State Small Business Credit Initiative Matt Jennings Illinois Department of Commerce & Economic Opportunity 500 E Monroe Springfield, IL 62701 Direct Phone: (217)782-3891 E-Mail Address: matt.jennings@illinois.gov

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

Advantage Illinois (“AI”) AI Performance as of 1/23/14 Total Amt of Loans/Investments: $443,904,877 Total Amt of AI Funds Obligated/Expended: $54,732,073 Total Amt of Private Sector Loans/Investments Catalyzed: $389,227,115 Total Jobs Created/Retained: 2,319 / 1,521

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

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.

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

Participation Loan Program Where to Access A participating lender or DCEO Financial Analyst How Loans Work Financial institution identifies potential opportunities for state participation Or DCEO reviews business plan and facilitates a meeting with the prospective borrower’s bank Eligible Borrowers Viable small/middle market business For-profit business 750 or fewer employees 4 Product Lines Standard PLP Minority/Women/Disabled/ Veteran-Owned Business Revolving Line of Credit

Standard Participation Loan Program DCEO’s Product Lines Standard Participation Loan Program DCEO Participation is subordinated to Lender’s 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 Lender’s loans by an unrelated Lender now permitted.

PLP for Minority/Women/Disabled/Veteran- Owned Businesses (“MWDV PLP”) DCEO’s Product Lines 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.)

Revolving Line of Credit PLP Program DCEO’s Product Lines 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 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).

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

Invest Illinois Venture Fund Preferred Applicants 3rd party investment commitment Fast growth company in expanding markets Dedicated and experienced management team New idea/leverages technology Strong and sustainable with competitive advantage Defined investment plan Strong strategic partners Establishing reasonable price per share State strategic value and potential to impact Illinois economy How Process Works Application submitted Internal Review Interview with mgt team Response within 30 days Funding Parameters Awards under $1M and/or 25% equity Investment in form of equity or convertible debt Likely to follow lead investor terms Preferred 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 economy 10) Conforms to all DCEO and US Treasury SSBCI guidelines.

How to Apply www.ildceo.net/AdvantageIllinois 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 www.ildceo.net/AdvantageIllinois

Illinois Department of Commerce & Economic Opportunity Questions about institutional lending programs 800-252-2923 CEO.IllinoisAdvantage@illinois.gov Contact Me Matt Jennings Matthew.Jennings@illinois.gov 217/782-3891 Illinois Department of Commerce & Economic Opportunity Illinois DCEO Keep in touch Q & A