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Version 2 -- 6/13/13

Version 2 -- 6/13/13. 2008 Video Lottery Terminal legislation included a 1.5 percent set aside of revenue to benefit small, minority- and women-owned business account The Maryland Department of Business and Economic Development manages revolving loan fund

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Version 2 -- 6/13/13

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  1. Version 2 -- 6/13/13

  2. 2008 Video Lottery Terminal legislation included a 1.5 percent set aside of revenue to benefit small, minority- and women-owned business account • The Maryland Department of Business and Economic Development manages revolving loan fund • AAEDC approved in April 2013 to be a fund manager • The VOLT Fund = AAEDC’s program • AAEDC planned allocation: • 70% conventional small business • 30% early-stage technology companies HISTORY

  3. REQUIREMENTS • TARGETED AREAS: 50% of the fund to small businesses located within a 10-mile radius of Maryland’s three casinos: • Maryland Live! (Anne Arundel) • Hollywood Casino Perryville (Cecil County) • Casino at Ocean Downs outside of Ocean City (Worcester County) • NON-TARGETED AREAS: Remaining funds for loans to small, minority- and women-owned businesses located in other areas of the state

  4. Loans amounts from $25,000 - $500,000 • Priced at below current market interest rates • Eligible purposes: • business or commercial real estate acquisition • building improvements • equipment/vehicle purchase • leasehold improvements • business start-up costs • working capital • Start ups and existing businesses eligible LOANS TO SMALL BUSINESS

  5. Use of standard underwriting practices • repayment capacity • financial strength of the company/guarantors • industry and management experience • collateral protection • Total processing time is 45-90 days • We ask for 3 years of financial statements, tax returns on the company and guarantors, and a personal financial statement • Post-closing servicing administered by AAEDC staff: • loan monitoring • billing • collections APPLICATION PROCESS

  6. Personal credit (640 or above) • Historical/projected Debt Service Coverage Ratio (DSCR) of 1.00x • Collateral required when available • All owners over 20% must personally guaranty the loan • Life insurance on owner/guarantor where no valid succession plan is in place • In addition, for start-up businesses: • minimum equity injection of 10% • business plan required • management and industry experience LOAN REQUIREMENTS

  7. LOANS TO TECHNOLOGY COMPANIES • Promising early stage companies • Loans to help attract follow-on funding from venture capital firms, angel investors and other sources • Loan amounts range from $100,000 to $250,000 (long term debt with payment deferred to future liquidity event) • Applications considered on a real-time basis as they are identified • Typical investor due diligence and evaluation process

  8. ELIGIBILITY CRITERIA FORTECHNOLOGY COMPANIES • High potential early stage small, minority- and women-owned technology company with clear path to follow-on funding, particularly engaged in cyber security, energy, life sciences or Health IT • Prefer company be affiliated with a member of the Maryland Business Incubation Association (MBIA)

  9. ELIGIBILITY CRITERIA FORTECHNOLOGY COMPANIES • Defendable intellectual property with clear ownership or licensing arrangement • Cash flow break-even reached within 18 months • Leader who is an experienced entrepreneur/demonstrates willingness to acquire needed management talent • Recognizable $20 million addressable market

  10. EXCLUDED TRANSACTIONS & INDUSTRIES • Financing existing debt where the fund is in position to take a loss • Loans to effect ownership change that will not benefit the business • Loans for the reimbursement of funds owed to an owner or reimbursement of equity injection • Loans for repayment of delinquent state or federal taxes

  11. EXCLUDED TRANSACTIONS & INDUSTRIES • Non-owner occupied real estate • Firms involved in speculative activities that develop profits from fluctuations rather than the normal course of trade • Firms involved in lending activities • Pyramid sales plans • Firms involved in gambling activities

  12. EXCLUDED TRANSACTIONS & INDUSTRIES • Adult bookstores/entertainment facilities • Gun shops • Liquor stores • Pawn shops • Tanning salons • Tattoo parlors • Check-cashing services

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