1. 4 STEP CREDIT UNION CHARTERING, PRIVATE PLACEMENT FUNDING,
COMMITMENT AND BANK OPERATIONS PLAN
Now we’re going to go into the plan and funding structure. This is for all you policy and process junkies…like me!
SUPPORT LOCAL BUSINESS
SHARING ECONOMY

2. PRE-CHARTERING AND PRE-PLACEMENT Proposed Field Of Membership (PFOM)
Now Time To Recruit
“Subscribers” aka Board
Members, write business plans and raise funds for chartering
Prepare and submit a
Proposed ‘Field Of
Membership (PFOM)
letter to the NCUA
NCUA
Approves
PFOM
I. Pre-Chartering and Pre-Placement
a. FOM Preapproval
i. Submit wording for the proposed field of membership (the persons, organizations and other legal entities the credit union will serve) to NCUA early in the application process for written approval.
ii. The proposed field of membership must meet all common bond or community requirements.
iii. Once the field of membership has been given preliminary approval,

3. SUBSCRIBER RECRUITMENT AND JOB DESCRIPTION
Job Aspect (During
Chartering Process)
Job Resulting Stage: Readiness
For Private Placement
Job Description (click link)
Qualification matching:
1- Subscribers executive directorship placement
2- NCUA charter
application processing
3- Business planning
a- GCCFCU business Planning
b- Cooperative business planning (8)
c- Limited partner business
planning (32)
d- Operating agreement finalization
e- Service level agreement and
f- Service and delivery contacts
Credit Union
Board Member
Committed to completing the Credit Union Chartering Process (Job #1)
Acting GCCFCU Board Member;
Advise. Promote and Fundraise
Sector-specific
Cooperative
Executive Director
i. Each "Subscriber" has a four-fold duty;
1. To be a part of the team that works on the administrative/Chartering process for the Greater Cleveland Cooperative Federal Credit Union (GCCFCU, and;
2. Serve on the Board of Directors for the GCC Federal Credit Union by;
3. Serve as acting executive director for the previously-mentioned cooperative entity which will be developed and incorporated, for the purpose of building capacity and/or render other technical support to a specific industry, its individual business entrepreneurs and the cooperative entity which will be supporting those businesses, to;
4. Perform duties as the Advisory Board for the associated Community Development Entities (CDE's) or Small Business Investment Company, by developing and delivering business plans and investment recommendations to the associated CDE's and/or SBIC's,
ii. A "Subscriber" for the purposes of the chartering process of the GCCFCU duties include the following;
1. Becoming knowledgeable about credit unions in general and specifically, the mission of the GCCFCU.
2. Working with the NCUA “Organizer” to develop a business, marketing and financial plan.
3. Serving as the ad hoc Board of Director to promote, fundraise and otherwise support the chartering and physical establishment of the GCCFCU and its commencement of operations.
4. To serve initially (or as needed) as managers or other positions in the GCCFCU, until full/part time personnel is put in place.
5. Apply the sector-specific expertise for the mentorship of the member business operators for;
a. Management training and other capacity-building
b. Operational Planning
6. Help develop, organize and incorporate, a cooperative entity focusing on the specific industry expertise and serve as the executive director of that newly incorporated entity.
7. Develop; Help research, create and file appropriate documentation to the appropriate government and business authorities to establish the cooperative entity.
8. Market to and recruit membership.
9. Perform all necessary administrative duties of cooperative entity status compliance.
iii. Each “Subscriber” must serve on the Board of Directors per GCCFCU Bylaws, and be a part of the Advisory Board for any associated CDE’s or SBIC’s until a Low-Income Community (LIC) Representative has been chosen (at random, from FOM) to replace them.
iv. As a GCCFCU Board Member, each subscriber must;
1. Promote,
2. Advise1
3. Fundraise
v. As an Advisory1 Board Member, each subscriber must;
1. Collect market data from its membership
2. Develop reports
3. Make investment recommendations 
vi. “Subscribers” should (but not necessarily) have Experience, Skills and Education in the following Industries, and will be assigned to each respectively, based on interest and qualifications matching.
1. Subscriber Executive Directorship Placement
2. NCUA Charter Application Processing
3. Business Planning
a. GCCFCU Business Planning
b. Cooperative Business Planning (8)
c. Limited Partner Business Planning (32)
d. Operating Agreement Finalization
e. Service-Level Agreements and Service and Delivery Contracts
Acting Executive Director:
Incorporate, Operate the Cooperative
Advisory Board to
GCCFCU/Executive and NLEH, Inc. Board
Develop and deliver business, econometric
and investment recommendation

4. Development Of The Finalized Private Placement Memorandum (PPM)
Credit Union Requirements:
Management;
1. Fitness
2. Experience
Organization;
1. Sponsorship
2. Advisory
3. Credit Committee
Mission;
1. Thrift
2. Credit
3. Business Plan
(NCUA/LlC/UA SBIC compliant)
SBIC Requirements:
Partnership Organization;
1. General Partner (AND
Direct. LLC)
2. Limited Partners
(Accredited Investors)
Business Plan;
Operations
Small Business Lending
Small Business Development (via Advisory Panel)
SBIC Accreditation
Fund Member Qualifications:
1- Subscriber executive
directorship placement
2- Market planning
3- Business planning:
a. Creditworthiness
b. Operation agreement finalization
c. Service level agreements
d. Service delivery contracts
II. Private Placement
a. Pre-Offering Transaction Structure and Offering Preparation Consulting
i. Defining the structure of the offering transaction
1. Choosing an SEC exemption that best fits the client’s needs, maximizes efficiency, and reduces State Blue Sky regulatory issues;
a. General Partnership Structure/SBIC Applicant
i. Management Assessment Questionnaire "MAQ" (pronounced "mac"): is a series of structured questions concerning the applicant's plans for the prospective SBIC and the experience and qualifications of the proposed management team. The MAQ consists of two electronic files and our SBIC consultant will provide detailed guidance and support throughout the completion of the MAQ and will serve as contact person for the SBA in the evaluation process.
ii. License Application: After the SBA has approved the initial MAQ filing and given a "go forth" letter to the applicant, the preparation of the license application begins. The license includes information gathered on the MAQ, more detail concerning financial commitments and several legal documents needed to create an SBIC. When the applicant begins the application, it should be highly confident of minimum capital levels required by the SBA. Firm commitments of $5 million of Regulatory Capital are required for Debentures SBICs under the SBIC regulations, but the SBA may require a higher amount, generally around $20 million or more. If the applicant intends to be non-leveraged, SBA regulations require it to have commitments of at least $3 million plus a plan for getting to $5 million, but again, the SBA may require a higher amount. In order to file an application, the applicant must have received signed firm commitments from qualified investors for the appropriate minimum.
iii. SBIC Regulations Classes: are held several times per year in Washington DC. The purpose of this course is to familiarize the applicant with the ins and outs of investing within the SBIC regulatory framework. The classes are critical and required by the SBA for licensing. At least one principal of the proposed SBIC must attend the regulatory training before a license will be issued. In addition, all principals must attend the training before any leverage will be issued. Individuals may register for these classes by contacting the Small Business Investor Alliance (SBIA).
iv. SBIC Audit: The SBIC requires each Licensee to submit an audited Annual Financial Report at the close of its fiscal year. The Annual Financial Report consists of the financial statements and other schedules included in SBA Form 468 and can be located on the SBA's Web site. A link to this form is located on the "SBIC Forms" page of SBICLaw.com. The preparation of the Annual Financial Report is the responsibility of the Licensee. SBA regulations require that an Independent Public Accountant perform the audit and express an opinion on financial statements and supplementary schedules based on the audit.
2. Deciding between an equity offering or debt offering, discussion of the advantages and disadvantages of each and the differences between equity investors and debenture investors;
3. Developing concise, attractive transaction structure including pricing the shares or notes and deciding between common, preferred, or convertible preferred equity;
4. Setting the capitalization structure of the company – specifically how many shares of total authorized share/unit capital is appropriate for the client’s current transaction and any future growth;
5. Development of several possible exit strategies;
6. Analysis of the business with a focus on identifying weak areas and providing recommendations to strengthen those areas pre-offering;
7. Setting a minimum offering amount and minimum investment amount;
8. Development of investor return models and valuation techniques;
9. Determining alternative financing that can be utilized in conjunction with the private capital to produce the most cost effective capitalization plan possible;
10. Guidance regarding possible marketing tactics and resources and the priority in which the client should utilize these tactics and resources;
11. Assistance with State Blue Sky filings;

5. PRESENTATION GRADE PRIVATE PLACEMENT OFFERING DOCUMENT PREPARATION
b. Presentation Grade™ Private Placement Offering Document Preparation
i. Developing high specification Regulation D offering documents that meet the SEC’s strict “Form 1A” specification
1. Presentation Grade™ Private Placement Memorandum (“PPM”): The PPM is the disclosure prospectus which provides full disclosure to investors prior to investing.
a. Review and modification of transaction structure and related data; and guidance on needed exhibits like financial statements, operating agreements, contracts, etc.
2. Subscription Documentation: Get assistance with the development of the necessary subscription documentation which serves as the sales contract for selling the securities (stock, LLC membership units, notes, bonds, etc.) to the investors;
3. Term Sheet: a summarized version of the offering terms used for certain initial contact and interaction with investors;
4. Investor Suitability Questionnaire: The investor suitability questionnaire provides you with certain critical information about the investors financial wherewithal and status as an accredited or non-accredited investor;
5. Bond or Note Agreement: RDR provides clients assistance with drafting of a bond or note agreement that, in debt offerings, serves as the debenture agreement between the investor and the company

6. FUNDING, RECEIPT AND COMMITMENTS
PPM OFFERING AND REQUIREMENTS
( Pre-SBIC Accreditation and Pre-Bank Charter)
Fund Offering #1: 506(b)
FUND CONSTRUCTION (click link)
Offering Type: Debenture
1. Each Investor Is A Limited
Partner (min. contribution $5,000)
2. Competitive Rate Of Interest
3. Diversified Portfolio Of Investments
4. Credit/Default Risk Mitigation
5. NMTC/LIHTC or other CDE/CRA
considerations to Boost ROI and
Decrease Overall Risk
General Partner (Pre-SBIC Approval)
AND Direct, LLC
Management:
Arlin J, Wallace
1- Manager Managed
2- ERISA Compliant
3- CDE
4- Complete SBIC Application
SBIC-Compliant Limited
Partnership Operating Agreement
Credit Union
Greater Cleveland
Cooperative
Federal Credit
Union (GCCFCU)
1. Funds Commitment Letter from GP completes Charter Application
Cash
(From Debenture)
Committed
Deposits
III. Funding, Receipt and Commitments
a. Partnership Funding Goal ($5MM minimum for SBIC Guidelines)
b. SBIC Development
i. Operating Agreement
ii. SBIC Application
1. Submission
2. Approval ( days)
c. General Partner Receives Investments from Limited Partners
Investment (Cash) via Debenture
Limited Partners/Accredited Investors (PPM)

7. Bank Operations: Lending/Investing and Equity
Post SBIC Accreditation and Post Bank Charter
Credit Union Opening Day and “1st Order Of Business”
(Initial Investor Payoff)
Step 2
Loan(s)
Credit Union
Greater Cleveland
Cooperative
Federal Credit
Union (GCCFCU)
1. CDFI Lender
2. Accredited Investor
General Partner
AND Direct, LLC
Management;
Arlin J. Wallace
1. Manager Managed
2. CDE
3. SBIC
Offering #2 506(c)
FUND CONSTRUCTION (click link)
Offering Type: Equity
ERISA-Compliant Fund;
1. Purchasers Must be Accredited
(Credit Union or General Partner)
2. Stock Price Total Asset
Valuation/POM
Step 1a
Cash (Refinance
Debenture Debt)
Step 3
Convertible Debentures
In scenario 1, the bank refinances the debt incurred from its Private Placement Memorandum (PPM). The new loan would discount the old loan during the investment period and pay off the limited partners (to the PPM). From the “Fund’s” perspective, the investment from the General Partner (AND Direct, LLC as an SBIC) in the form of debt convertible into equity.
Step 1b
Payoff Initial Investors
Limited Partners/Accredited Investors (PPM)

8. Fund Operations: Investing and Equity
SBIC, Investment Fund and Community Transactions
(Community Integration and Investment)
Step 2
Cash
Offering #2 506(b)
FUND CONSTRUCTION (click link)
Offering Type: Equity
ERISA-Compliant Fund;
1. Purchasers need not be Accredited
2. Individual Stock Price =
Fund Intrinsic Valuation/Proportion
General Partner
AND Direct.LLC
Management;
Arlin J. Wallace
1. Manager Managed
2. CDE
3. SBIC
Credit Union (GCCFCU)
Deposit Institution
POS Treasury
Lender
Accredited Investor (CDE)
Lender to Individual Fund Companies
Step 3
Loan Repayment
In scenario 2, there is the same refinancing transaction between the Sponsor (AND Direct, LLC as an SBIC) and the Bank, but this time, the Sponsor presents a new PPM offering (a 506b) to the community residents. So the funds to payoff the Limited Partners from the original PPM is refinanced by the bank at a discount, then paid of by equity investments by the community at large by the new PPM through IRA/401k rollovers.
Step 4
Mutual Fund-type Ownership
Step 1
Rollover Equity Investment
Normal Business/Member Banking
Non Accredited/401k/IRA
Investors from the Community

9. This diagram depicts the flow of money, information, sequentially and topologically. I will explain...