Fueling the Entrepreneurial Spirit Funding the American Dream

Current Loan Programs: Borrego Express Capital Loan Programs utilize 2 SBA Loan Products: Patriot Express Loan Program Community Express Loan Program

COMMUNITY EXPRESS BORREGO EXPRESS CAPITAL LOAN PROGRAM BORREGO SPRINGS BANK, N. A. LOAN AMOUNTS: $5,000 - $50,000 COLLATERAL: Unsecured INTEREST RATES: $5,000 - $25,000 – WSJ PRIME % $26,000 - $50,000 – WSJ PRIME % VARIABLE RATE ADJUSTING CALENDAR QUARTERLY TERM: 7 YEARS - FULLY AMORTIZING NO PREPAYMENT PENALITY : 21 DAY PAYOFF NOTIFICATION

COMMUNITY EXPRESS WHO IS ELIGIBLE? COMMUNITY EXPRESS: (EFFECTIVE OCTOBER 1, 2008) All SBA ELIGIBLE BUSINESSES $5,000 - $25,000 $26,000 - $50,000 BUSINESSES LOCATED IN LMI ‘S AND HUB ZONES

ELIGIBILITY CONTINUED PATRIOT EXPRESS PROGRAM:($5,000 - $50,000) (51% OWNED AND OPERATED) VETERAN OWNED, ACTIVE DUTY MILITARY PARTICIPATING IN THE MILITARY’S TRANSITION ASSISTANCE PROGRAM (TAP), or ACTIVE DUTY WITHIN ONE YEAR OF SEPERATION, ACTIVE RESERVISTS OR NATIONAL GUARD MEMBER, OR A SPOUSE OF ANY OF THESE GROUPS, OR A WIDOWED SPOUSE OF A SERVICE MEMBER OR VETERAN WHO DIED OF SERVICE- CONNECTED DISABILITY

COMMUNITY EXPRESS LOAN COST $425 – PACKAGING FEE – DEDUCTED FROM LOAN PROCEEDS 2% SBA GUARANTY FEE ON GUARANTEED PORTION (85%) DEDUCTED FROM LOAN PROCEEDS LOAN PAYMENTS – AUTO DRAFT FROM BUSINESS CHECKING ACCOUNT AT YOUR LOCAL FINANCIAL INSTITUTION

COMMUNITY EXPRESS TECHNICAL ASSISTANCE REQUIREMENT PRE AND POST CLOSING FOR ONE (1) YEAR FROM FUNDING WHAT IS TECHNICAL ASSISTANCE? BUSINESS PLAN – REQUIRED FOR ALL LOANS PRIOR TO FUNDING ACCOUNTING, MARKETING, INVENTORY CONTROL, SALES TRAINING, P.O.S. TRAINING … SBA APPROVED TECHNICAL ASSISTANCE PROVIDER

COMMUNITY EXPRESS BUSINESS PLANS THE BLUEPRINTS FOR BUILDING YOUR BUSINESS BUSINESS SUMMARY, MANAGEMENT RESUME AND ANALYSIS, MARKET IDENTIFICATION AND FINANCIAL PROJECTIONS  2 YEAR BREAKOUT OF INCOME AND EXPENSES TO INCLUDE OWNERS SALARY  STARTUP AND/OR NEW PROJECT COSTS  BALANCE SHEET AND CASH FLOW ANALYSIS INCLUDING LOAN PROCEEDS AND EQUITY INJECTION

COMMUNITY EXPRESS INITIAL CREDIT APPROVAL PERSONAL FINANCIAL STATEMENTS ARE REQUIRED INCOME VERIFIED WITH TAX RETURN TRANSCRIPT (4506) UTILIZING FAIR ISAAC SMALL BUSINESS CREDIT SCORING MODEL FOR FAST EFFICENT CREDIT APPROVAL EVALUATES THE CREDIT HISTORY OF THE BORROWER ALONG WITH INDUSTRY DATA ON THE BUSINESS CURRENT AND RECENT PAST DUE ACCOUNTS, COLLECTIONS, JUDGEMENTS, LIENS AND BANKRUPTCY HAVE VERY NEGATIVE AFFECT ON SCORE

COMMUNITY EXPRESS ELIGIBILITY ISSUES START-UP BUSINESSES ARE ALLOWED LOAN PROCEEDS FOR BUSINESS ACQUISITION NOT ALLOWED FRANCHISE MUST BE ON SBA APPROVED FRANCHISE LIST LIQUID ASSETS OF INDIVIDUAL OWNER CAN NOT EXCEED $100,000

COMMUNITY EXPRESS INELIGIBLE BUSINESSES NOT FOR PROFIT BUSINESS INVESTMENT REAL ESTATE – APARTMENTS, RENTAL HOUSING OR MULTI-TENANT BUILDINGS SPECULATIVE REAL ESTATE LOANS OR BUSINESSES AGRICULTURAL AND FARM BUSINESSES (GROWING CROPS OR ANIMALS) FISHING AND SHORE OPERATIONS MEDICAL FACILITIES (INCLUDING NURSING HOMES AND ALF’S)

COMMUNITY EXPRESS INELIGIBLE BUSINESSES CONTINUED MINING OPERATIONS (INCLUDING SAND AND GRAVEL PITS) LOANS FUNDS TO OPERATE OR ESTABLISH OPERATIONS IN A FOREIGN COUNTRY BUSINESSES ENGAGED IN TEACHING, INSTRUCTING, COUNSELING OR INDOCTRINATING RELIGION OR RELIGIOUS BELIEFS, WHETHER IN A RELIGIOUS OR SECULAR SETTING A BUSINESS WITH ANY PRODUCTS OR SERVICES OF A SEXUAL NATURE

COMMUNITY EXPRESS INELIGIBLE BUSINESSES CONTINUED BUSINESSES THAT IS ENGAGED IN LENDING BANKS ARE NOT ELIGIBLE MORTGAGE BROKERS ARE OK MORTGAGE BANKER IS NOT PAWN SHOP – DEPENDS ON INCOME SOURCE BUSINESSES THAT ARE ENGAGED IN GAMBLING BUSINESSES ENGAGED IN PYRAMID SALES AND DISTRIBUTION

COMMUNITY EXPRESS INELIGIBLE BUSINESSES CONTINUED A BUSINESS THAT RESTRICTS PATRONAGE CONSUMER AND MARKETING COOPERATIVES A BUSINESS ENGAGED IN LOBBYING ACTIVITIES (50%) INSURANCE COMPANIES SBA LOAN PACKAGERS A BUSINESS OR BORROWER THAT HAS A PRIOR LOSS TO THE GOVERNMENT

COMMUNITY EXPRESS APPLICATION PROCESS PREFERRED METHOD IS THROUGH A TA PROVIDER, PARTICIPATING BANK PARTNER, OR DIRECT FROM BORROWER UPON INITIAL CREDIT REVIEW (FAIR ISAAC SMALL BUSINESS CREDIT SCORE), PROCESSING / UNDERWRITING CHECKLIST IS ISSUED TO BORROWER AND/OR THE TA PROVIDER

Y UNDERWRITING PROCESS ALL PROGRAMS: REVIEW OF THE BUSINESS PLAN AND PROJECTIONS (DOES IT MAKE SENCE? IS IT REALISTIC?) VERIFICATION OF INFORMATION SUBMITTED (TIME IN BUSINESS, HOUSEHOLD INCOME (4506), OWNERSHIP OF THE BUSINESS, REVIEW OF LEASE AND BUSINESS FORMATION DOCUMENTS)

COMMUNITY EXPRESS CLOSING PROCESS COMMITMENT LETTER AND CLOSING DOCUMENTS ARE ISSUED ONCE ALL CHECKLIST ITEMS ARE RECEIVED, REVIEWED, AND APPROVED BY UNDERWRITING, (INCLUDING THE BUSINESS PLAN AND TA CERTIFICATE) FUNDING THEN OCCURS AFTER RECEIPT AND REVIEW OF EXECUTED LOAN DOCUMENTS NOTE: IF LOAN DOCUMENTS REQUIRE ANY CHANGES, CONTACT THE CLOSER IMMEDIATELY

Program Updates Community Express Patriot Express

Community Express Loan Program The community express loan program will expire on April 30, We will stop taking applications for the Community Express loan Program on April 1, 2011

Patriot Express Loan Program The Patriot Express Loan program has been extended for another 3 years by the SBA.

Potential New Products We are currently evaluating the potential of the new Small Loan Advantage Program as well as the feasibility of the 7(a) program to deliver small dollar loans to businesses across the US.

COMMUNITY EXPRESS QUESTIONS? THANKS FOR YOUR INTEREST IN OUR LOAN PROGRAMS