STL Business Development Fund

Background:

The Saint Louis Business Development Fund ("SLBDF") (www.slbdf.com) was founded in 1994. It is a private, for-profit corporation, owned by 27 bank shareholders and three local economic development agencies. The SLBDF funds its investments by drawing on lines of credit provided by its bank shareholders.

The Saint Louis Private Fund ("SLPF") was founded in 2008. It is a private, for-profit limited liability company, owned by 18 individual investors, who provide the capital for the SLPF investments.

The SLBDF and the SLPF (together "the Funds") are professionally managed by the St. Louis County Economic Council, whose offices are in the World Trade Center in Clayton.

The SLBDF and the SLPF make joint investments in selected applicants that demonstrate significant potential for success and value an investment by the Funds as an attractive alternative to venture capital or other forms of equity investment.

Investment Criteria:

The investments by the Funds are in the form of subordinated financing of up to $1,000,000 (One Million Dollars) to qualified applicants. The profile of a qualified applicant is:

a growing, locally-based company;
where the available senior debt is not adequate to finance the company's organic growth, an acquisition or a recapitalization; and
there is sufficient cash flow to cover the Funds' debt service.

The SLBDF and the SLPF may consider locally based applicants from a broad geographic range, including southwestern Illinois to eastern Missouri. The Funds invest in a range of industries, including manufacturing, distribution, service and retail.

As part of its determination of whether to approve a company's application for investment, the SLBDF and SLPF investment committees will consider several guidelines:

cash flow coverage
management capabilities
business plan
debt to equity ratio
personal credit scores of majority and significant shareholders

SLBDF Pricing:

The SLBDF and the SLPF share the same slogan -- "Investment without Ownership" -- since the SLBDF and SLPF do not take any equity ownership. Applicants seek financing from the Funds as an alternative to selling equity in a growing company. Terms include:

An Origination Fee of 3% of the investment amount (due at the time the applicant accepts the terms and conditions of the SLBDF/ SLPF investment)
Fully amortized payments of principal and interest over sixty (60) months
interest at an annual rate of 3% to 4% above floating prime rate (with a floor on prime rate of 4 ½%)
A Risk Premium (payable at the end of the term) equal to cumulative fees of 10% to 15% of the original amount of the investment for each year, or part of any year, that there is an unpaid balance. The Risk Premium is compensation to the Funds in recognition of: a) the relative risk taken by the Funds; and b) the Funds' contribution to the enhanced value of the client company.
No pre-payment penalty (i.e., the Risk Premium stops accruing as of the year any early final full payment is made)
Personal guaranties required