Organization and Funds Overview

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Organization and Funds Overview

• December 31, 2006

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MISSION

• Southeast Community Capital provides loans to
  small businesses lacking access to traditional
  financing, with emphasis on low- and moderate-
  income communities in the Southeast, resulting in
  new jobs and wealth creation.

3
Overview

• Southeast Community Capital (SCC) was established
  in December 1999 to provide businesses in
  underserved markets (low, moderate, and rural
  areas) access to capital through debt programs
• SCC brings disparate programs together in one
  organization to create a source of capital for
  growing companies that traditionally do not have
  access to capital
• SCC uses a unique strategy to bring Federal,
  State, and Local programs designed to provide
  capital together to maximize affect and minimize
  program costs

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Overview

• Southeast Community Capital (SCC) is a Community
  Development Financial Institution (CDFI) as
  chartered by the United States Department of
  Treasury (Certified through June 30, 2006)
• An investment into a CDFI like SCC under CRA
  regulations (Preamble) automatically qualifies as
  an investment under the CRA investment test
• Investors include banks, the federal government,
  local governments, foundations, national
  intermediaries
• Total Assets of more than 12.7 million
• Loan Originations totaling more than 19.3
  million
• 209 businesses financed
• Job Creation of more than 786 with average wages
  of 15.20 (one job for each 24,411 of loans)
• Jobs maintained or retained by SCC clients total
  2,593

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SCC Office Locations and Funds
Oak Ridge/Knox County
Nashville
Memphis

• SBA Microloan Program (Statewide)
• USDA Intermediary Relending Program (6 Counties
  East TN)
• USDA Non-traditional Lender

Office Locations
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Providing Access To Capital to
Businesses
Leveraging City/State Program Dollars
Leveraging Private Sector Funds
Leveraging Federal Programs Dollars
Minority, Women-Owned, and Small Firms
Service Technology based businesses
Businesses Located in Low- and Moderate Areas
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Goals and Impacts

• SCC focuses on producing measurable results from
  its activities.
• These results include
• Job Creation
• Sustainable Wages
• Above average level of start-up business
  survivorship
• Low levels of loan losses
• Migration of portfolio companies to traditional
  financial institutions
•  

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SCC Historical Review

• Originated 271 loans totaling 19,329,495
• Financed 209 companies
• 106 Outstanding loans totaling 6,725,371
• Average loan size is 71,326 average outstanding
  loan is 63,447
• Historical Losses totaling 2.33 of average
  annual outstandings
• Created or retained more than 1,829 jobs.
  Created 786 new full-time jobs averaging
  15.20/hour from our loans
• One job created for every 24,411 of loans

As of 12-31-06
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Access to Capital Strategy
Debt Gap - Two Areas of Focus
Loans for High Tech Companies
Angel Capital
Economically Disadvantaged
Later
IPO
Early
Invention
Seed
Expansion
SCC Target Area
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Types of Lending Considered

• Equipment
• Working Capital
• Growth Capital
• Lines of Credit
• Accounts Receivables Lines of Credit
• Purchase Orders
• Start-up financing if the principal has more than
  5 years of P L experience in the industry

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Types of Lending Typically NOT Considered

• SCC unfortunately cannot provide financing for
  the following types of businesses
• Retail Clothing
• Restaurants
• Speculative real estate
• Start-up businesses where the principal has no
  prior industry experience
• Businesses that primarily sell alcohol and
  cigarettes
• Businesses that will re-lend the money to others
• Refinancing of existing debt
• Financing of franchise fees
• Non-profit organizations

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Target Company Profiles

• Targeted Companies
• Early stage companies ready to crossover to
  expansion stage
• Expansion stage companies needing capital for
  accelerated growth
• Companies with inconsistent growth and
  profitability
• Companies with good ideas and strong management
  that do not have access to traditional financing
  sources

• Targeted companies
• Entrepreneur with many years of experience in an
  industry
• Growing companies with limited working capital or
  historically under-capitalized
• Have revenues from 50M to 5MM

Debt financing from 20,000 - 500,000
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Lending and Criteria

• Strong CEO and management team
• Compelling business characteristics and
  attractive growth prospects
• Opportunity to generate cash flow quickly
• Recurring revenue and good earnings visibility
  and potential
• Potential for diversified customer base, markets
  and industries served
• Well defined niche businesses with defensible
  market positions
• Preferred industries include Business Services,
  Technology Based, Government Contracting,
  Software, and Specialized Manufacturing

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Loan Terms

• TYPES OF LOANS
• Term loans to 72 months
• Lines of Credit 12 month
• Purchase Order manufacture and payment period
•  INTEREST RATES
• Typically begin at Prime 3
• Rates range from 9 - 14

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Toolbox Approach
DEBT
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Investors

• Regions (RLF Statewide Memphis)
• SunTrust (Nashville, Knox, Memphis)
• Tennessee Commerce Bank (Nashville)
• First Tennessee (Memphis)
• Greene County Bank (Knox RLF)
• FirstBank (Nashville RLF)
• Bank of Nashville (Nashville)
• Wilson Bank and Trust (RLF)
• Tennessee State Bank (Knox)
• TNBank (RLF)
• B B T (RLF)
• Pinnacle Bank (Nashville)
• Insurors Bank (Nashville)
• PrimeTrust Bank (Nashville)
• Citizens National Bank (Knox County)
• Calvert Foundation (RLF Statewide)
• Seedco (Memphis)
• Tennessee Valley Authority

Capital Bank Trust Company
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Contact Information
806 South Sixth Street Nashville, TN
37206 615.254.6113 Fax [phone] info_at_sccapita
l.org
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Appendix
Additional Information on Investment and
Reporting to Investors
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Investment Structure

• Equity Equivalent Agreements
• 10 year subordinated debt instruments
• Interest paid quarterly
• Carried on the banks balance sheet as a loan but
  qualifies as a CRA investment or CRA community
  development loan
• Loans qualify for State of Tennessee Community
  Investment Franchise and Excise tax credit (5
  per year F E tax credit based on amount of loan)

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Financial Institution Reporting

• SCC provides quarterly financial statements on
  each fund and portfolio
• SCC has an annual outside audit with findings
  provided to investors
• SCC provides detailed listing of loan portfolio
  monthly if requested by investors
• SCC welcomes potential investors to visit
  Nashville or its local office to see operations
• SCC provides investors loan policies and lending
  criteria