MEDC Capital Services Team

Help with financing your exports

Contents

• Capital Continuum• Collateral Support Program• Loan Participation Program• Export Program• Contact Information

The Capital Continuum

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Angel Investment Incentive(Small Business Investment Tax Credit)

• 25% tax credit on investment in certified company

• Investment must be made through or alongside a qualified VC or Angel group

• $9 million in credits allocated each year

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Pre-seed Funds

Over $30 million to:•SmartZones•Spark•Automation Alley•NextEnergy•MUCI•UTEAMED•BRCC

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21st Century Commercialization Competition Accelerator Funds

•In 2006 - Awarded $126.3 million to 78 highly recommended projects

•Targeted Sectors•$30 million in 2008•Loans to for profits•Follow-on-Fund

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21st Century Investment Fund,Venture Michigan Fund, Accelerator Fund

•$300 million to VC, mezzanine, and private equity funds

•Over $600 million in private leverage

•Fund of Fund structure

•Managed by Credit Suisse

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Loan Enhancement Programs

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MBGF Program

• Michigan Business Growth Fund• Helping diversify and strengthen Michigan businesses• Two programs, one deals with Collateral Value, one

with Capacity to Repay (debt service coverage). • Designed to use public capital to deal with an

“access” issue, not a “cost” issue. • Designed to work with bank policy and regulatory

framework for commercial credit. • One enhancement mechanism per borrower. • Enormous flexibility in use of proceeds, structural

incorporation, type of note, etc….

MBGF Eligibility

• Business must be eligible to receive a MEGA tax credit (manufacturing, wholesale & trade, research & development, high technology, mining, office operations, film & digital media productions)

• No retail or passive real estate• Companies with 750 global employees or less.• Public policy benefit • 100% of loan proceeds must be used in the State

of Michigan

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Loan Types

• R/E, FF&E, Working Capital• Not to be used as a means for partial acquisition

between partners.• Cannot provide assistance for credit facilities

supported by SBA and USDA federal guarantees.• Support for brand new credit facilities only.

– No refinancing of existing lender debt– No increase in existing credits

• Maximum enhancement of $5MM• Maximum loan amount of $20MM

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Mechanism One - Collateral Support

• Intended as a gap filling mechanism, not a stand alone asset.

• Can contribute up to 49.9% of the amount of the loan.• Support value of existing assets and support

expansion of debt to finance growth. • Cash deposit in lending institution, Deposit Agreement

tied to specific account & loan. • Claim in the event of both a default and a deficiency. • Minimum claim is lesser of actual loss after liquidation

of primary collateral or 90% of eligible deposit. • Fees 1-3% at closing. 1% of eligible balance annually

+ deposit rate interest.

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Mechanism Two- Loan Participation

• Intended to: – facilitate projects with a revenue gap– de-concentrate bank – reduce debt service demands for a short term

period• Program can purchase up to 49.9% of a commercial

credit facility an forego the receipt of interest as well as potentially defer the receipt of principal.

• Pro-Rata and Pari Passu• Fees are 1-3% at closing. After grace period, bank

rate (pro rata) plus an annual fee of 1% of the programs outstanding balance.

Getting started

• Step 1– Contact MEDC staff to discuss proposal.

• Step 2– Complete intake and background check

forms

• Step 3– Submit bank underwriting document along

with forms

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Export Financing Incentive Program

• Uses a small amount of public resources to defray the incremental cost difference between domestic and foreign working capital loans.

• Increase business profit by lowering costs• Induce entry and expansion into foreign

markets.

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Eligibility

• Must have a physical facility located in MI• Business must receive additional loan exposure

for financing exports from MI.• Maximum export loan exposure of $6MM• Maximum total loan exposure of $20MM• Maximum 750 global employees

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Benefits

• Up to a maximum $100,000 per company during a 24 month period.

• Reimbursement of up to 50% for A/R Insurance Premiums

• Reimbursement of up to 75% of eligible costs, including:– Field Exams– Facility Fees– Guaranty Fees– Letter of Credit fees

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Additional Guidelines

• Lender may not pass through reimbursed costs to the borrower.

• Lender to provide a schedule of anticipated reimbursable costs at enrollment

• Loan to be enrolled prior to closing.• Lender and borrower to certify their adherence to all

applicable laws and SSBCI requirements at enrollment.

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Enrolling a Loan

• Lender to submit the following:– Loan Enrollment form– Schedule of anticipated eligible costs– Borrower Assurances– Copy of the lender’s underwriting approval

document

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Website: www.michiganadvantage.orgbusinessloans@michigan.org

MEDC Capital Services Team300 N. Washington Sq.

Lansing, MI 48913

Contact Info