1. SBA Lending & Better Access to Capital MBS 6 th Small Business Summit May 5, 2015 Confidential

2. Agenda 1. Welcome & Introduction 2. The Problem & The Opportunity 3. SBA Program Overview 4. SBA 7a Program 5. SBA 504 Program 6. Prudent Lenders Value Proposition and Process 7. Creating a Successful SBA Program

3.  New York Business Development Corporation  $1.2 billion SBA portfolio  Processes $200+ million of SBA loans annually  85+ staff of lenders, loan processors, underwriters, and attorneys  CDC Small Business Finance  $2.0 billion SBA portfolio  Processes $300+ million of SBA loans annually  Largest Certified Development Company in the U.S. Our Foundation 3

4. The Problem – “Why do SBA Loans Take so Long?”  The vast majority of the lending community in the US views SBA 7a loans as slow and cumbersome.  Roughly 10 lenders in any market possess the knowledge base and standardized process to close loans quickly, ensure the guaranty is intact, and generate significant fee income.  75% of current lenders are deemed inactive (less than 10 loans annually) by SBA.  Inactive lenders perpetuate “slow and cumbersome” myth: 1. Unfamiliar with structuring and eligibility upfront; 2. Unfamiliar with “hot spot” issues in underwriting; 3. Unfamiliar with SBA personnel and documentation. 4

5. The Problem 5

6. Credit Unions & SBA Lending 6

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9. The Opportunity 9

10. The Solution 10  Prudent Lenders offers a consistent delivery system to lending institutions.  Our business emphasizes efficiency and compliance in SBA lending through one of the largest SBA processing and servicing platforms in the nation; marketing & training resources; secondary market access; and nationally-recognized partners.  By uniting these often disparate resources, Prudent Lenders is not like other SBA service providers: It is the best outsourcing option for lenders today.

11. 11 Origination Loan Processing Closing Secondary Market Sales Post-closing Lender and branch network training Business development targeting local COIs 48 hour eligibility assessment Full document collection and compilation Full underwriting (SBA-compliant CAM) Complete application submission to SBA In-house counsel for preparation of closing documents Reduced borrower cost Competitive bid process Accounting entry assistance and documentation Annual insurance, financial statement follow-up, annual loan grading, monthly 1502 reporting, periodic loan servicing requests, past due collections < 90 days, site visits, SBA reporting, delinquency reports & liquidation plans Prudent Lenders Value Proposition

12.  The following reflect major eligibility criteria:  Must be for-profit business;  Most industries are eligible;  All owners of OC and RE Holdco greater than 20% are required personal guarantors;  Cannot finance passive CRE investment;  Maximum loan amount of $5.0 million ($5.5 exception);  Personal liquidity;  Franchise pre-screen;  SBA Form 912. 12 SBA Program Overview – Eligibility

13. SBA Program Overview – Program Comparison 13

14.  Eligibility  Affiliation  Statement of Personal History  Franchise & Jobber Agreements  Underwriting  Global Cash Flow  Projections and Assumptions  Life Insurance 14 SBA Program Bottlenecks

15. SBA 7a Program – Best Use  Business Acquisitions  Undercollateralized Projects with Cash Flow  Reduced Equity Requirements  Longer Loan Terms 15

16. SBA 7a Program – Loan Terms  Fixed asset acquisition (RE, Equipment, or Machinery), refinancing, furniture and fixtures, Line of Credit term-outs, working capital, and business acquisition are all eligible.  Loan terms are based on the use of proceeds:  Working Capital: 7-10 years  Equipment: 10-25 years (depends on useful life)  Building: 25 years  Goodwill: 10 years  No balloons 16

17. SBA 7a Program – Underwriting  The 7a program is best defined as a credit enhancement, which as a result, expands the universe of potential borrowers to which institutions may lend money.  It does not make bad loans good.  Standard underwriting criteria are still assessed:  Cash flow;  Fundamentals (customers, margin trends, mgmt);  Collateral;  Balance Sheet;  Global Cash Flow. 17

18.  Maximum Loan Amounts -  Standard 7(a) > $5,000,000  Small Loan Advantage < $350,000  SBA Express < $350,000  Guaranty Amounts -  SLA & Standard 7(a) < $150,000 = 85%  SLA & Standard 7(a) > $150,000 = 75%  SBA Express = 50% 18 SBA 7a Program – Maximum Loan Amounts

19.  Interest Rates –  Loans can be fixed or variable (can have re-set periods)  SBA periodically publishes the maximum fixed rate  The maximum variable rate is Prime plus 2.75%  Lender pays SBA servicing fee (52 bps) annually on guaranteed amount resulting in reduced rate margin. 19 SBA 7a Program – Interest Rates

20.  Collateral –  SBA will not decline a loan request solely on the basis of inadequate collateral.  SBA does not permit its guaranty to be used as a substitute for collateral.  “All Available Collateral” - SBA requires that the Lender collateralize the loan to the maximum extent possible up to the loan amount. If the business assets do not fully secure the loan, the Lender must take available personal real estate assets of the principals as collateral.  First security interest in assets purchased by SBA loan proceeds is required. 20 SBA 7a Program – Collateral

21. 21 SBA 7a Program – Program Fees

22. SBA 504 Program – Overview  The SBA 504 program is a very specific funding mechanism for new purchases of commercial property and equipment.  Commercial property acquisition, construction, renovation or expansion as well as Equipment purchases.  There are only two debenture options: 1. 20 year Debenture: Commercial property; Equipment with at least a 20-year useful life (printing presses, pick/pack machines). Current 20-year Fixed Rate is 5.75%. 2. 10 year Debenture: Typically used only for Equipment purchases. Current 10-year Fixed Rate is 5.04%. 22

23. SBA 504 Program – Typical Structure  50/40/10 structure is standard: Lender Conventional 80% Borrower Equity 20% Lender Conventional 1st 50% Equity 10% SBA 2 nd Mortgage 40% $800K 20 year Am. 5 year Term. 5 year Rate reset. Conventional StructureSBA 504 Structure $500K 20 year Am. 10 year Term. 5 year Rate reset. $400K 20 year everything.  Benefits: $100K Reduction in Equity required. 2 nd Mortgage on 20-year Fixed Rate of 4.59%. Inclusion toward Equity of all eligible soft and closing costs (instead of out-of-pocket). $200K $100K 23

24. SBA 504 Program – The Details  Details on the 504 program:  Special purpose facilities and start-ups increase Equity injection requirement by 5% each.  Rate is set when debenture funds (45-60 days after closing)  Pre-payment penalties during the first 10 years.  Maximum SBA portion of $5.0 million ($5.5 exception).  Must be owner-occupied (greater than 50% of sq.ft.)  New construction allowed (60-80% of sq.ft. requirement).  Projection-based loans for expansion are eligible.  Fully secured by project collateral. Appraisal needed. 24

25. SBA 504 Program – Quick Reference  Quick Reference on SBA 504 Program:  New Commercial Property and Equipment purchases.  90% funding. Typical 50/40/10 funding structure.  20-year Fixed Rate of 4.59%.  10% Equity requirement.  Inclusion of eligible soft and closing costs toward Equity instead of out-of-pocket. 25

26. The Prudent Lenders Process

27. 27 Lender responsibility Prudent responsibility The Prudent Lenders Process

28. 28 The Prudent Lenders Process Produced in 48 hours Required Forms Source Documents Fast Track Assessment

29. 29 The Prudent Lenders Process Vendor reports ordered

30. Creating a Successful Program 30  Develop a responsive program  A quick no or yes  Eliminate bottlenecks  Life Insurance  Appraisals  Identify Centers of Influence  CPA, Realtors  Referral Fees  Market the process  Follow-up and track progress

31. Contact Information 31