State Small Business Credit Initiative (SSBCI) Loan & Venture Capital Programs

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Nov 18, 2013 (3 years and 11 months ago)

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State Small Business Credit Initiative (SSBCI)
Loan & Venture Capital Programs


Presentation at






David Rodriguez

Capital
Programs






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

What is SSBCI?


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.






Leverage:



Goal
:
10 to 1 leverage



EFI SSBCI Program:

Small Business Loan Support Program


$33,500,000

Florida
Venture Capital
Program


$
43,500,000






$77,000,000







SSBCI is:
A loan and venture capital program
designed to
leverage

private capital for
Florida's small businesses.

SSBCI is not:
a Grant!
.


4

Why does SSBCI makes sense?



New reality



Increased pressure on lenders


Increased regulatory focus on “prudent lending”


Stringent compliance rules


Deterioration in collateral values


Credit scores negatively affected


Tighter “credit box”


=
Need for
“credit
-
enhancements”




5

Small Business

Loan
Support
Program


The
Small Business Loan Support Program
is designed to provide
Florida’s
small
businesses with
loans participations and loan guarantees to help them better
access commercial bank and export financing.



Loan Guarantees



Loan Participations




Export Loan Guarantees





Export Direct Loans





Each transaction
requires at
a minimum, a matching equity investment or loan
from a private source ($1
-

for
-

$1 match).
Goal: 10 to 1 Leverage!



For applications, please visit
www.eflorida.com/ssbci

or e
-
mail David Rodriguez at
ssbci@eflorida.com
.


6

Loan
Guarantees

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)


Minimum
$
250,000 loan amount;
maximum $5,000,000.


Maximum
loan term permitted is five (5) years.


Interest
rates and fees are negotiable.


Financial
Institution

EFI

Small
Business

Loan

Limited
Guarantee

7

Operating Mechanics of

Loan Guarantees


Lender is responsible for underwriting the loan


Lender applies for guarantee


EFI reviews and approves the guarantee application, and issues
commitment to the lender, outlining terms of guarantee


Lender obtains Borrower’s Certification, and executes Lender’s
Certification (prior / at closing) for eligibility and compliances purposes


Guarantee Agreement is executed between Lender and EFI, specifying
responsibilities and available remedies


Lender services the loan


EFI monitors repayment progress and servicing performance


If Borrower defaults on the loan, Lender executes available collateral


Lender submits a claim to EFI in accordance with Guarantee Agreement







8

Loan Participations

Permits the purchase of a portion of the loan originated by the lender
.










Typical loan participation will be between 5
-
20% of the loan amount, up to a
maximum 50% (1:1 min)


Minimum
$
250,000 loan amount;
maximum $5,000,000.


Maximum
loan term permitted is five (5) years.


Interest
rates and fees are negotiable.


Financial Institution

EFI

Small
Business

100% of financing

Purchasing
portion of loan

9

Operating Mechanics of

Loan Participations


Lender underwriter and originates the loan


EFI reviews and purchases a portion of the loan


Lender obtains Borrower’s Certification, and executes Lender’s
Certification (prior / at closing) for eligibility and compliances purposes


Participation Agreement is executed between lender and EFI, specifying
responsibilities and available remedies


Lender services the loan


EFI monitors repayment progress and servicing performance


If Borrower defaults on the loan, Lender executes available collateral and
proceeds in accordance with Participation Agreement (
Pari
-
passu
,
etc
)







10

Export Loan
Guarantees &

Export
Direct
Loans


Export
loan guarantees
and direct loans for
Florida's exporting small businesses
are available to assist in
facilitating lower
-
cost
export financing.
These transactions
are originated by
Florida Export
Finance Corporation
, working in conjunction with
Enterprise Florida
.



An
average export loan guarantee or export direct loan of $500,000 or less is
targeted, with
larger transactions
permitted in exceptional circumstances. The
maximum term permitted is 12
months.




11

Florida
Venture
Capital Program


Via the
Florida Venture Capital Program
,
Florida
Opportunity Fund
provides 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





12

Florida
Venture
Capital Program


Equity investments and convertible debt instruments ranging from $1,000,000
-

$3,000,000 are targeted
, although larger transactions
are permitted
in exceptional
cases.



Each
equity investment
requires at
a minimum, a matching
1:1 equity
investment
or
loan.



For applications, please visit
www.floridaopportunityfund.com

or e
-
mail Jennifer
Dunham at
jennifer@floridaopportunityfund.com
.



13

SSBCI Advantages
to Florida’s Small
Businesses, Lenders & Investors

SSBCI advantages
to Florida's
small businesses

include
:



Access
to debt and venture capital financing that may not otherwise be
available.


A
flexible and non
-
bureaucratic
source of capital.


SSBCI advantages
to Florida's
lenders and investors

include
:



Ability
to approve a loan that
might
otherwise be declined.


Provides
a non
-
competitor participant on
loans and
investments
.


No cost to the small business lender or investor.

14

E
ligible 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



15

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.


16

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
.



17

Eligible Loan Purposes

The loan/investment
proceeds must be used for a “business purpose.” A business
purpose includes, but is not limited
to:



Startup costs


W
orking capital


Business procurement


F
ranchise fees


Equipment


I
nventory


Owner
-
occupied real estate


P
urchase
, construction renovation or tenant improvements of an eligible
place of business that is not for passive real estate investment
purposes


18

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



s
upport unguaranteed
potions of
SBA
-
guaranteed
or other federally
guaranteed
loans.


19

Questions?


Jay Robinson

Director, Capital Programs

(407) 956
-
5607


David Rodriguez

Manager, Capital Programs

(407) 956
-
5682


www.eflorida.com/ssbci

ssbci@eflorida.com


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