Small Business Administration Community Advantage Loan Program

LOAN APPLICATION

COLORADOLENDING SOURCE

BORROWERAPPLYING FOR LOAN

Application is submitted toSubmitCA@coloradolendingsource.org

Reviews eligibility & SBA credit score

Receives list of items needed to

apply for loan & in-person meeting

Sends all documents & information needed

Underwriting of loan begins

Presents application to External Loan

Review Committee

APPROVAL #1

Provides items needed & sends non-refundable packaging fee check for

$2,500

Issues Letter of Intent & sends list of

items needed to submit application

Submits loan to SBA

COMMUNITY ADVANTAGE LOAN PROCESS

Issues Commitment Letter & list of items needed to close

Sends final closing items

Reviews items & prepares for closing

5 Work Days 1-2 Work Days

Time VariesTime Varies

3-5 Work Days

2 Work Days

Time Varies

Start

APPROVAL #2

SBA underwrites loan

Become part of the Colorado Lending Source community!

Finish

LOAN CLOSES!

1

SBA Borrower Application for Community Advantage LoansBorrower Information:

Business Name:______________________________________________________________________________________

Trade Name:______________________________________ Business Description:_________________________________

Address:____________________________________________________________________________________________

City:_________________________________ County:__________________________ State:__________ Zip:__________

Tax ID:__________________________________________ Phone:_____________________________________________

Email Address:___________________________________________ Web Address:_________________________________

Number of Jobs to be created as a result of this loan:___________________________ Year Established:_________________

Business Type (circle one):

Sole Proprietor Partnership LLC S Corporation

C Corporation Trust Other

Is your business a franchise operation? ____Yes ____No

If yes, name of franchise:_______________________________________________________________________

Is the business more than 51% woman or minority owned? ____Yes ____No

Bank of Business Account:____________________________________________________________________________

Bank Address:_______________________________________________________________________________

City:______________________________ County:_______________________ State:________ Zip:_________

DUNS #:__________________________________________________________________________________Dun & Bradstreet (D&B) provides a DUNS Number, a unique nine-digit identification number, for a business’ physical location. DUNS Number assignment is free for all businesses required to register with the U.S. Federal government for contracts or grants. Business owners can go to http://fedgov.dnb.com/webform to request a DUNS Number. If one does not already exist for the business location, it can be created within one business day.

Management Information:

Please provide the following information for all proprietors, partners, officers, directors and holders of outstanding stock. (100% of business ownership must be shown; use separate sheet if necessary)

1. Owner Name: SSN: Ownership:__________%

Address: Title:

City: State: Zip:

2. Owner Name: SSN: Ownership:__________%

Address: Title:

City: State: Zip:

3. Owner Name: SSN: Ownership:__________%

Address: Title:

City: State: Zip:

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Project Cost Detail:

Use of Project Funds Source of Project Funds

Purchase land and/or a building SBA Loan Amount

Construct, add an addition or make renovations to a building owned

Borrower Equity

Make renovations or tenant im-provements to a building leased

Gifted Funds (if applicable)

Purchase Equipment Seller Carry(if applicable)

Purchase furniture and/or fixtures

Other Sources________________

Purchase inventory Other Sources________________

Pay trade or accounts payable Other Sources________________

Refinance existing debt Other Sources________________

Refinance existing SBA debt Other Sources________________

Purchase business Other Sources________________

Working capital Other Sources________________

Closing cost and fees Other Sources________________

TOTAL Project Costs: TOTAL Project Funding:

Current & Previous SBA & Other Government Debt:

Please include any debts you, your business, any principal of your business, any affiliate of your business, any other business currently owned by a principal, or any business previously owned by you or a principal of your business that has received or applied for any direct or guaranteed finan-cial assistance from the Federal Government. This would include SBA loans, student loans and disaster loans. All current, previous and pending Federal Government debt must be listed including loans that have been paid in full or those that resulted in a loss to the Government. Note: Loans that resulted in a loss to the Government include loans that were charged off, compromised, or discharged as a result of bankruptcy. The amount of the loss is the outstanding principal balance of the loan that the Government had to write off after all collection activi-ties (including compromise) were finalized.

Agency Loan # Borrower Name

Original Loan Amount

Approval Date

Loan Status

Outstanding Balance

$ Amount Loss to Gov’t

# $ $ $

# $ $ $

# $ $ $

# $ $ $

3

Business Indebtedness:

Please list all current notes, lines of credit and credit cards. Please indicate with an asterisk (*) any debts which are proposed for payoff. Use separate sheet if necessary.

Creditor Original Amount

Original Date

Present Balance

Interest Rate Maturity Date

Monthly Payment

Security Current or Past due?

1. Has the borrowing business(es) or any of the owners now or previously been a debtor in a bankruptcy?

YES / NO (circle one)

If yes, please provide a written explanation with the attached bankruptcy documentation.

2. Is the borrowing business(es) or any of the owners a defendant in a pending lawsuit?

YES / NO (circle one)

If yes, please provide a written explanation.

3. May we reference your business as a “Success Story” in our eNewsletter?

YES / NO (circle one)

4. How did you hear about Colorado Lending Source and/or the Community Advantage Loan Program?

Signature______________________________________________________ Date________________________

Print Name____________________________________________________

4

OMB APPROVAL NO.: 3245-0188 EXPIRATION DATE: 03/31/2021

SBA Form 413 (7a/504/SBG) (01-18) Previous Editions Obsolete Page 1

PERSONAL FINANCIAL STATEMENT 7(a) / 504 LOANS AND SURETY BONDS

U.S. SMALL BUSINESS ADMINISTRATION As of ________________, ________

SBA uses the information required by this Form 413 as one of a number of data sources in analyzing the repayment ability and creditworthiness of an application for an SBA guaranteed 7(a) or 504 loan or, with respect to a surety bond, to assist in recovery in the event that the contractor defaults on the contract. Submission of this information is required as part of your application for assistance. Failure to provide the information would impact the agency’s decision on your application.

Complete this form for: (1) each proprietor; (2) general partner; (3) managing member of a limited liability company (LLC); (4) each owner of 20% or more of the equity of the Applicant (including the assets of the owner’s spouse and any minor children); and (5) any person providing a guaranty on the loan

Return completed form to: For 7(a) loans: the Lender processing the application for SBA guaranty For 504 loans: the Certified Development Company (CDC) processing the application for SBA guaranty For Surety Bonds: the Surety Company or Agent processing the application for surety bond guarantee

Description of Other Income in Section 1.

*Alimony or child support payments should not be disclosed in “Other Income” unless it is desired to have such payments counted toward total income.

Name Business Phone

Home Address Home Phone

City, State, & Zip Code

Business Name of Applicant

ASSETS (Omit Cents) LIABILITIES (Omit Cents)

Cash on Hand & in banks…………………………$ ________________ Savings Accounts…………………………………..$ ________________ IRA or Other Retirement Account………………...$ ________________ (Describe in Section 5) Accounts & Notes Receivable…………………….$ ________________ (Describe in Section 5) Life Insurance – Cash Surrender Value Only……$ ________________ (Describe in Section 8) Stocks and Bonds…………………………………..$ ________________ (Describe in Section 3) Real Estate…………………………………………..$ ________________ (Describe in Section 4) Automobiles…………………………………………$ ________________ (Describe in Section 5, and include Year/Make/Model) Other Personal Property……………………………$ ________________ (Describe in Section 5) Other Assets………………………………………….$ _______________ (Describe in Section 5)

Total $ ________________

Accounts Payable……………………………$ ______________ Notes Payable to Banks and Others……….$ ______________ (Describe in Section 2) Installment Account (Auto)…………………..$ ______________ Mo. Payments $ ___________ Installment Account (Other)………………....$ ______________ Mo. Payments $ ___________ Loan(s) Against Life Insurance……………...$ ______________ Mortgages on Real Estate…………………...$ ______________ (Describe in Section 4) Unpaid Taxes………………………………….$ _____________ (Describe in Section 6) Other Liabilities………………………………..$ _____________ (Describe in Section 7) Total Liabilities………………………………....$ _____________ Net Worth……………………………………….$ _____________

Total $ _____________ *Must equal total in assets column.

Section 1. Source of Income. Contingent Liabilities

Salary………………………………………………….$ ________________

Net Investment Income……………………………...$ ________________

Real Estate Income………………………………….$ ________________

Other Income (Describe below)*…………………...$ ________________

As Endorser or Co-Maker…………………….$ _____________

Legal Claims & Judgments…………………..$ _____________

Provision for Federal Income Tax…………....$_____________

Other Special Debt…………………………….$ _____________

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SBA Form 413 (7a/504/SBG) (01-18) Previous Editions Obsolete Page 2 of 6

Section 2. Notes Payable to Banks and Others. (Use attachments if necessary. Each attachment must be identified as part of this statement and signed.)

Names and Addresses of Noteholder(s)

Original Balance

Current Balance

Payment Amount

Frequency (monthly, etc.)

How Secured or Endorsed Type of Collateral

Section 3. Stocks and Bonds. (Use attachments if necessary. Each attachment must be identified as part of this statement and signed.)

Number of Shares Name of Securities Cost Market Value Quotation/Exchange

Date of Quotation/Exchange Total Value

Section 4. Real Estate Owned. (List each parcel separately. Use attachment if necessary. Each attachment must be identified as a part of this statement and signed.)

Property A Property B Property C Type of Real Estate (e.g. Primary Residence, Other Residence, Rental Property, Land, etc.)

Address

Date Purchased

Original Cost

Present Market Value

Name & Address of Mortgage Holder

Mortgage Account Number

Mortgage Balance

Amount of Payment per Month/Year

Status of Mortgage Section 5. Other Personal Property and Other Assets. (Describe, and, if any is pledged as security, state name and address of lien holder, amount of lien, terms of payment and, if delinquent, describe delinquency.)

Section 6. Unpaid Taxes. (Describe in detail as to type, to whom payable, when due, amount, and to what property, if any, a tax lien attaches.)

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SBA Form 413 (7a/504/SBG) (01-18) Previous Editions Obsolete Page 3 of 6

Section 7. Other Liabilities. (Describe in detail.)

Section 8. Life Insurance Held. (Give face amount and cash surrender value of policies – name of insurance company and Beneficiaries.)

I authorize the SBA/Lender/Surety Company to make inquiries as necessary to verify the accuracy of the statements made and to determine my creditworthiness.

CERTIFICATION: (to be completed by each person submitting the information requested on this form and the spouse of any 20% or more owner when spousal assets are included)

By signing this form, I certify under penalty of criminal prosecution that all information on this form and any additional supporting information submitted with this form is true and complete to the best of my knowledge. I understand that SBA or its participating Lenders or Certified Development Companies or Surety Companies will rely on this information when making decisions regarding an application for a loan or a surety bond. I further certify that I have read the attached statements required by law and executive order.

Signature ________________________________________ Date ____________________

Print Name _______________________________________ Social Security No. ____________________

Signature ________________________________________ Date ____________________

Print Name _______________________________________ Social Security No. ____________________

NOTICE TO LOAN AND SURETY BOND APPLICANTS: CRIMINAL PENALITIES AND ADMINISTRATIVE REMEDIES FOR FALSE STATEMENTS:

Knowingly making a false statement on this form is a violation of Federal law and could result in criminal prosecution, significant civil penalties, and a denial of your loan or surety bond application. A false statement is punishable under 18 U.S.C. §§ 1001 and 3571 by imprisonment of not more than five years and/or a fine of up to $250,000; under 15 U.S.C. § 645 by imprisonment of not more than two years and/or a fine of not more than $5,000; and, if submitted to a Federally-insured institution, a false statement is punishable under 18 U.S.C. § 1014 by imprisonment of not more than thirty years and/or a fine of not more than $1,000,000. Additionally, false statements can lead to treble damages and civil penalties under the False Claims Act, 31 U.S.C. § 3729, and other administrative remedies including suspension and debarment.

PLEASE NOTE: According to the Paperwork Reduction Act, you are not required to respond to this request for information unless it displays a valid OMB Control Number. The estimated average burden hours for the completion of this form is 1.5 hours per response. If you have questions or comments concerning this estimate or any other aspect of this information collection, please contact: Director, Records Management Division, Small Business Administration, 409 Third Street SW, Washington, D.C. 20416, and SBA Desk Officer, Office of Management and Budget, New Executive Office Building, Room 10202, Washington, D.C. 20503. PLEASE DO NOT SEND COMPLETED FORMS TO OMB.

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SBA Form 413 (7a/504/SBG) (01-18) Previous Editions Obsolete Page 4 of 6

PLEASE READ, DETACH, AND RETAIN FOR YOUR RECORDS STATEMENTS REQUIRED BY LAW AND EXECUTIVE ORDER

SBA is required to withhold or limit financial assistance, to impose special conditions on approved loans, to provide special notices to applicants or borrowers and to require special reports and data from borrowers in order to comply with legislation passed by the Congress and Executive Orders issued by the President and by the provisions of various inter-agency agreements. SBA has issued regulations and procedures that implement these laws and executive orders. These are contained in Parts 112, 113, and 117 of Title 13 of the Code of Federal Regulations and in Standard Operating Procedures.

Privacy Act (5 U.S.C. 552a) Any person can request to see or get copies of any personal information that SBA has in his or her file when that file is retrieved by individual identifiers such as name or social security numbers. Requests for information about another party may be denied unless SBA has the written permission of the individual to release the information to the requestor or unless the information is subject to disclosure under the Freedom of Information Act.

Under the provisions of the Privacy Act, you are not required to provide your social security number. Failure to provide your social security number may not affect any right, benefit or privilege to which you are entitled. Disclosures of name and other personal identifiers are, however, required for a benefit, as SBA requires an individual seeking assistance from SBA to provide it with sufficient information for it to make a character determination. In determining whether an individual is of good character, SBA considers the person’s integrity, candor, and disposition toward criminal actions. Additionally, SBA is specifically authorized to verify your criminal history, or lack thereof, pursuant to section 7(a)(1)(B), 15 USC Section 636(a)(1)(B) of the Small Business Act ( the Act). Further, for all forms of assistance, SBA is authorized to make all investigations necessary to ensure that a person has not engaged in acts that violate or will violate the Act or the Small Business Investment Act, 15 USC Sections 634(b)(11) and 687(b)(a), respectively. For these purposes, you are asked to voluntarily provide your social security number to assist SBA in making a character determination and to distinguish you from other individuals with the same or similar name or other personal identifier.

The Privacy Act authorizes SBA to make certain “routine uses” of information protected by that Act. One such routine use is the disclosure of information maintained in SBA’s investigative files system of records when this information indicates a violation or potential violation of law, whether civil, criminal, or administrative in nature. Specifically, SBA may refer the information to the appropriate agency, whether Federal, State, local or foreign, charged with responsibility for, or otherwise involved in investigation, prosecution, enforcement or prevention of such violations. Another routine use is that SBA may disclose the information maintained in SBA’s investigative files to other Federal agencies conducting background checks to the extent the information is relevant to the requesting agencies' function. In addition, another routine use is that SBA may transfer information related to a debt that a person is delinquent in paying to SBA in connection with its loan programs for publication on a computer database system maintained by the Department of Housing and Urban Development, or other Federal agency, to allow searches by participating Government agencies and approved private lenders, consistent with applicable law. SBA and its authorized lenders may also use this computer database system to perform a computer match to determine a loan applicant’s credit status with participating agencies of the Federal Government. See Revision of Privacy Act System of Records, 74 F.R. 14890 (April 1, 2009) and 77 F.R. 61467 (October 9, 2012) for additional background and other routine uses, which may be amended from time to time.

Right to Financial Privacy Act of 1978 (12 U.S.C. 3401) -- This is notice to you as required by the Right to Financial Privacy Act of 1978, of SBA's access rights to financial records held by financial institutions that are or have been doing business with you or your business, including any financial institutions participating in a loan or loan guaranty. The law provides that SBA shall have a right of access to your financial records in connection with its consideration or administration of assistance to you in the form of a Government guaranteed loan. SBA is required to provide a certificate of its compliance with the Act to a financial institution in connection with its first request for access to your financial records, after which no further certification is required for subsequent accesses. The law also provides that SBA's access rights continue for the term of any approved loan guaranty agreement. No further notice to you of SBA's access rights is required during the term of any such agreement. The law also authorizes SBA to transfer to another Government authority any financial records included in an application for a loan, or concerning an approved loan or loan guarantee, as necessary to process, service or foreclose on a loan guaranty or collect on a defaulted loan guaranty.

Freedom of Information Act (5 U.S.C. 552) This law provides, with some exceptions, that SBA must supply information reflected in agency files and records to a person requesting it. Information about approved loans that will be automatically released includes, among other things, statistics on our loan programs (individual borrowers are not identified in the statistics) and other information such as the names of the borrowers (and their officers, directors, stockholders or partners), the collateral pledged to secure the loan, the amount of the loan, its purpose in general terms and the maturity. Proprietary data on a borrower would not routinely be made available to third parties. All requests under this Act are to be addressed to the nearest SBA office and be identified as a Freedom of Information request.

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SBA Form 413 (7a/504/SBG) (01-18) Previous Editions Obsolete Page 5 of 6

Flood Disaster Protection Act (42 U.S.C. 4011) -- Regulations have been issued by the Federal Insurance Administration (FIA) and by SBA implementing this Act and its amendments. These regulations prohibit SBA from making certain loans in an FIA designated floodplain unless Federal Flood insurance is purchased as a condition of the loan. Failure to maintain the required level of flood insurance makes the applicant ineligible for any financial assistance from SBA, including disaster assistance.

Executive Orders -- Floodplain Management and Wetland Protection (42 F.R. 26951 and 42 F.R. 26961) – SBA discourages settlement in or development of a floodplain or a wetland. This statement is to notify all SBA loan applicants that such actions are hazardous to both life and property and should be avoided. The additional cost of flood preventive construction must be considered in addition to the possible loss of all assets and investments due to a future flood.

Occupational Safety and Health Act (15 U.S.C. 651 et seq.) -- This legislation authorizes the Occupational Safety and Health Administration in the Department of Labor to require businesses to modify facilities and procedures to protect employees or pay penalty fees. Businesses can be forced to cease operations or be prevented from starting operations in a new facility. Therefore, SBA may require additional information from an applicant to determine whether the business will be in compliance with OSHA regulations and allowed to operate its facility after the loan is approved and disbursed. Signing this form as an applicant is certification that the OSHA requirements that apply to the applicant business have been determined and that the applicant, to the best of its knowledge, is in compliance. Furthermore, applicant certifies that it will remain in compliance during the life of the loan.

Civil Rights Legislation -- All businesses receiving SBA financial assistance must agree not to discriminate in any business practice, including employment practices and services to the public on the basis of categories cited in 13 C.F.R., Parts 112, 113, and 117 of SBA Regulations. This includes making their goods and services available to handicapped clients or customers. All business borrowers will be required to display the "Equal Employment Opportunity Poster" prescribed by SBA.

Equal Credit Opportunity Act (15 U.S.C. 1691) -- The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status or age (provided the applicant has the capacity to enter into a binding contract); because all or part of the applicant's income derives from any public assistance program, or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act.

Executive Order 11738 -- Environmental Protection (38 F.R. 251621) -- The Executive Order charges SBA with administering its loan programs in a manner that will result in effective enforcement of the Clean Air Act, the Federal Water Pollution Act and other environment protection legislation.

Debt Collection Act of 1982, Deficit Reduction Act of 1984 (31 U.S.C. 3701 et seq. and other titles) -- These laws require SBA to collect aggressively any loan payments which become delinquent. SBA must obtain your taxpayer identification number when you apply for a loan. If you receive a loan, and do not make payments as they come due, SBA may take one or more of the following actions: (1) report the status of your loan(s) to credit bureaus, (2) hire a collection agency to collect your loan, (3) offset your income tax refund or other amounts due to you from the Federal Government, (4) suspend or debar you or your company from doing business with the Federal Government, (5) refer your loan to theDepartment of Justice or other attorneys for litigation, (6) foreclose on collateral or take other action permitted in the loaninstruments, or (7) if you default on an SBA loan and fail to fully reimburse SBA for any resulting loss, refer you to thecomputer database of delinquent Federal debtors maintained by the Department of Housing and Urban Development, orother Federal agency, which may disqualify you from receiving financial assistance from other Federal agencies. Inaddition, unless SBA is reimbursed in full for the loss, you will not be eligible for additional SBA financial assistance.

Immigration Reform and Control Act of 1986 (Pub. L. 99-603) -- If you are an alien who was in this country illegally since before January 1, 1982, you may have been granted lawful temporary resident status by the United States Immigration and Naturalization Service pursuant to the Immigration Reform and Control Act of 1986. For five years from the date you are granted such status, you are not eligible for financial assistance from the SBA in the form of a loan guaranty under Section 7(a) of the Small Business Act unless you are disabled or a Cuban or Haitian entrant. When you sign this document, you are making the certification that the Immigration Reform and Control Act of 1986 does not apply to you, or if it does apply, more than five years have elapsed since you have been granted lawful temporary resident status pursuant to such 1986 legislation.

Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821 et seq.) -- Borrowers using SBA funds for the construction or rehabilitation of a residential structure are prohibited from using lead-based paint (as defined in SBA regulations) on all interior surfaces, whether accessible or not, and exterior surfaces, such as stairs, decks, porches, railings, windows and doors, which are readily accessible to children under 7 years of age. A "residential structure" is any home, apartment, hotel, motel, orphanage, boarding school, dormitory, day care center, extended care facility, college or other school housing, hospital, group practice or community facility and all other residential or institutional structures where persons reside.

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SBA Form 413 (7a/504/SBG) (01-18) Previous Editions Obsolete Page 6 of 6

Executive Order 12549, Debarment and Suspension (2 CFR 180, adopted by reference in 2 CFR Part 2700 (SBA Debarment Regulations)) -- By submission of this loan application, you certify and acknowledge that neither you nor any Principals have within the past three years been: (a) debarred, suspended, declared ineligible from participating in, or voluntarily excluded from participation in a transaction by any Federal department or agency; (b) formally proposed for debarment, with a final determination still pending; (c) indicted, convicted, or had a civil judgment rendered against you for any of the offenses listed in the Regulations; or (d) delinquent on any amounts due and owing to the U.S. Government or its agencies or instrumentalities as of the date of execution of this certification.

If you are unable to certify and acknowledge (a) through (d), you must obtain and attach a written statement of exception from SBA permitting participation in this loan. You further certify that you have not and will not knowingly enter into any agreement in connection with the goods and/or services purchased with the proceeds of this loan with any individual or entity that has been debarred, suspended, declared ineligible from participating in, or voluntarily excluded from participation in a Transaction. All capitalized terms have the meanings set forth in 2 C.F.R. Part 180.

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Company Name: _____________________________________________________________ Total Year 1

Total Year 2MONTH 1 2 3 4 5 6 7 8 9 10 11 12

Sales: Cash

Credit

Total Sales

Cost of Goods Sold

Gross Profit

Officer Salary(ies)

Wages

Rent- Property

Rent- Equipment

Auto/Truck Expenses

Office Supplies

Advertising

Telephone & Utilities

Bad Debts

Taxes & Licenses

Repairs & Maintenance

Accounting & Legal

Depreciation

Interest

Insurance (all)

Office Expenses

Royalties

Miscellaneous

Other

Total Expenses

Net Profit

Profit and Loss Projections

Please attach assumptions to this projection worksheet. If applicable, please indicate seasonality during the year. Signature ________________________________________________ Date _______________

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Colorado Lending Source Disclosure StatementA summary of the Small Business Administration Community Advantage Loan Program

The U.S. Small Business Administration (SBA) Community Advantage loan program is a pilot program with a goal to increase access to credit for small businesses in underserved areas through sources including non-traditional, mission-oriented lenders. The SBA itself does not make loans, but rather guarantees a portion of the loans made and administered by an eligible Community Advantage lender.

This Disclosure Statement highlights routinely encountered rules associated with the SBA Community Advantage loan program and is intended for informational purposes only. It is not meant to be a complete listing of all relevant policies and requirements. In many areas of this Disclosure Statement, the SBA 7(a) program is referenced as the SBA Community Advantage policy follows general SBA 7(a) requirements. Please visit our website at www.ColoradoLendingSource.org or sign up for our e-mail list (also available on our website) to view or receive up-to-date program news.

1. NO REPRESENTATIONSThe funding of a Community Advantage loan is subjectto satisfactory compliance with the terms and conditionsset forth in a loan commitment document known asthe SBA’s Authorization. By signing this DisclosureStatement, a small business applicant acknowledges thathe/she has not relied upon any representation made byColorado Lending Source and/or its agents, and thatColorado Lending Source and/or its agents have madeno representations or promises to the applicant and itsagents regarding a formal Colorado Lending Source orSBA approval of a loan or of qualifications to receive aloan through the Community Advantage loan program.

2. OBJECTIVE OF THE COMMUNITY ADVANTAGEPROGRAMCommunity Advantage is a SBA pilot program underthe general 7(a) loan program, introduced in 2011 andcurrently operating through at least March 31, 2020.The program may be extended or made permanentat SBA’s discretion. It was formed to allow businessesin underserved markets the ability to access SBA 7(a)financing through eligible, mission-oriented, non-profitlenders.

The SBA’s goals for the program are to:• Increase access to credit for small businesses located

in underserved areas• Expand points of access to the SBA 7(a) loan

program by allowing non-traditional, mission-basedlenders to participate

• Provide management and technical assistance tosmall business applicants, as needed, and

• Manage portfolio risk at acceptable levels

SBA defines underserved markets as 1) loans made to start-ups (firms in business for less than 2 years) 2) veteran-owned businesses 3) businesses located in Empowerment Zones, Enterprise Communities, or HUBZones, or 4) businesses located in, or that have more than 50% of their workforce residing in, low-to-moderate (LMI) communities, or promise zones. Colorado Lending Source expands on this SBA definition of underserved to also include small businesses that are minority-owned, women-owned or are based in rural communities.

An interested lender must apply to SBA to become an eligible Community Advantage lender. Eligible organizations include SBA-Authorized Certified Development Companies (CDCs), SBA-Authorized Microloan Intermediaries, and Non-Federally Regulated Community Development Financial Institutions (CDFIs). Colorado Lending Source is a Certified Development Company and is eligible and authorized as a Community Advantage lender.

Community Advantage loans can be used to finance a variety of general business needs including working capital, business acquisition, machinery and equipment, furniture and fixtures, land and building (including purchase, renovation, and new construction), leasehold improvements, and debt refinancing. Loan maturity is up to 10 years for most uses with a maximum of 25 years for long term equipment and commercial real estate. Participating lenders agree to structure loans in accordance to SBA’s requirements and then apply to receive a guarantee from SBA on a portion of this loan. The SBA does not fully guarantee 7(a) loans -- the lender and SBA share the risk that a borrower may not be able to repay the loan in full. The SBA guarantee is against payment default; it does not cover imprudent decisions by the lender or misrepresentations by the borrower.

The Community Advantage Program

12

3. HOW THE SBA COMMUNITY ADVANTAGEPROGRAM WORKSA small business obtains an SBA Community Advantageloan directly through a mission-based, nonprofitCommunity Advantage lender such as Colorado LendingSource. As the lender, Colorado Lending Source willreceive and review the application and decide if it fits theprogram requirements and philosophy. To be consideredfor an SBA-backed loan, a small business applicantmust be both eligible and creditworthy. The SBA thenguarantees a portion of the loan upon SBA approval,either 75% or 85% depending on the loan amount. Thisguarantee assures the lender that if a borrower does notrepay the loan, the government will reimburse the lenderfor a portion of its loss. However, the small businessborrowing the money remains obligated for the fullamount due.

4. APPROVAL PROCESSThere are three distinct stages involved with securingfinancing through Colorado Lending Source under theCommunity Advantage program:• Application received and underwritten by Colorado

Lending Source. First loan approval considerationthrough Loan Review Committee

• Second loan approval consideration through theSmall Business Administration

• Loan funding upon satisfaction of all collateral andclosing conditions

In order to begin the application process, the following minimum information is required:• Completed Community Advantage application,

including execution of this Disclosure Statement• Completed personal financial statement for any

owner owning 20% or more of business• Most recent business tax return and current year

interim financial statements OR two years ofprojections with written assumptions

• Written business history (existing business) orbusiness plan (new business) and

• Bank referral or bank decline letter for financingPlease keep in mind the above is not a comprehensivelist of all information required to allow for a loan decisionto be made. For a complete list of all informationrequired to complete most Community Advantageapplications, please refer to the Community AdvantageProgram Document Checklist.

5. GENERAL ELIGIBILITYApplicants must meet certain eligibility requirements.These requirements are designed to be as broad aspossible so that the program can accommodate a diverse

variety of small business financing needs.

To be eligible for consideration under the SBA 7(a) program, a business must:• Operate as a for-profit entity• Do business (or propose to) in the United States• Meet SBA size standards• Be an eligible type of business (while the vast

majority of businesses are eligible, some are not,detailed in #7)

• Plan to use proceeds for an approved purpose (SBA7(a) loan proceeds may be used to establish a newbusiness or to assist in the operation, acquisition orexpansion of an existing business)

• Be unable to secure funds from other sources(the SBA does not extend financial assistance tobusinesses when the business has the ability toobtain some or all of the requested loan funds onreasonable terms from alternative, non-Federalsources, without SBA assistance.) Non-Federalsources include the liquidity of owners owning 10%or more equity in the applicant business, and theapplicant business itself

• Have the ability to repay the loan on time, from theprojected operating cash flow of the business

• Evidence of good character (SBA obtains a“Statement of Personal History” from the principals,officers and key employees of each applicantto determine if they have historically shown awillingness and ability to pay their debts and haveabided by the laws of their communities)

• Evidence of management expertise and commitmentnecessary for success

• Provide a feasible business plan

It is the goal of the Community Advantage program for loan funds to be provided to “underserved businesses.” See page 1 for the SBA definition.

In addition, Colorado Lending Source intends to provide financing to those businesses which are unable to secure funding through either conventional or SBA 7(a) financing sources. Accordingly, a requirement for all Community Advantage loans processed by Colorado Lending Source is that either (1) a bank has referred the project, or (2) the applicant small business can show that a bank has declined their request.

6. CREDITWORTHINESSFor all loan requests, the small business applicant willbe screened through SBA’s E-Tran system to ensure theapplication meets the minimum credit score requiredby SBA (determined by SBA and subject to change).

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The credit score is a proprietary formula developed by Dun & Bradstreet for SBA and is calculated based on a combination of consumer credit bureau data, business bureau data, borrower financials, and application data.

At a minimum, the credit analysis performed by Colorado Lending Source will address and reflect the following:• Brief description and history of the business• Management analysis• Credit history of the business and owner/guarantors• Repayment ability of the borrower including past

earnings, projected cash flow and future prospects;• Global cash flow coverage• Owner/guarantor analysis including personal financial

statements, and• Acceptable level of equity and pro-forma debt-to-

worth

Additional requirements and underwriting criteria are allowed at the discretion of Colorado Lending Source. The application will be denied if it does not receive an acceptable E-Tran score, is determined to otherwise not meet the program requirements or philosophy, is not granted approval by the Loan Review Committee or SBA, is not found creditworthy, or in any other way deemed insufficient.

7. INELIGIBLE BUSINESSESIneligible businesses include those engaged in illegalactivities, loan packaging, speculation, multi-salesdistribution, gambling, investment or lending or wherethe owner is on parole. Specific types of businesses noteligible to receive SBA 7(a) loans include:• Real estate investment firms when real property is

held for investment purposes as opposed to loansto otherwise eligible small business concerns for thepurpose of occupying the real estate being acquired.

• Firms involved in speculative activities that developprofits from fluctuations in price rather than throughthe normal course of trade.

• Firms involved in lending such as banks, financecompanies, factors, leasing firms, insurancecompanies (not agents), and any others whose stockin trade is money.

• Pyramid sales plans, where a participant’s primaryincentive is based on the sales made by an ever-increasing number of participants.

• Firms involved in illegal activities that are againstthe law in the jurisdiction where the business islocated. Included in these activities is the production,servicing, or distribution of otherwise legal productsthat are to be used in connection with an illegalactivity.

• Marijuana clinics, facilities and related businesses areineligible for SBA loan programs because of federalstatutes.

• Gambling activities, including any business whoseprincipal activity is gambling.

• Charitable, religious, or other non-profit institutions,government- owned corporations

• Businesses engaged in promoting religion may notbe eligible.

8. ELIGIBLE USES OF PROCEEDSSBA 7(a) loan proceeds may be used to establish anew business or to assist in the operation, acquisitionor expansion of an existing business. Eligible uses ofproceeds include (this is a non-exclusive list):• Purchase of land & buildings, new construction, the

expansion or conversion of existing facilities• Purchase of equipment, machinery, furniture, fixtures,

supplies, or materials• Long-term working capital, including the payment

of accounts payable and/or for the purchase ofinventory

• Refinancing existing business indebtedness that isnot already structured with reasonable terms andconditions

• Purchasing an existing business

9. INELIGIBLE USES OF PROCEEDSSBA 7(a) loans may not be used for the followingpurposes:• To refinance existing debt where the lender is in a

position to sustain a loss and SBA would take overthat loss through refinancing

• To effect a partial change of business ownership or achange that will not benefit the business

• To permit the reimbursement of funds owed to anyowner, including equity injection or injection ofcapital for the business’s continuance until the loansupported by SBA is disbursed

• To repay delinquent state or federal withholdingtaxes or other funds that should be held in trust orescrow

• For any non-sound business purpose

10. TERMS AND CONDITIONSThe specific terms of SBA loans are negotiated betweenan applicant and the participating financial institution,subject to the requirements of the SBA. In general, thefollowing provisions apply to all SBA 7(a) loans.

Loan Amounts: The SBA Community Advantage program allows for a maximum loan amount up to $250,000. Colorado Lending Source has a target loan

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size of $100,000, but will consider a minimum loan amount of $50,000 up to a maximum loan amount of $250,000. The aggregate balance of all Community Advantage loans to a single borrower, including the borrower’s affiliates, may not exceed a total amount of $250,000. In addition, SBA’s maximum exposure is $3.75 million under the 7(a) loan program or $4.5 million on an international trade 7(a) loan made to an exporter.

Maturity Terms: SBA loan programs are generally intended to encourage long-term small business financing. Loan maturities are based on an ability to repay, the purpose of the proceeds, and the useful life of the assets financed. However, maximum loan maturities have been established. Working capital, equipment, furniture, fixtures or inventory loans should be appropriate for the borrower’s ability to repay, up to 10 years; 25 years is the maximum for long term equipment and commercial real estate.

When loan proceeds will be used for a combination of purposes, the maximum maturity can be a blended maturity based on the use of proceeds OR up to the maximum for the asset class comprising 51% or more of the use of proceeds.

Interest Rates: Interest rates are negotiated between the borrower and the lender but are subject to SBA maximums. SBA allows a maximum interest rate of Wall Street Journal Prime + 6.00%. The interest rate will be an adjustable rate that will have the opportunity to adjust every calendar quarter, based upon changes to the Wall Street Journal Prime.

Percentage of Guarantee: SBA can guarantee up to 85% on loans equal to or less than $150,000 and up to 75% on loans greater than $150,000.

Fees: To offset the costs of its loan programs to the taxpayer, the SBA charges lenders a guarantee fee (on the guaranteed portion) and a servicing fee for each loan approved and disbursed. The amount of the fees is based on the guaranteed portion of the loan.

The guarantee fee is charged to the lender by the SBA and is directly passed on to the borrower. The following guarantee fee structure applies:• For loans of $150,000 or less, a 2% guarantee fee will

be charged. Lenders are permitted to retain 0.25%of the up-front guarantee fee.

• For loans from $150,001 to $250,000, a 3%guarantee fee will be charged.

• For loans with a maturity of 12 months or less, a

0.25% guaranty fee will be charged regardless of loan amount.

The lender’s annual service fee to SBA is included in the interest rate the lender charges and cannot be separately passed on to the borrower.

A packaging fee will be charged by Colorado Lending Source on each application. These services include assisting the borrower with the completion of the SBA forms and other document assistance relating to the SBA loan application. SBA allows a fee of 2% of the gross loan amount for loans greater than $50,000 up to $1,000,000. Colorado Lending Source will charge a 2% packaging fee calculated on the gross loan amount - this fee will not exceed $2,500.00. This fee will be due and collected from the borrower at the time of submission to SBA. In the event the borrower chooses to withdraw the loan application during SBA underwriting or after SBA approval, the packaging fee will not be refunded. In the event the loan is not closed or funded due to unmet closing conditions, the fee will not be refunded.

Prepayment Penalties: Only applied when a loan has a maturity of 15 years or more and the borrower is voluntarily prepaying more than 25% of the outstanding balance within the first three years of the date of the first disbursement (not approval) of the loan proceeds. In this case, the prepayment fee is:• During the first year after disbursement, 5% of the

amount of the prepayment• During the second year after disbursement, 3% of

the amount of the prepayment• During the third year after disbursement, 1% of the

amount of the prepayment

Collateral Requirements: At a minimum, a lien on all of the fixed assets of the small business applicant is required. A loan request is not to be declined solely on the basis of inadequate collateral, however, SBA does not permit its guaranty to be used as a substitute for available collateral.

Additional collateral beyond the minimum lien on fixed assets may be taken, such as in the below scenarios:• When loan proceeds will be used to refinance

existing debt, the Community Advantage loan mustbe secured with at least the same security and lienpriority as the debt being refinanced

• When loan proceeds will be used to purchase assets,a first security interest in those assets is required

• If there is a collateral shortfall, available equity inthe personal real estate of the principals (20% or

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greater owner) must be taken. A lien on a personal residence or investment property may be limited to the amount of the collateral shortfall. SBA does not require a lender to collateralize a loan with personal real estate when the equity in the real estate is less than 25% of the property’s fair market value. However, Colorado Lending Source may choose to require a lien if deemed necessary and prudent.

• If there is a collateral shortfall, a lien against trading/current assets may be taken, and

• Any other situations where additional collateral isdeemed available and necessary

11. LEASING EXCESS SPACE POLICYIf an expansion project involves the acquisition of anexisting building, the small business applicant(s) mustoccupy at least 51% of the total building space. SBA 7(a)loan program proceeds may not be utilized to tenant-finish any portion of the building not being immediatelyoccupied by that small business. On an expansionproject involving new construction, the small businessapplicant(s) must initially occupy 60% of the totalbuilding space, intend to occupy additional space withinthree years, and reasonably expect to occupy at least80% of the total building space within 10 years. No morethan 20% of the total building space may be permanentlyleased out. For an existing building project, 7(a) loanproceeds may not be utilized to tenant-finish any portionof the building not being initially occupied by the smallbusiness applicant(s).

12. “DO-IT-YOURSELF” CONSTRUCTIONSituations where the borrower is also the projectcontractor have generally proved to be an unsatisfactoryarrangement on SBA loans. However, “do-it-yourself”construction and/or the installation of machinery andequipment, or situations where the borrower acts as itsown contractor, may be permitted as long as it is possibleto justify and document the following:• The borrower/contractor is experienced in the type

of construction and has all appropriate licenses• The cost is the same as, or less than, what an

unaffiliated contractor would charge as evidenced bytwo (2) independent bids on the work

• The borrower/contractor will NOT earn a profit onthe construction

13. SIZE ELIGIBILITY REQUIREMENTSA small business applicant, together with its affiliates (anaffiliation occurs when one concern controls or has thepower to control the other) generally may not have atangible net worth in excess of $15 million, and may nothave an average net income after taxes in excess of $5

million (two year average). Some exceptions are allowed to this general rule.

14. PERSONAL/CORPORATE GUARANTEESPersonal guarantees are required from EVERY person orentity owning 20% or more of an applicant for an SBA7(a) loan. A personal guarantor is required on EVERY SBA7(a) loan, even if no one owns more than 20%.

15. LIFE INSURANCEKey-person life insurance will be required if the smallbusiness applicant is a sole proprietorship, singlemember LLC or a business otherwise dependent on oneowner’s active participation. The amount of life insurancerequired to be assigned will depend on the amount andtype of collateral and will be at the lender’s discretion.

16. VALUATIONS, APPRAISALS, ANDENVIRONMENTAL REPORTSPrior to ordering any of the following type of reports,Colorado Lending Source will collect a check from theborrower to recoup the cost of this report. Should theloan request be approved and funded, the cost of thereport may be able to be financed through the loanproceeds and the check returned to the applicant.

Business Valuation: In the event of a loan application to fund any change of business ownership, a business valuation ordered by Colorado Lending Source from a qualified 3rd party will be required. A business valuation assists the buyer in making a determination that the seller’s asking price is supported by historic operations and permits the buyer to make a reasonable return on his or her investment.

Equipment Appraisal: If a valuation of fixed assets other than net book value is utilized through the underwriting process, an independent appraisal ordered by Colorado Lending Source from a qualified third party will be required. Valuation of Non-Commercial Real Estate or Real Estate Securing a Personal Guarantee: SBA has no specific appraisal requirements for non-commercial real estate (such as a residence) or real estate (commercial or non-commercial) taken as collateral to secure a personal guaranty. Colorado Lending Source will utilize tax-assessed value in such situations. Commercial Real Estate: Colorado Lending Source may require an appraisal of commercial real estate for projects involving the purchase, improvement or construction of real estate. All appraisals must be ordered by Colorado Lending Source, performed by a state-certified or state-licensed appraiser.

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Environmental Reports: An environmental investigation is required on all commercial property on which a lien will be taken. In most cases, an Environmental Questionnaire and Records Search with Risk Assessment will satisfy the SBA requirements. In some situations, additional reports such as a Phase I and/or Phase II or other due diligence may be required.

17. FLOOD & EARTHQUAKE HAZARDSFlood insurance must be purchased if any building orequipment acquired, installed, improved or constructedwith loan proceeds is located in a special flood hazardarea. Newly constructed facilities must be constructed toconform with the National Earthquake Hazards ReductionProgram.

18. CREDIT DELINQUENCY/PRIOR BANKRUPTCIESAny current or prior delinquency must be explained infull and proven to be in current status or paid in full. Fulldisclosure of prior personal or business bankruptcies isrequired.

19. PRIOR CRIMINAL OFFENSES/ARRESTSIf any individual positively answers Question 17 on theincluded Borrower Information Form 1919, then thesmall business applicant is not eligible. If any individualpositively answers Question 19 and is currently ondeferred prosecution, parole or probation, then thesmall business applicant is not eligible. If any individualpositively answers Question 18 and/or 19 on theincluded Borrower Information Form 1919, that individualmust complete the Statement of Personal History Form912, the Statement of Personal History Addendum B andprovide a signed and dated explanation with the specificdetails and reason for the positive answer(s) includingthe statement “all court conditions have been satisfied”.Copies of all relevant court documentation relating tothe event(s) will also be required. In the case of a priorfelony arrest, an SBA fingerprint card will also need to becompleted and submitted.

The SBA’s Borrower Information Form 1919 MUST be completed by all proprietors, general partners, officers, directors, managing members of any LLC, owners of 20% or more equity in any applicant business, any person/employee hired by the applicant business to manage day-to-day operations AND any other person guaranteeing the loan, if that guaranty is required by SBA. The determination of who is or isn’t a key employee is made on a case-by-case basis by SBA.

20. LEGAL PERMANENT RESIDENTSSBA 7(a) loans are available to businesses owned bypersons who are not citizens of the United States.However, the processing procedures, terms andconditions may vary, depending upon residency status.Because fraudulent immigration documents are a seriousproblem, the status of each Legal Permanent Residentmust be verified as part of the loan application process.Accordingly, applicants seeking SBA 7(a) financing whoare not citizens of the United States must provide (a)a legible copy of DOCUMENTATION (front and back)evidencing resident status, and, (b) a PERMISSIONLETTER, signed and dated, which includes the statement“I authorize the US Citizen and Immigration Service torelease information regarding my immigration status to[insert lender name here] because I am applying for aU.S. Small Business Administration loan.”

21. LANDLORD AGREEMENTSTo close your loan, Colorado Lending Source will needto work with your landlord in two situations. First, if loanproceeds will be used for leasehold improvements (forexample painting, putting up walls, or redoing the floor)or, second, if a ny tangible personal property is taken ascollateral for your loan that is held in leased space. Thiscan apply to multiple locations. Under either of thesecircumstances, we will work with your landlord to obtain aCollateral Assignment of Lease and a Landlord’s Waiver.These documents are an agreement by your landlordunder which the landlord essentially agrees to: (1) letColorado Lending Source collect collateral before thelandlord does if we both have an interest in the samecollateral; (2) provide Colorado Lending Source writtennotice if you default on your lease and a reasonableopportunity to cure the default; and (3) allow ColoradoLending Source the right to take possession of, remove,and sell the collateral if you default on your loan.

22. EQUITY VERIFICATIONColorado Lending Source will verify the equity sourcesused for the Community Advantage loan prior tofunding. Verifying your cash injection requires thefollowing documentation: 1) a copy of the check orwire transfer along with evidence that the check or wirewas processed showing the funds were moved into theborrower’s account or escrow; 2) a copy of the statementof account for the account from which funds are beingwithdrawn for each of the two most recent months priorto disbursement showing that the funds were available;and 3) a subsequent statement of the borrower’s accountshowing that the funds were deposited or a copy of anescrow settlement statement showing the use of thecash. If the equity injection came from a gift or borrowed

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funds, exclusions and additional documentation may be required. The required documents needed will be outlined in the closing checklist following SBA approval of the loan request. Please keep detailed records of all funds spend on your project in anticipation of this requirement.

23. CHILD SUPPORT COMPLIANCENo principal who owns at least 50% of the ownership orvoting interest in a company applying for financing underthe SBA 7(a) program, may be delinquent more than 60days under the terms of any (1) administrative order, (2)court order, or (3) repayment agreement that requirespayment of child support. A certification of compliancewill be required before any funds will be disbursed underthe SBA 7(a) loan program.

24. EQUAL CREDIT OPPORTUNITYThe Federal Equal Credit Opportunity Act prohibitscreditors from discriminating on the basis of race, color,religion, national origin, sex, marital status, age (providedthe applicant has the capacity to enter into a bindingcontract), handicap, because all or part of the applicant’sincome derives from any public assistance program, or,because the applicant has in good faith exercised anyright under the Consumer Credit Protection Act.

25. IDENTIFICATION PROCEDURESTo help fight the funding of terrorism and moneylaundering activities, federal law requires 7(a) lendersto obtain, verify, and record information that identifieseach person who applies for a loan. This means that theywill ask for a name, address, date of birth, and otherinformation, including copies of a driver’s license or otheridentifying document.

26. NO ADDITIONAL PROVISIONSAn applicant(s) will indemnify and hold Colorado LendingSource and/or its agents harmless from any and all lossor injury, including reasonable attorney fees, resulting orarising from failure by the applicant to receive such loanand/or any loss or liability to applicants or the businessof the applicant. All parties agree that there are no otherpromises, terms or agreements (oral or written) betweenColorado Lending Source and that program rules andfees are subject to change at any time.

27. FINANCIAL PRIVACYColorado Lending Source commits to protecting anyand all personal information provided in conjunctionwith a loan application, and also commits to collectand disclose this information only as allowed by law.Colorado Lending Source is required to secure a SBA

credit score through SBA’s ETRAN system and a credit bureau report on all business and individual applicants, owners (20% or greater) and guarantors applying for assistance under Colorado Lending Source administered loan programs. A signature below acknowledges and authorizes this credit inquiry. Colorado Lending Source is dedicated to security procedures designed to protect all personal information. Colorado Lending Source maintains physical, electronic and procedural safeguards that exceed federal standards to guard personal information. Colorado Lending Source does not sell, trade, or barter personal information to anyone.

28. CREDIT ALERT VERIFICATION REPORTING SYSTEM(CAIVRS)If the applicant(s) defaults on the SBA-guaranteedCommunity Advantage loan and SBA suffers a loss, thenames of the small business and the guarantors of theSBA-guaranteed loan will be referred for listing in theCAIVRS database, which may affect their eligibility forfurther financial assistance.

The undersigned acknowledges that he/she understands the provisions described within this Disclosure Statement as they apply to an application for consideration under the SBA Community Advantage loan program accessed through Colorado Lending Source.

Company _______________________________________

Signed _________________________________________

Name __________________________________________

Date ___________________________________________

Effective Date 10/1/2018

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