Financing for the Recycling Business Community

Carol C. Brennan, Director of Business Development, BDC Capital3/29/11

Loans & Investment Capital

for Business

At BDC Capital, our mission for over 57 years has been to provide innovative financing to growing companies in New England.

For permanent working capital, re-financing, machinery & equipment, real estate, and business acquisitions

When you need: Longer repayment term – to help with debt

service coverage Higher advance rates (100% financing) Reduction in leverage

BDC Capital www.bdcnewengland.com A privately-funded company-headquarters in Wakefield, MA•Funded by 28 banks (can work with any lender)•$300 million under management•Administers state programs (RLF, BRAC, CAP)

CDC New England www.cdcnewengland.com An affiliate company•SBA 504 Loans•For fixed asset financing:

-real estate and machinery & equipment

About Us

Loan and Investment Solutions

Recycling Loan Fund (RLF) Loans: $50,000 - $500,000

ABL Lines of Credit: BDC Term Loans:

$500,000 - $3,000,000

BDC Mezzanine Investments: $750,000 - $5 million

CDC New England SBA 504 Loans: typical $250,000 project size and up

We work with your bank to provide the complete financing that a business needs to grow.

Recycling Loan Fund (RLF)

Loan program funded by Massachusetts DEP Flexible terms to help businesses involved in any

recycling activity which keeps non-hazardous materials out of Massachusetts landfills

Supplements bank financing For solid waste recyclers OR companies that use

recycled materials in their process (e.g. a molder that uses recycled resin)

Typical loans range from $50,000 to $300,000; up to 10 year term; fixed rates negotiated

Quick turnaround time

Since 1995, the start of the RLF program 15 years ago: Provided 43 “Recycling Loan Fund” loans to assist a diverse group of recycling businesses

throughout the Commonwealth. We have funded over $8.5 million of loans,

more than double the $4 million of state funds that capitalized the program.

These loans have helped to raise $24 million in private sector financing – and created and/or retained over 900 jobs

RLF Past Borrowers:

DW Clark Manufacturer of metal castings $300,000 term loan for debt refinance and working

capital

Universal Plastics Plastics manufacturer using recycled resin $175,000 term loan for equipment

Agresource, Inc. Organic composting business $130,000 term loan for equipment

RLF: Low Interest Rate Program for Management of Food Waste

Loans for activities involving food waste can receive up to $500,000 at a rate as low as 4% fixed

Up to 10 year term For any reasonable business purpose! Examples of eligible types of customers:

1) generators of food waste - totes for recycling 2) haulers - equipment to move the food waste3) composters - equipment to make compost from food waste

BDC Asset-Based Lines of Credit

$500,000 to $3,000,000 secured by: Accounts Receivable and Inventory

Cash is controlled via a lockbox and collateral account at a bank

Any type of business – but no progress billings

Ability to get cash immediately – even if Temporary earnings or leverage issues

Term loans: $500,000 to $3,000,000 With or without an SBA 7(a) guarantee

(BDC Capital is an SBA preferred lender)

In a senior or junior secured position or in a participation loan with a lender

March 2011 rates as low as 5.5%

BDC Term Loans

BDC Term Loans

Example of Borrower Needs:

•Additional working capital needs: •line of credit fully advanced•took 2nd position on assets

•Restructure existing term debt to free up cash flow for real estate acquisition

•Business acquisition – participation loan with bank and SBA 7(a) guarantee

• For owner-occupied real estate and M&E:

• Borrower conserves working capital: 10% down payment (vs. 20% conventionally)

• Bank has 50% loan-to-value 1st mortgage

• SBA funds 40% share (through CDC New England) -with low, 20-year fixed rate: 6.4%

in March 2011

SBA 504 Loansthrough CDC New England

3rd Mezzanine Fund – Raised $28 million• For acquisitions, leveraged buyouts,

management buyouts • For healthy, growing companies looking

for “growth capital” - equity base too thin

Companies with:• Solid management• Strong cash flows (usually limited

collateral)• Barriers to entry

BDC Mezzanine Investments

•Investment size: $750,000 to $5,000,000

•A market rate of interest (12%); 5 year term

•Plus either :- a royalty fee tied to sales (tax deductible)

- or a warrant•Don't give up ownership / control •Don’t require personal guarantees•Less dilutive than equity•Can fill the “collateral gap”

BDC Mezzanine Investments

BDC Capital500 Edgewater Drive, Suite 555 781-928-1100 Wakefield, MA 01088 781-028-1101 fax

LOAN OFFICERS: Karen Michalski 781-928-1107

kmichalski@bdcnewengland.com Joe Herzog 781-928-1109

jherzog@bdcnewengland.com

BUSINESS DEVELOPMENT OFFICERS: Carol Brennan (WMass.) cell 413-237-6648

cbrennan@bdcnewengland.com Nancy Gibeau (South & SE Mass.) cell 508-254-7891

ngibeau@bdcnewengland.com John Figmic (Central & Eastern Mass.) 781-928-1122

jfigmic@bdcnewengland.com