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

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

1 State Small Business Credit Initiative Matt Jennings Illinois Department of Commerce & Economic Opportunity 500 E Monroe Springfield, IL Direct Phone: (217) Address:

2 STATE SMALL BUSINESS CREDIT INITIATIVE (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 2

3 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 / 1,521 3

4 Institutional Lending o Capital Access Program o Participation Loan Program Two Avenues to Access Capital Venture Capital o Invest Illinois Venture Fund

5 Eligible 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.

6 Capital 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 Banks 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 Access o A participating lender Eligible Borrowers o Business located and legally authorized to do business in Illinois o 500 or fewer employees o Maximum loan size: $1M Types of Loans o Term loans up to 5 years o Revolving Lines of Credit (renewable for up to one year, with only one fee due)

7 Participation 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 borrowers bank Where to Access o A participating lender or DCEO Financial Analyst Eligible Borrowers o Viable small/middle market business o For-profit business o 750 or fewer employees 4 Product Lines o Standard PLP o Minority/Women/Disabled/ Veteran-Owned Business o Revolving Line of Credit

8 Standard Participation Loan Program DCEO Participation is subordinated to Lenders 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 Lenders loans by an unrelated Lender now permitted. 8 DCEOs Product Lines

9 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 DCEOs Product Lines

10 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 DCEOs 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 Lenders RLOC facility by an unrelated Lender is now permitted. Maximum RLOC Tenor is two years. Further support requires reapplication. DCEOs Participation in the Facility will be deposited with Lender. The Lender will pay a low annual interest rate on the entire amount of DCEOs Participation, (which can be built into the overall RLOC interest rate charged by the Lender to the Borrower). 10 DCEOs Product Lines

11 Institutional Lending o Capital Access Program o Participation Loan Program (4) o Collateral Support Program Two Avenues to Access Capital Venture Capital o Invest Illinois Venture Fund

12 Invest Illinois Venture Fund How Process Works o Application submitted o Internal Review o Interview with mgt team o Response within 30 days Preferred Applicants o 3 rd party investment commitment o Fast growth company in expanding markets o Dedicated and experienced management team o New idea/leverages technology o Strong and sustainable with competitive advantage o Defined investment plan o Strong strategic partners o Establishing reasonable price per share o State strategic value and potential to impact Illinois economy Funding Parameters o Awards under $1M and/or 25% equity o Investment in form of equity or convertible debt o Likely to follow lead investor terms

13 How 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

14 Questions about institutional lending programs o o Contact Me o Matt Jennings o o 217/ Illinois Department of Commerce & Economic Opportunity Illinois DCEO Keep in touch


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