Presentation on theme: "State Small Business Credit Initiative"— Presentation transcript:
1State Small Business Credit Initiative Matt JenningsIllinois Department of Commerce & Economic Opportunity500 E MonroeSpringfield, IL 62701Direct Phone: (217)Address:
2STATE SMALL BUSINESS CREDIT INITIATIVE (“SSBCI”) OriginSmall Business Jobs Act of 2010Title III – “State Small Business Credit Initiative$1.5 BN, divided according to state/territory population and unemployment experience during 2008 & 2009Illinois Allotment: $78,365,264, divided into three disbursements of approximately $26MM each
3Advantage Illinois (“AI”) AI Performance as of 1/23/14Total Amt of Loans/Investments:$443,904,877Total Amt of AI Funds Obligated/Expended:$54,732,073Total Amt of Private Sector Loans/Investments Catalyzed:$389,227,115Total Jobs Created/Retained:2,319 / 1,521
4Two Avenues to Access Capital Institutional LendingCapital Access ProgramParticipation Loan ProgramVenture CapitalInvest Illinois Venture Fund
5Eligible Business Purposes start-up costsworking capitalbusiness procurementfranchise feesequipmentinventorypurchase, construction, renovation, or tenant improvements of an eligible place of business that is not for passive real estate investment purposes.
6Capital Access Program Where to AccessA participating lenderHow Loans WorkBorrower is charged an upfront fee of 2-5%, which is deposited into a bank Reserve Account.The fee amount is matched by DCEO and deposited in the same account, aiding the Bank’s ability to build reserves against future loan lossesCAP 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 & conditionsEligible BorrowersBusiness located and legally authorized to do business in Illinois500 or fewer employeesMaximum loan size: $1MTypes of LoansTerm loans up to 5 yearsRevolving Lines of Credit (renewable for up to one year, with only one fee due)
7Participation Loan Program Where to AccessA participating lender or DCEO Financial AnalystHow Loans WorkFinancial institution identifies potential opportunities for state participationOr DCEO reviews business plan and facilitates a meeting with the prospective borrower’s bankEligible BorrowersViable small/middle market businessFor-profit business750 or fewer employees4 Product LinesStandard PLPMinority/Women/Disabled/ Veteran-Owned BusinessRevolving Line of Credit
8Standard Participation Loan Program DCEO’s Product LinesStandard Participation Loan ProgramDCEO Participation is subordinated to Lender’s credit exposureOnce 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.
9PLP for Minority/Women/Disabled/Veteran- Owned Businesses (“MWDV PLP”) DCEO’s Product LinesPLP 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.)
10Revolving Line of Credit PLP Program DCEO’s Product LinesRevolving 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).
11Two Avenues to Access Capital Institutional LendingCapital Access ProgramParticipation Loan Program (4)Collateral Support ProgramVenture CapitalInvest Illinois Venture FundThe 2nd way to access capital is through the state’s new venture capital fund.GOALS OF THE IIVF• Accelerate the commercialization of research discoveries and growth of start-up companies in Illinois.• Increase the number of successful investment-grade companies with a significant presence in Illinois.• Catalyze private capital investment and position more companies to attract additional venture investment.• Create sustainable high-paying jobs.• Generate return within the portfolio to ensure sustainability.With our Venture Capital program, Invest Illinois, Illinois is targeting high-growth companies (in fields such as bio-tech, agri business, etc.) with the potential for creating good-paying jobs. All stages of venture capital financing are eligible, including seed/angel, early stage, expansion and mezzanine financing.
12Invest Illinois Venture Fund Preferred Applicants3rd party investment commitmentFast growth company in expanding marketsDedicated and experienced management teamNew idea/leverages technologyStrong and sustainable with competitive advantageDefined investment planStrong strategic partnersEstablishing reasonable price per shareState strategic value and potential to impact Illinois economyHow Process WorksApplication submittedInternal ReviewInterview with mgt teamResponse within 30 daysFunding ParametersAwards under $1M and/or 25% equityInvestment in form of equity or convertible debtLikely to follow lead investor termsPreferred Applicants:1) Already has an actual, conditional, or anticipated market-based third-party lead investment commitment;2) Pursues a rapidly expanding market with demonstrated potential for large market share;3) Has a dedicated management team with significant experience to execute;4) Features a new idea /leverages technology with a clear path to commercialization and monetization;5) Has a strategy demonstrating a strong sustainable competitive advantage;6) Has an investment plan for:(a) securing follow-on venture capital or financing to successfully sustain the company;(b) to successfully sustain the company upon completion of the venture capital financing;7) Has successful collaborations and experience (preferably with Illinois-based incubators, labs and universities) needed to commercialize technology and accelerate the growth of a high-tech start-up company;8) Establishes reasonable price per share or terms;9) Offers strategic value to the Illinois economy10) Conforms to all DCEO and US Treasury SSBCI guidelines.
13How to Apply www.ildceo.net/AdvantageIllinois Make sure you have a credible business plan by visiting an Illinois SBDCContact a participating financial institutionVisit our web site for more information orIIVF online application
14Illinois Department of Commerce & Economic Opportunity Questions about institutional lending programsContact MeMatt Jennings217/Illinois Department of Commerce & Economic OpportunityIllinois DCEOKeep in touchQ & A