2007 Annual Report

COLORADO LENDINGSOURCE

5 6 2 S A B L E B O U L E V A R D . S U I T E 2 4 0 . A U R O R A , C O 8 0 0 1 1 . 3 0 3 . 3 4 0 . 2 1 0 1 . F A X 3 0 3 . 3 4 0 . 2 1 1 1 . W W W . A U R O R A E D C . C O M

Superlatives seem inadequate when attempting to describe the performance of Colorado Lending Source in 2007. The organization was again the leader of Colorado CDC’s in terms of loans approved and also finished in the top ten in the country for the year. This national standing which is occurring annually is re-markable when one considers the relatively limited population and business base we have in the Rocky Mountain Region as compared to other parts of the country.

CLS’s loan volume continues to grow at impressive rates. Through November, CLS had 281 project approvals representing an increase of 22% over 230 approv-als for the same period in 2006. Additionally, a single month record of 26 loan fundings occurred in November. This represents almost one funding per day!

A significant milestone was achieved in July when CLS bested the so-called “magic” $300 million mark for its SBA 504 loan portfolio. With over $331 mil-lion in the portfolio through October, it was expected that the portfolio was going to exceed $350 million by the end of the year!

Needless to say, the success of Colorado Lending Source begins with a highly ca-pable and hard-working staff. Active participation of the Board of Directors and the Board’s Executive Committee as well as the many hours devoted by the Loan Review Committee complement the staff’s visionary efforts. Finally, this success is possible only through the partnerships developed with our outstanding lending partners who make the deals possible.

It has been a privilege serving as Board President of Colorado Lending Source in 2007 and I would like to express my sincere appreciation and thanks to all individuals and organizations associated with CLS who have helped us take the organization to new heights.

SignatureDick Hinson, CED

Vice PresidentAurora Economic Development Council

Our mission is to foster the economic growth of diverse small businesses throughout the state of Colorado.

2007 Colorado Lending Source Staff

Beth Wilson, Alaina Alexander, Alissa Frohreich, Joe Pariseau, Matt Junge, China Carll, Tod Cecil, Stacey Williams, Sara Beyer, Amber Boyer, Edna Milinowicz, Lauren Sarnosky, Dianne Ariki, Debra Morack, Kim Palmer, Mike O’Donnell, Karen McDevitt, Barbara Taylor,

Nicole Christianson, Cindy Scheich, Becky Fuller, Stephanie Martinnot pictured: Karol Jones & Laurel Walk

Who we are and what we do...

Colorado Lending Source is a pri-vate, nonprofit, economic development organization certified by the U.S. Small Business Administration to process, administer and service SBA 504 loans under both the Accredited Lender Program (ALP) and Preferred Certified Lender Program (PCLP). As the only PCLP lender in the state of Colorado, and one of only a handful in the nation, we have the delegated authority to provide our partner bank lenders and bor-rowers with highly efficient, expedited loan process-ing, closing and servicing assistance. We now also offer financing assistance under the New Markets Tax Credit (NMTC) and Community Reinvestment Fund (CRF) loan programs through our partnership with Community Reinvestment Fund.

Under the SBA 504 Loan Program small business owners can purchase, construct or reno-vate commercial real estate and/or purchase capital equipment and machinery for their business with a low down payment and a long-term, fixed interest rate.

In order to qualify for financing a business must be for -profit, have a net worth of less than $7.5MM and/or a net income (after taxes) of no more than $2.5MM for the last two years. In addition, a business must intend to occupy at least 51% of an existing structure or at least 60% of a newly constructed building.

The SBA 504 loan is limited to 40% of a total project with a maximum of $1.5MM. This portion can be increased to $2MM for Women, Veteran or Minor-ity owned businesses, projects located in enterprise zones, rural communities, or exporters. In addition, manufacturing firms can receive as much as $4MM in financing. A Bank or Partner lender will typically pro-vide 50% of the financing, while the small business owner will be required to put down 10% towards the project and in some cases 15% or 20%, if the business is a start up and/or intends to operate out of a single purpose facility.

Interest Rates for the SBA 504 portion of the loan are set once a month with the sale of a bond on the New York market. Rates are fixed for 20-years on commer-cial real estate and 10-years for machinery and large

equipment. The Bank/Partner Lender portion of the loan will contain a conventional market interest rate.Absolutely NO funds for this program are taken from taxpayer dollars. The borrower will pay a one-time origination fee of 2.24% in addition to closing costs of $1,500, these are typically financed as part of the loan.

NMTC and CRF business loans are based on loan to value and can be used for refi-nance transactions. These programs might be great options for businesses that are too large per SBA 504 guidelines, or have already used their allocation of SBA funds.

Both programs have a maximum loan to value of 90%, if the NMTC or CRF loan amount is $500,000 or less. If the loan amount is greater than $500,000, the loan to value reduces to 85%. A maximum eligible loan amount under the NMTC program is $2,500,000, and under the CRF program is $1,000,000. Both loans typically mirror the SBA 504 loan program with a bank holding a 50% first Deed of Trust, and CLS with a 40% second Deed of Trust. However, there is flex-ibility regarding the percentage allocations.

Eligibility for NMTC financing requires that a busi-ness be located in an eligible low income census tract, and must be a Qualified Active Low-income Commu-nity Business.

The NMTC loan has a term/amortization of 25 years, with an interest rate 240 basis points over the 7-year treasury, fixed for 7 years. On the 7th anniversary, the rate changes to 360 basis points over the 10 year trea-sury, fixed for the remaining term. The fees include a .5% origination fee based on the NMTC loan amount, a $1,000 loan closing fee, and applicable title/filing fees.

If a project is not located in an eligible low income census tract we can utilize the CRF loan program. The interest rate on this loan can vary but is typically priced at 450 basis points over the 10-year treasury and is fixed for the term of the loan. The fees include a 1.5% origination fee based on the CRF loan amount, a $500 loan closing fee, and applicable title/filing fees.

Who we are and what we do...

A s the alternative energy industry becomes in-creasingly more important worldwide, many are do-ing what they can to change the way we think about and use energy. Mobile Energy Solutions, LLC is a leader on the front lines of this change with the de-sign and manufacture of high-tech, ultra low emis-sion, commercial, hybrid-electric, battery and fuel cell-powered transportation vehicles (hybrid electric buses).

Mobile Energy Solutions CEO, Dale Hill, and several principles began this successful business with the design and production of Denver’s 16th Street FREE Mall Ride. The FREE Mall Ride is “the world’s largest and most successful alterna-tive fueled hybrid electric transit project”, carrying 135,000,000 passengers to date, and is now in its 7th year of Revenue Service.

Today, Mobile Energy Solutions is under contract for four hybrid electric fuel cell bus programs including a fuel cell bus to operate in the Burbank Media District outside Jay Leno’s studio, one die-sel hybrid project, and six all battery school bus programs including two for the Jefferson County School District which will be used for the Democrat-ic National Convention in Denver. Colorado Lending Source was thrilled to work with Emily Robinson at FirstBank of Colorado to pro-vide financing for the 3.24 acre land purchase and construction of a 13,000 square foot manufacturing facility located in the Coors Technology Center.

COLORADO LENDINGSOURCE

Mobile Energy Solutions

Rosy Rings, Inc.

S hannon Cumberland started manufacturing high-end, distinctive, handmade candles from her kitchen in 1995. Within a few years, Rosy Rings, Inc. had taken off and the increase in demand re-sulted in two moves, each time to a larger location. Eventually, it became apparent that more space would always be an issue when Shannon needed to make lower cost volume purchases to build her inventory for busier seasons. In order to avoid complications as a result of this continual growth, Shannon looked to purchase her own facility that would provide the business with more than enough space to grow.

Rosy Rings, Inc. now operates out of a 14,686 square foot warehouse in Denver. The building includes 2,500 square feet of office space and is laid out in a way that allows for increased efficiency and

significant storage.

Rosy Rings Inc. offers a vast array of candles comprised of botanical, fruit and seashell lines, jar candles, citronella, votive, holiday and even wedding sets. The majority of the business’s client base is comprised of small gift shops and spas nationwide. Rosy Rings, Inc. now has sales representatives in all but seven states and sends out 1,900 catalogues annually.

Colorado Lending Source was pleased to work with Marcia Cohen at UPS Capital Business Credit to provide Shannon with financing for the purchase of her new warehouse through the SBA 504 loan program.

COLORADO LENDINGSOURCE

Artisan chocolate manufacturer, Seth Ellis Chocolatier, LLC was started when Rick Levine, Neil Levine and David Lurie decided to turn their passion for chocolate into a full time business. With experi-ence spanning the globe from Eu-rope to the Boulder Valley this trio of entrepreneurs is equipped with the wisdom to “create gor-geous, sensa-tional-tasting chocolates from the finest or-ganic and natural ingredients”. These gentleman love chocolate so much they even blog about it!

Focusing on taste, appearance and packaging is what leads to the production of each exquisite piece of chocolate. Their wholesale business includes the sale of both loose and boxed choc-olates to volume resellers. In addi-tion to the wholesale channels, the company intends to have a small retail store in front of the produc-tion area to showcase the manufac-turing process and create

consumer interest. Eventually they will add Internet retail sales as a way of assisting their marketing efforts.

Located in Boulder, CO, or what many consider the “Mecca” for organic food production, the busi-ness needed a great deal of equip-

ment in order to begin opera-tions. The equip-ment primarily consists of five pieces of confec-tionary machin-ery including one to fill the choco-lates, another to coat the choco-late, a tempering machine to assist in the molding process, a melt-

ing tank and even a machine to wrap the chocolate.

Colorado Lending Source was pleased to partner with Paul Clemens of FlatIrons Bank to provide Rick, Neil and David with SBA 504 financing to purchase the manufacturing equipment needed to start the business.

Husband and wife team Gran and Glenda Farnum opened Gran Farnum Printing & Publishing, Inc. in Glenwood Springs in 1979. Since then, the business has grown into one of the top high speed, 4-color and spot color print shops on the Western Slope. The business offers assistance at any stage of a customer’s project including designing, pre-press produc-tion, printing, bindery and mailings. The goal at Gran Farnum is to give

their customers a quality job, delivered on time, and at a good price.

In a highly competitive industry Gran and Glenda attribute the success of Gran Farnum Printing & Publishing to their use of the newest technol-ogy, a talented and experienced staff, and over 25 years of commitment to service. They have been recognized in many ways over the years for this success, most recently Gran Farnum Printing & Publishing was honored by

the Mountain States Division – Print-ing and Imaging Association with more awards than they could carry. In fact they received three Awards of Excellence, and the Best of Category for each of six entries they submitted for judging!

After leasing space for years, Gran and Glenda decided it was time to purchase their own retail storefront on the main thoroughfare in Glen-

wood Springs. They renovated a 4,000 square foot building and built a 2,800 square foot unattached addition to provide extra production space. The move allowed them to update equip-ment and even acquire two additional printing presses.

Colorado Lending Source was pleased to partner with Bill Sanderson at Alpine Bank to provide Gran and Glenda Farnum with an SBA 504 loan to purchase their new location.

GRAN FARNUM PRINTING

Paula Lopez has been suc-cessfully running her family’s busi-ness, Decatur West, Inc., for over 15 years. Decatur West provides low cost residential housing with a 24-hour staff to clients with dis-abilities who, for one reason or another, are unable to live independently. The staff of Decatur West provides meals, medication, laundry and housekeeping services in addi-tion to planning activities for its residents in a home like environment. They accept individuals from a mixed population of age groups which sets Decatur West apart from a typical assisted living facility, opening the doors to those who may not have realized there was a place for them.

Decatur West, which has been oper-ated by the Lopez family since inception in the 1950’s, relies solely on word of mouth referrals in the Denver Metro Area to fill its 32 rooms. As a result the business has

experienced low turnover with a yearly occupan-cy rate in excess of 98%.

Paula was in-terested in refinancing her existing debt on the 11,300 square foot building that is home to Decatur West. This has

significantly improved the monthly cash flow of the business. Colorado Lending Source was pleased topart-ner with Tom Francis at Wells Fargo to provide financing for the project under the Community Re-investment Fund loan program.

For a year and a half Shel-ley Long owned and operated a successful catering business in Salida, CO called Stir It Up Catering. When Shelley real-ized her business was quickly outgrowing her kitchen space, so much so that she was forced to turn away business, she began to look for a new loca-tion from which to cater. Her search lead her down an unex-pected path when she discov-

ered a restaurant for sale on Highway 285 between Salida and Buena Vista. This purchase would allow her to open a full service restaurant in addition to expanding her catering business.

The restaurant, Purple Sage Grill, serves a variety of what Shelley refers to as “Western

Food with Global Flair”. This includes favorites such as Elk and Buffalo and freshly made desserts.

The 3,684 square foot build-ing can seat 164 inside and an additional 75 on the deck when the weather is favorable. A pri-vate dining room on the lower level is perfect for catered events, while the main level of the restaurant serves locals

and those who just happen to pass by. Purple Sage Grill has become so popular that Shel-ley now takes reservations.

Colorado Lending Source is happy to have partnered with Gary Martin at Pueblo Bank & Trust to provide Shelley Long with a SBA 504 Loan to purchase the restaurant.

The mission of Colorado Lending Source, as you will see elsewhere in this report, on our lit-erature and all over our web site, is to foster the economic growth of diverse small businesses within the communities of Colorado. We achieve this mission by helping to facilitate, through our financing programs, the purchase, improvement or construction by small business owners of primarily owner-occupied commercial real estate.

The 2007 calendar year for Colorado Lending Source was our best year ever! The dedicated, enthusiastic and hard working CLS staff originated 308 new loan approvals, consisting of 259 SBA 504 loans, 24 Community Reinvestment Fund (CRF) loans and 25 New Markets Tax Credit (NMTC) loans.

These 308 new loan approvals in-volved 152 different loan officers at 64 different banking institutions (not just different branches, but differ-ent banks!) and will result in a HUGE impact on the state of Colorado: our individual small business borrowers will receive a total of $150.9 million in financing through Colorado Lending Source, $241.0 million from private sector partner bank lenders and they will directly invest more than $66.2 million in their projects themselves.

The bottom line is the staggering sta-tistic of $458.1 million worth of new investment in the state by expanding small businesses, which will create at least 1913 new jobs for Colorado. And all this without any tax payer subsidization, artificial support or even a net!

This annual report is a celebration of our efforts in 2007 and some of the many businesses we have been fortunate enough to work with, together with all the private sector lenders who have partnered with us to bring our economic development lending programs to the small business community here in Colorado.

Thank you to the staff of Colorado Lending Source! Thank you to the board of directors! Thank you to our members! Thank you to all of our partner private sector lenders! Thank you to all the small business owners! And thank you to all the other partners and supporters we have enjoyed working with! It has been a great year, and it is all because of you!

Respectfully, your humble servant savant,

Mike O’DonnellExecutive DirectorColorado Lending Source

P.S. Now we need to see if we can make 2008 an even better year!!

2007 Colorado Lending SourceBoard of Directors

Don Abbott, Loveland Center for Business DevelopmentBrian Ballard, FirstBank of ColoradoMark Bostock, Centennial Lending

Brian Burke, SBA AccessBecky Clark, City of Lakewood

Jim Fallon, Commerce Bank [Past President]Preston Gibson, Jefferson Economic Council

Jaime Gomez, Colorado Housing & Finance AuthorityDick Hinson, Aurora Economic Development Corporation [President]

Connie Meine, JP Morgan Chase [Secretary]Lila Nigh, Arvada Economic Development Corporation [Treasurer]

Jim Ocken, Guaranty Bank & Trust [Vice President / President Elect]Ceyl Prinster, Colorado Enterprise Fund

Joanne Thompson, SBA One SourceRudy Bianchi, United Western Bank (Honorary Board Member)

2007 Colorado Lending Source Loan Review Committee

David Adzema, Citywide Banks Mark Bostock, Centennial Lending, LLC

Seth Bradley, UMB Bank Colorado Nancy Broome, Colorado Business Bank

Rick Bruno, FirstBank of Tech Center Fred Burmont, Upstate Colorado Economic Development Corporation

John Gray, Bank of Colorado Terri Groves, Broomfield Economic Development Corporation

Ron Harlow, Harlow Capital Corporation Craig Kaffenberger, Community South Lending

Tim Merkle, Mile High BanksLila Nigh, Arvada Economic Development Association

Michael Paul, MainStreet Lender Joy Richardson, UMB Bank Colorado

Denise Stephens, Jefferson County Business Resource Center Dan Wallace, West Quadrant Financial

Advantage BankAlpine Bank

AmFirst BankAmerican National Bank

Bank of the WestBeach Business BankCache Bank & TrustCapital Pacific Bank

Capital West National BankCentennial Lending

Center BankCentennial Banks of the West

Champion BankColorado Housing & Finance Authority

Citizens BankCitywide Banks

Colorado Business BankColorado Capital Bank

Colorado East Bank & TrustColorado First Commercial

Commerce BankCommunity South Lending

Compass BankCommunity Reinvestment Fund

First Community BankFirst National Bank of Fort Collins

First National Bank of Steamboat SpringsFirst National Bank of the Rockies

FirstBankFirsTier BankFlatirons Bank

Fort Collins Commerce Bank

GE CapitalGrand Mountain BankGuaranty Bank & Trust

Hanmi BankHarlow Capital

Home State BankInternational BankJP Morgan Chase

KeyBankMain Street Lender

Mile High BanksMillennium Bank

Mission OaksMutual of Omaha Bank

New West BankPacific Western BankPeoples National BankPueblo Bank & Trust

Shinhan BankSilver State Bank

Steele Street State BankSturm Financial Small Business Credit

Temecula Valley BankUMB Bank

United Western BankUPS Capital

US BankValley Bank & Trust

Vectra BankWells Fargo

West Quadrant FinancialZions Bank

We would like to thank the following financial institutions for partnering with us in 2007.

THANK YOU!

Adams County Economic DevelopmentAdwest Consulting, Inc.Aurora Chamber of CommerceAurora EDC, Inc.Boulder Chamber of CommerceBoulder County S.E.E.D.Boulder Economic CouncilBroomfield Chamber of CommerceBroomfield EDCColorado Association of Government Guaran-teed LendersColorado Association MTCarbondale Chamber of CommerceCircle of Latina LeadershipCity of WestminsterColorado Business Incubation AssociationColorado Council on Economic EducationColorado Outward BoundColorado Rural Development CouncilColorado Springs Chamber of CommerceColorado Springs Technology IncubatorColorado Women's Chamber of CommerceCommercial Brokers of BoulderCraig Chamber of CommerceDelta Area Chamber of CommerceDelta Area Development, Inc.Denver Metro Chamber of CommerceDMCARDurango Chamber of CommerceEagle Valley Chamber of CommerceEconomic Developers' Council of ColoradoFort Collins Chamber of CommerceGlenwood Chamber of CommerceGlenwood Springs Chamber Resort AssociationGrand Junction Area Chamber of CommerceGrand Junction Economic PartnershipGreeley Chamber of Commerce

Independent Bankers of ColoradoJefferson Economic CouncilLafayette Chamber of CommerceLongmont Area Economic CouncilLongmont Chamber of CommerceLouisville Chamber of CommerceLoveland Center for Business DevelopmentLoveland Chamber of CommerceMetro North Chamber of CommerceMi Casa Resource Center for WomenNational Association for Government Guaran-teed LendersNorth Metro Chamber of Commerce Northern Colorado EDCProgressive 15Rifle Chamber of Commerce RMA Rocky Mountain ChapterRocky Mountain Indian Chamber of CommerceSCORESouth East Business PartnershipSouth Metro Chamber of CommerceSouth Metro Chamber of Commerce EDG Steamboat Chamber of CommerceSteamboat Springs Chamber Resort AssociationSummit Chamber of CommerceThe Asian ChamberThe Business Incubator CenterThe Colorado Springs Chamber of CommerceUniversity of Northern Colorado FoundationUpstate Colorado Economic DevelopmentWellington Area Chamber of CommerceWest ChamberWestern Regional Lenders ConferenceWindsor Chamber of CommerceWindsor Parks & Recreation DepartmentYoung Americans Center for Financial EducationYouth Leadership Jefferson County

We are pleased to have been involved with the following organizations in 2007.

HEADQUARTERS518 17th Street, Unit 1800

Denver, CO 80202(303) 657-0010 • (877) 852-6799

fax: (303) 657-0140info@ColoradoLendingSource.org

w w w . C o l o r a d o L e n d i n g S o u r c e . o r g

NORTH1635 Foxtrail Drive

Loveland, Colorado 80538(970) 232-3120

fax: (970) 797-1094

SOUTH1115 Elkton Drive, Suite 300Colorado Springs, CO 80907

(719) 227-6687fax: (719) 623-0192

WEST2520 S. Grand Avenue

Suite 207Glenwood Springs, CO 81601

(970) 947-1400fax: (970) 947-1404

EAST16765 CR 3

Kirk, Colorado 80824(303) 657-0010

fax: (303) 657-0140