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: [email protected]
MEDC Capital Services Team300 N. Washington Sq.
Lansing, MI 48913
Contact Info
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