identified needs and working with businesses. • Economic Recovery: Assists rural communities experiencing acute economic problems associated with changes in natural resource management to diversify and expand their economic potential. • Wood in Transportation: Provide cost saving options to rural communities to rebuild/replace their transportation and recreation infrastructure while stimulating diverse markets for local wood products.

13. TRIBAL ENERGY PROGRAM GRANT • Incentive Type:Federal Grant Program • DOE's Office of Energy Efficiency and Renewable Energy's (EERE's) Tribal Energy Program provides financial and technical assistance to tribes for feasibility studies and shares the cost of implementing sustainable renewable energy installations on tribal lands • Eligible Technologies:   Passive Solar Space Heat, Solar Water Heat, Solar Space Heat, Photovoltaics, Wind, Biomass, Hydroelectric, Geothermal Electric, Geothermal Heat Pumps • Applicable Sectors:   Tribal Government • Amount:  Varies • Max. Limit:  Varies • Terms:  Varies • Approximately $2-$3 million expected to be available

14. INVESTMENT PROGRAMS • Public WorksEmpowers distressed communities to revitalize, expand, and upgrade their physical infrastructure to attract new investment. • Economic Adjustment Assistance ProgramAssists state and local interests to design and implement strategies to adjust or bring about change to an economy.    • Research and National Technical AssistanceSupports research of leading edge development practices efforts. • Local Technical AssistanceHelps fill the knowledge and information gaps. • Partnership PlanningHelps support local organizations with their long-term planning efforts and outreach. • Trade Adjustment AssistanceTwelve Trade Adjustment Assistance Centers to help manufacturers and producers.

15. Grants and Congressional Earmarks • Request that dollars be included in Federal appropriations for departments and agencies • Senators & Congressmen must submit request • Congress has the ability to earmark funds for most projects • Funding process is extremely competitive

16. NEW MARKET TAX CREDITS • Congress created to encourage $15 billion in investments in low-income communities. • Qualified Community Development Entities (CDE) will apply to the CDFI Fund for an award of New Markets Tax Credits. The CDE will then seek taxpayers to make Qualifying Equity Investments in the CDE • Equity investments used to make Qualified Low-Income Community investments in/to Qualified Active Low-Income Businesses in low income areas • The taxpayer will be eligible to claim a tax credit equal 39% percent of the total investment in the CDE

17. NMTC Investment Structure US Treasury Investor NMTCs QEIs $s CDE NMTCs $s $s Equity or Debt QALICB QALICB NMTC: New Markets Tax Credit CDE: Community Development Entity QALICB: Qualified Active Low-Income Community Business QEI: Qualified Equity Investment

18. Bond Financing • Revenue Ruling 63-20 Bonds • Tax Exempt Bonds • Long Term Fixed Rate Term • Bonds Issued on Behalf of a Nonprofit Entity Whose Purpose is “Public in Nature” • The Political Subdivision Issuing the Bonds Must Have a Beneficial Interest in the Corporation While the Indebtedness Remains Outstanding • The Political Subdivision Must Obtain Full Legal Title to the Property Upon the Retirement of the Indebtedness

19. Revenue Ruling 63-20 Bonds

20. Bond Financing • General Obligation/Revenue Bonds • Issued by the State, County or Municipality • Government is Obligated for Repayment of Debt • Tax Exempt Rates 4. Long Term Fixed Rate Debt

21. TAX INCREMENT FINANCING (TIF) • Bonds issued by local governments for infrastructure improvements • Bond proceeds used to entice businesses to bring revenue-producing properties to an area • Bonds are retired by the property and/or sales taxes generated by businesses locating in the tax increment district

22. Taxable Corporate Notes • Allows credit worthy existing business to take advantage of LIBOR-based rates • Requires a Letter of Credit (LC) from an “A” rated bank or better • LC cost is added to rate as are issuance costs • Variable Rate Demand Notes with Permanent Conversion Features, e.g., interest caps, collars and swaps • One time transaction-all fees rolled into one and can provide construction and permanent financing • Weekly Pricing-3 month LIBOR • Sold to institutional investors

23. Federal Home Loan Bank • Source of low cost funding for economic development and housing • Community Investment Program (CIP)- offers banks long term fixed rate financing that can be loaned out for restoration projects and other commercial projects, as well as for housing • CIP-provides banks the ability to provide AAA- rated letters of credit (LC’s) that can be used to credit enhance bond issues

24. Mississippi Land, Water and Timber Resource Board • Grants and Loans • Grants up to $1.5 million for alternative energy using agriculture and forestry materials as feedstock Delta Regional Authority • grants and loans Appalachian Regional Authority • grant and loans Rural Impact Fund • grants and loans for communities under 5,000 in population. Mississippi Development Authority • Renewable Energy Loan Program • Eligible renewable energy technologies include solar thermal, solar space heat, solar process heat, photovoltaics (PV), alternative fuels, geothermal, biomass and hydropower. • All projects must demonstrate that they will reduce a facility's energy costs • Other incentives usually available for industry.

25. Renewable Fuels  State Grant Program • Eligible Technologies:   Biomass, Municipal Solid Waste • Applicable Sectors:   Commercial, Industrial, Schools, Local Government, State Government, Agricultural • Amount:  Varies Max. Limit:  $75,000 Terms: varies • Summary:The Renewable Fuels Program assists businesses in installing biomass energy systems. Industrial, commercial and institutional facilities; agricultural property owners; and city, county, and state government entities are eligible.  With an initial emphasis on wood waste, the program now also focuses on switchgrass and municipal solid waste (MSW). ADECA is also interested in landfill gas as a potential source of energy for industrial and other uses. Several landfill waste disposal facilities across Alabama have been identified as prime candidates for landfill gas recovery and utilization.   Appalachian Regional Authority - grant and loans Delta Regional Authority - Grants and Loan Programs

26. Tennessee Incentives for Renewable EnergySmall Business Energy Loan Program Eligible Technologies:Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Photovoltaics, Wind, Biomass, Hydroelectric, Renewable Transportation Fuels, Geothermal Electric, Municipal Solid Waste • Applicable Sectors:   Commercial, Industrial • Amount:  Varies • Max. Limit:  $100,000 • Terms:  7-year maximum term • Summary:The Tennessee Energy Division offers low-interest loans of up to $100,000, with terms of up to 7 years, for renewable energy and energy efficiency projects. Businesses with fewer than 300 employees or less than $3.5 million in annual gross sales or receipts are eligible. Loans cannot be used for new construction or business start-up. All renewable energy technologies are eligible under the program's guidelines. Delta Regional Authority grants and loans Appalachian Regional Authority grant and loans

27. Financial Incentives Mainstay Energy Rewards Program - Green Tag Purchase Program • Incentive Type:  Production Incentive • Eligible Technologies:   Solar Thermal Electric, Photovoltaics, Wind, Biomass, Geothermal Electric, Small Hydroelectric, Renewable Fuels • Applicable Sectors:   Commercial, Residential • Amount:  $1-$100 per MWh total production; Varies by technology and contract length • Terms:  Any size system, grid tied, new renewable (1/1/99 or later) • Effective Date:  2003; systems installed after 1/1/1999 eligible • Website: http://www.mainstayenergy.com/

28. “Hard Money” Lenders • These lenders typically loan 60% of the liquidation value of the real estate • Terms are usually up to 3 years and rates 12%-15% interest only • Points are high (app. 5 points) but can be financed • Funds can be obtained within 30-45 days

29. Feasibility Studies Formal Business Plans Market Development Site Selection Construction Operations Management Government Relations Stakeholder Relations SUCCESSFUL ACCESS TO FUNDING REQUIRES:

30. A NEW RESOURCE FOR THE BIOECONOMY

31. COMPREHENSIVE MANAGEMENT SERVICES TO RENEWABLE ENERGY AND BIOBASED PRODUCT COMPANIES • Feasibility Studies • Debt, Equity and Public Financing Assistance • Loan packaging • Grant Writing • Operations Management Assistance • Market Development • State, Federal & Local Governmental Liaisons • Other Managerial Assistance to Assure Success

32. THE ORGANIZATION • Maury Radin, Business Planning / Operations • Over 30 Years • Past 5 Years with Biobased Organizations • W. Bruce Crain, Financing & Government Relations • Over 20Years of Debt, Equity and Public Financing, Federal and State Government Relations, Association and Government Agency Management, Media and Public Relations • 10 years of experience with Biobased Ventures

33. THE ORGANIZATION • Pete Nelson, Founder AgroTech Communications • Over 10 Years Experience in Biobased Marketplace • Paul Levine, Financial Management & Accounting • 28 Years in Accounting and Financial Operations • Past 5 Years Working with Biobased Companies

34. THE LOCATIONS • Memphis, Tennessee • Washington, D.C. • Jackson, Mississippi

35. HOW TO CONTACT US PH: 601.957.3493 FX: 601.914.5871 www.biodemensions.net