Getting Small Deals Done

Warren SebraNovogradac & Company LLP

MODERATOR PANELISTS

Kermit BillupsGreenline Ventures

Tracey Gunn LowellU.S. Bancorp CommunityDevelopment Corporation

Brynn SandersNew Markets Support Company

Donna SmithSmith NMTC Associates

Fund Diagram

Senior Note Rate: $0.85Leverage Loan Fee:

$150,000 Fund Legal Closing Costs$45,000 Compliance and Audit/Tax Expense Reserve$80,000 Origination Fee$38,334 Leverage Loan Fee

$313,334 Total

Managing Member (0.01%)

$2,780,000 $7,760,000

$1,940,000

QLICI Loan 5$1,940,000QLICI Loan 6

$915,000 $1,940,000QLICI Loan 2 QLICI Loan 4$1,865,000 $1,940,000

QLICI Loan 1 QLICI Loan 3

$300 $800Loan Loss Reserve Sub-Allocation Fee Sub-Allocation Fee

$100,000 $120,0001.0% QEI Orig. Fee

$240,000(3.33% of QEI) (4.0% of QEI)

$80,000(3.00% of QEI)

Sub-CDE #2 Managing

Member$3,000,000 $8,000,000 Managing Member (0.01%)

Sub-CDE #1 Managing Sub-CDE #1 Sub-CDE #2

Member

Credit Price:

Investment Fund

Equity Investor

$7,666,834 $3,646,500

$2,012,590

0.50%

Leverage Lender

5.54%

$11,313,334

$3,000,000

QEI 3$2,000,000

QEI 4$2,000,000

QEI 5$2,000,000

QEI 6$2,000,000

$8,000,000

QEI 1$987,410

QEI 2

Savings for QALICBs/Additional Funds for Project

Greenline Community Ventures

Mission:• To improve the flow of capital into underserved communities

• To motivate market rate capital to invest in community priorities

• Create sustainable competitive advantages and replicabledevelopment models in underserved communities

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Why Do Small Deals?

• To achieve a higher score on the CDFI Fund application!• To support the overall CDE business strategy and enhance community impacts.

• Strategic fit with CDE mission.

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Greenline Community VenturesCDE Background• Small Deals: Revolving, Subordinate Loan Structures

• With early allocations, we established a track record of structuring short term (1-3 year) debt financings and “recycling” NMTC subsidy into additional projects as loans mature.

• Greenline reinvested NMTC subsidy from early rounds into projects which lasted well beyond the 7-year compliance period.

• NMTC loans (QLICIs) subordinate to conventional financing

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Greenline Community VenturesCDE Background• Maximum Community Impact!

• Allows Greenline to finance multiple projects over 7-yr compliance period

• Uses subsidy during project stabilization then enables traditional bank capital to invest in LIC

• Leverages more conventional, non-NMTC capital• Maximize efficiency of NMTC subsidy

• Jobs created/retained per tax credit• Tax revenue generated per tax credit

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Greenline Community VenturesBasic Pool Structure

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Tax Credit Investor

$100,000,000 Equity (QEI)(99.98% owner)

$100,000,000Loans (QLICIs)

$25,000,000 Tax Credit Equity

$75,000,000 Fund Loan

Loan Servicer,Asset ManagerAdmin Member(0.01% owner)

Managing Member

Investment Fund

Fund Lender

Fund Manager

Fund Manager /Syndication Fee

CDE Sponsor Sub CDE

Qualifying Projects(QALICBs)

Call Option

(0.01% owner)

(100% owner)

Pool Structures• Spread risk• Allow for smaller deal sizes• Allow for various deal types• Reduce costs

Greenline Community VenturesSmall Business Capital Fund

The world the way it ought to

be.

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Greenline Community VenturesSmall Business Capital Fund• Multi-asset, multi-investor “blind” fund is the most effective structure for

achieving impacts with small deals. • One-off deals are cost prohibitive

• Revolving funds are preferable – enhanced impact, credit risk management, no 7-yr lockout requirement, etc).

• Requires experience, capabilities and personnel bandwidth to raise the capital for the fund in a fully discretionary manner.

• Important to have investors that trust the manager and don’t need substantive controls.• Difficult to execute a small business loan fund if the manager needs to get any outside

consent for the loans from the tax credit investor or fund lenders.• Helps to perform the AUP in-house and just get sign off from accountants for

documenting the QALICB status/reasonable expectations.

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Greenline Community VenturesSmall Business Capital Fund• NMTC EQUITY FOR LICs: Subordinate, flexible loans of $250,000 –

$2,000,000 with terms of 1-7 years.

• FOCUS ON UNDERSERVED BORROWERS: Loans to women and minority owned firms in high distress LICs.

• ONLINE BUSINESS SUPPORT AND REFERRALS: Technology partner Bode Tree provides management advice to businesses.

• RESPONSIBLE COMMUNITY LENDING PARTNERS: National and community banks. Non bank partners. Bode Tree.

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Sample Capital Stack

SubordinateMezzanineDebt

Senior Debt

Equity Project Sponsor(95% - 100%)

Greenline SBCF(76% - 94%)

Third PartyInvestor(0% -75%)

Page 4 of 12

Greenline Community Ventures Small Business Capital Fund

Basic Product Profile

SubordinateMezzanineDebt

Amount: $250,000 to $2,000,000

Purpose: Working Capital, Growth/Expansion, Acquisition, Equipment Financing, etc.

Term: 12-84 months (Borrower needs, risk profile, and term of senior financing

Borrower Characteristics (one or more of the following): • Minority or women ownership • Environmental benefits • Meaningful employee benefits (Health Insurance, 401(k), Employee Ownership,

etc.) • Employee training programs (especially for advancement from unskilled to

skilled positions) • Local community hiring preferences • Other factors that have a demonstrable and positive economic and social impact

in their communities Page 5 of 12

Rocky Mountain Instrument Co.DEFINING THE COMMUNITY PROBLEM

Community Problem: Shortage of venture capital, flexible debtand “incubator services” in support small businesses and emerging technology companies.

Causes of the community problem: Venture capital providers and support services are concentrated regionally. Operate with limited geographic scope.

Community need: Cost effective source of growth capital and management support for emerging technology companies. Reliable capital and support services will allow these businesses to remain in their communities of origin.

Rocky Mountain Instrument Co.Business Description

Operating business investment.• Minority-owned manufacturer of optics, coatings & assemblies for laser and imaging

applications. • 100 employees – over 50% minority, 90,000 sq. ft. facility in Lafayette, CO• Defense, industrial, medical, semiconductor, scientific markets• Seeking capital to expand into unique market segment involving Zinc Selenide.

Rocky Mountain Instrument Co.NMTC Solution

NMTC Supported Solution: Operating business investment.• Company exhausted traditional sources of funding• Unable to secure growth capital• Existing equipment financed at a 40% effective rate

Key impact considerations: • $1.9 million 36 month financing with extension options• 15 direct technology jobs will be created in expansion• Available to minority, low income residents • Agreed to subordinate to accounts receivable financings • Strong local support.

URBAN LAND INSTITUTEUrban Land Magazine

• While the established tech capitals attract a variety of imported talent, an increasing number of tech companies are evaluating the benefits and tradeoffs of being homegrown—aging in place within the diverse set of communities that supported their early-stage ideas.

• Whereas tech capitals have primarily reacted to the influx of residents and businesses—rapidly trying to develop and deploy housing, transportation, and commercial solutions—the next generation of tech cities is proactively combining economic development strategies, housing, amenity planning, and development tools to leverage existing assets, advance city growth, and reposition city economies in place-specific, provocative ways.

Tech Cities: From Silicon Valley to Silicon PrairieBy Howard Kozloff and Christina CalabreseOctober 2, 2015(Excerpts Below)

Getting Small Deals Done

Warren SebraNovogradac & Company LLP

MODERATOR PANELISTS

Kermit BillupsGreenline Ventures

Tracey Gunn LowellU.S. Bancorp CommunityDevelopment Corporation

Brynn SandersNew Markets Support Company

Donna SmithSmith NMTC Associates