Walter Acuna, VP & Sr. Business Lender

Clean Energy & Conservation Loans Craft3 Commercial Loans Business Loans To finance business start-up and expansion Nonprofit Loans To finance projects that provide essential services Clean Energy & Conservation Loans To finance projects that conserve energy, protect habitat and ensure clean water

Craft3 – Commercial Lending Guidelines Overview: No minimum credit score. No minimum collateral requirements. No minimum business history.

Craft3 – Commercial Lending Underwriting: Full - $100k up to $10M Fast Track - $20k up to $250k

Full Underwriting Lender or Underwriter prepared and analyzed: a) Debt service coverage and/or cash flow forecast for at least one year following the investment are required for all term loans. b) Pro-forma balance sheet including the project and the Craft3 financing. c) Projections of cash flow for at least 12 months are required for startup operations and where Craft3 is financing current assets or working capital.

Full Underwriting Presentations must contain the following information: a) A summary and analysis of the historical business financial statements, including a review of the last 3 years financial statements whenever possible. b) Historical Cash Flow Analysis. c) Balance Sheet Analysis including working capital adequacy and a pro-forma balance sheet d) Summary and analysis of current personal financial statements, tax returns and credit history of all principals and guarantors. References should be checked and a summary presented.

Full Underwriting Presentations must contain the following information: e) Biography of borrower and history of business. f) Description and valuation of collateral. g) Summary of the valuation of subject business when business’s purchase is being financed by Craft3. h) A schedule for repayment and an analysis of the sources of repayment, including secondary and tertiary (if available) sources of repayment. i) Industry and/or market analysis.

Full Underwriting Presentations must contain the following information: j) History of loan relationship with Craft3 or the borrower’s main Bank, when appropriate. k) Full particulars of the current request including interest rate, term, and itemized use of proceeds and Craft3 source of funding.

Craft3 – Full Underwriting Case Study: Noble Barton

Fast Track Standard underwriting shall be used when the loan is over $20,000 and: • The borrower cannot inject at least 10% cash into the project at inception (future profits or cash flow is not eligible for this calculation) or • The borrower’s projections reflect business DSCR less than 1.1:1 or • The borrower’s personal DTI exceeds 60% or • The borrower’s child support payments are past due or

Fast Track Standard underwriting shall be used when the loan is over $20,000 and: • The highest credit score for any borrower is less than 599 or • Personal credit reports reflect collections, write-offs, foreclosures or repossessions less than 23 months old or • Personal credit report reflects applicant is currently late payments on home mortgage or vehicle loans

Fast Track The Program includes customized interest rates, amortization schedules, and maturities. The program essentially “scores” the borrowers and their business: • Heavily weighted (35%) on the borrower’s personal credit report – giving points for those who have experienced issues in the past but now are now current with their mortgage and vehicle loans. • Compliance with child support – Borrowers must be current on required child support payments.

Fast Track The Program includes customized interest rates, amortization schedules, and maturities. The program essentially “scores” the borrowers and their business: • Equity in the project – (20%) someone whose saved up for their business venture earns more points that someone who has not. • Personal Debt To Income (DTI) (22.5%) – the lower the DTI the more points assigned; maximum DTI 60%

Fast Track The Program includes customized interest rates, amortization schedules, and maturities. The program essentially “scores” the borrowers and their business: • Business DSCR (22.5%) – The lender shall use the most appropriate financial information: if there is business history, use either the most recent 12 months or the average of the past 2 years; if there is a significant change in the business or a start-up, then the projections. Minimum DSCR 1.1.

Fast Track • Collateral – not scored; for all loans, Craft3 shall file a blanket UCC on all business assets. If the equipment being financed costs over $50,000, Craft3 shall file a Purchase Money Security Interest (PMSI) on equipment financed with our loan. If there is equity in the borrower’s residence, filing a DOT is strongly encouraged and the lender may offer a lower interest rate. • Balance Sheet (leverage and liquidity) – not scored; but the lender shall analyze and report on the applicant’s balance sheet (leverage and liquidity) and capacity to build a sustainable business.

Fast Track - Scoring < .9 Turn down, or full write-up with explanation 1 < > 1.9 Tier 1 = Fast Track up to $20K, max term 36 months, 11.99% 2 < > 2.9 Tier 2 = Fast Track up to $50K, max term 60 months, 10.99% 3 < > 4 Tier 3 = Fast Track up to $100K, max term 60 months, 9.99% 3+ Tier 3+ = Fast Track up to $250K, max term 60

Case Study: The Cookie Counter Craft3 – Fast Track Case Study: The Cookie Counter

Got questions?

Facebook.com/Craft3Org | Twitter.com/Craft3Org Thank you Walter Acuna VP & Sr. Business Lender 888-231-2170 ext. 112 wacuna@craft3.org www.craft3.org Facebook.com/Craft3Org | Twitter.com/Craft3Org General Assistance: info@craft3.org | 888-231-2170