North Carolina Rural Economic Development Center

Rural Economic Development Center, Inc.

North Carolina Capital Access Program

BORROWER’S CERTIFICATION

The undersigned Borrower (the “Borrower”) acknowledges:

(a)That the loan to be made by (Lender Name) ______to the Borrower will be filed for enrollment by the Lender in the North Carolina Capital Access Program (the “Program”), a program established by the North Carolina Rural Economic Development Center, Inc. (the “Center”);

(b)That the purpose of the Program is to assist the Lender in making loans that might otherwise not qualify for a loan from the Lender and to provide financing for North Carolina small businesses and promote economic development in the state of North Carolina;

(c)That as a condition of having the loan filed for enrollment in the Program, the Borrower is required to pay a non-refundable premium charge to an administrative account called the Reserve Fund, which Reserve Fund is established by the Center to help cover losses that the Lender may sustain on loans enrolled in the Program; and

(d)That the Borrower’s payment of its non-refundable premium charge will be collected by the Lender for transmittal to the Reserve Fund, that other payments or transfers will be made to the Reserve Fund by the Lender and the Center, and that the Borrower has no legal, beneficial, or equitable interest in the premium charges or any other funds credited to the Reserve Fund.

The Borrower represents that:

(a)The Borrower is an entity with 500 or less employees;

(b)The loan proceeds must be used for a “business purpose.” A business purpose includes, but is not limited to, start up costs, working capital, business procurement, franchise fees, equipment, inventory, as well as the purchase, construction renovation or tenant improvements of an eligible place of business that is not for passive real estate investment purposes. The definition of business purpose excludes activities that relate to acquiring or holding passive investments such as commercial real estate ownership, the purchase of securities; and lobbying activities as defined in Section 3 (7) of the Lobbying Disclosure Act of 1995, P.L. 104-65, as amended.

Permissible Borrowers include corporations, partnerships, joint ventures, sole proprietorships, state-designated charitable, religious, or other non-profit or eleemosynary institutions, government-owned corporations, consumer and marketing cooperatives, and faith-based organizations provided the loan is for a “business purpose” as defined above.

(c)The loan proceeds will not be used to:

(1)Repay a delinquent federal or state income taxes unless the Borrower has a payment plan in place with the relevant taxing authority; or

(2)Repay taxes held in trust or escrow, e.g. payroll or sales taxes; or

(3)Reimburse funds owed to any owner, including any equity injection or injection of capital for the business’ continuance; or

(4)Purchase any portion of the ownership interest of any owner of the business.

(d)The Borrower is not:

(1)An executive officer, director, or principal shareholder of the Lender; or

(2)A member of the immediate family of an executive officer, director, or principal shareholder of the Lenders; or

(3)A related interest of such executive officer, director, principal shareholder, or member of the immediate family.

For the purposes of these three Borrower restrictions, the terms “executive officer”, “director”, “principal shareholder”, “immediate family”, and “related interest” refer to the same relationship to a Lender as the relationship described in part 215 of title 12 of the Code of Federal Regulations, or any successor to such part.

BORROWER’S CERTIFICATION CONT.

(e)The Borrower is not:

(1)A business engaged in speculative activities that develop profits from fluctuations in price rather than through normal course of trade, such as wildcatting for oil and dealing in commodities futures, unless those activities are incidental to the regular activities of the business and part of a legitimate risk management strategy to guard against price fluctuations related to the regular activities of the business; or

(2)A business that earns more than half of its annual net revenue from lending activities; unless the business is a non-bank or non-bank holding company certified as a Community Development Financial Institution; or

(3)A business engaged in pyramid sales, where a participant's primary incentive is based on the sales made by an ever-increasing number of participants; or

(4)A business engaged in activities that are prohibited by federal law or applicable law in the jurisdiction where the business is located or conducted. (Included in these activities is the production, servicing, or distribution of otherwise legal products that are to be used in connection with an illegal activity, such as selling drug paraphernalia or operating a motel that knowingly permits illegal prostitution); or

(5)A business engaged in gambling enterprises, unless the business earns less than 33% of its annual net revenue from lottery sales.

(f)No principal of the borrowing entity has been convicted of a sex offense against a minor (as such terms are defined in section 111 of the Sex Offender Registration and Notification Act (42 U.S.C. 16911)). For the purposes of this certification, “principal” is defined as “if a sole proprietorship, the proprietor; if a partnership, each managing partner and each partner who is a natural person and holds a 20% or more ownership interest in the partnership; and if a corporation, limited liability company, association or a development company, each director, each of the five most highly compensated executives or officers of the entity, and each natural person who is a direct or indirect holder of 20% or more of the ownership stock or stock equivalent of the entity.”

(g)The Borrower authorizes the Lender to report to the Center certain loan information as the Center may reasonably require.

The Borrower acknowledges the foregoing and represents and warrants that the Borrower has no, and has not been promised or told by anyone that it has any, legal, beneficial, or equitable interest in the non-refundable premium charges or any other funds credited to the Reserve Fund account, and hereby waives any right, claim, or interest to any and all such funds paid or credited from time to time to the Reserve Fund account.

OWNERSHIP (%): Male

Female

RACE: American Indian or Alaska Native

Asian

Black or African-American

Native Hawaiian or Pacific Islander

White

ethnicity: Hispanic or Latino

Not Hispanic or Latino

VETERAN STATUS: Veteran

Non-Veteran

BORROWER’S CERTIFICATION CONT.

Name of Borrower:

Name of Business:

Primary Business Activity:

Annual Sales in Last Fiscal Year: $

Year Business Established:

Total Full Time Employees (2 half time employee’s equals 1 full time employee):

Estimated Jobs Created by this Loan:

Estimated Jobs Retained by this Loan:

Borrower Signature:Title:

Printed Name: Date:

Rural Economic Development Center, Inc.

North Carolina Capital Access Program

NOTICE TO BORROWER

This notice is provided to Borrowers who may receive a loan from a Lender under the North Carolina Capital Access Program of the North Carolina Rural Economic Development Center, Inc.

The purpose of this program is to assist Lenders make loans to enhance financing availability for small businesses in North Carolina for the purposes of economic development. The program utilizes a special loss reserve to assist the Lender in covering losses from a portfolio of loans that a Lender makes under the program. The Borrower pays a premium charge to the reserve, which is sometimes matched by a financial institution premium payment to the reserve. The North Carolina Rural Economic Development Center, Inc. will then match the combined total of the Borrower’s payment and the financial institution’s payment.

It is important to emphasize that the loan is a private transaction between the financial institution and the Borrower. While the program may assist a Lender in being able to take more risk than normal, it is important to understand that it is still the financial institution that is bearing the risk of the loan. The North Carolina Rural Economic Development Center, Inc. is not a party to the loan and plays no role at all in the Lender’s decision regarding whether or not to make the loan, or in the setting of the interest rate, fees, duration, or any other terms or conditions of the loan. The financial institution’s rights and remedies are delineated in the loan contract and in law applicable to any financial institution financing. The North Carolina Rural Economic Development Center, Inc. plays no role in any decision by the financial institution with respect to enforcing the financial institution’s rights under the loan contract.

While the purpose is intended to assist the financial institution in providing you with access to financial institution financing, you should understand that it is likely to be more expensive for the Borrower than would be the case with a conventional financial institution loan. The Borrowerand the Lender make payments to the Reserve Fund, and the Lender may recover from the Borrower the cost of its payment into the Reserve Fund.

Rural Economic Development Center, Inc.

North Carolina Capital Access Program

LOAN ENROLLMENT FORM

1.Lender Name:

2.Lender (Tax) ID Number:

3.Lender Loan Number:

4.Date Loan Contract Entered into:

5.Name of Borrower:

6.Physical Address of Borrower:

City:State: Zip:

7.County Location of Borrower:

8.County Location of Business:

9.NAICS Code:

10.Loan Type (Please check one): Term Line of Credit Other

11.Total Amount of Loan: $

12.Total Covered Amount of Loan:$

13.Use of Loan Proceeds (briefly describe the use of the loan proceeds):

Note: An acceptable business purpose does not include directly supporting, assisting, or furthering an explicitly religious purpose, including, but not limited to, worship, religious instruction, or proselytization.

YES NO

14.If the Loan is being used to purchase a business, the proceeds may only be used to purchase the assets of the business and not goodwill or business ownership interest.

Is the loan purpose consistent with the above requirement?

If NO:

• This Loan is not eligible for the NC-CAP Program. Eligible Loans cannot include any goodwill, stock purchases or other ownership interests of the business.

15.Are Loan Proceeds being used to refinance any of the Lender’s existing debt?

If YES:

• Did the refinanced Loan mature by the refinance date?
• Was new money included with the refinanced Loan that was used for a new purpose

other than that of the refinanced debt?

• Has there been a new underwriting of the debt?

All eligible loans which are refinanced by the existing Lender must meet all of the above qualifications. A copy of the maturing Loan Note must be submitted to the Rural Center with the Loan Enrollment Form. These qualifications are not required when refinancing another lender’s debt.(Note: if the existing loan was previously

enrolled in NC-CAP, the incremental amount can be enrolled – see questions 17-19)

16.Is this Loan being made to a Real Estate Holding Company?

If YES:

• Name of Operating Company:
• Did both Operating Company & Holding Company sign Borrower Certifications?
• Is there a lease between the Holding Company and the Operating Company for the term of

the Loan (including options to renew only for the Operating Company)?

• Did owners with 20% or more interest in both the Holding Company and the Operating

Company sign personal guarantees?

• Is the Operating Company either a Co-Borrower or a Guarantor on the loan?

Eligible loans must meet all of the above qualifications. In addition, the Lender must provide the required supporting documentation to the Rural Center at the time of the enrollment.

LOAN ENROLLMENT FORM CONT.

Only complete 17-19 if refinancing an enrolled NC-CAP loan.

17.Previous Covered Loan Amount:$

18.Balance Immediately Prior to Refinancing:$

19.New Total Covered Loan Amount:$

20.Percent Premium paid by Borrower:%

21.Dollar Amount of Borrower Payment to the Reserve Fund:$

22.Percent Premium paid by Lender (which can be recovered from Borrower at closing): %

23.Dollar Amount of Lender Payment to the Reserve Fund: $

PLEASE NOTE: The Lender must provide separateproof(deposit slips, screen shot of bank ledger, checks etc.) of the Borrower and the Lender’s payment to the Reserve Fund.

______

LENDER’S CERTIFICATION

I herby certify to the Rural Center that: 1. This Loan is not being made in order to place under the protection of the NC Capital Access Program prior debt that is not covered under the NC Capital Access Program and that is or was owed by the Borrower to the Lender or to an affiliate of the Lender. 2. This Loan is not a refinancing of a loan previously made to that Borrower by the Lender or an affiliate of the Lender. 3. The Lender is not attempting to enroll the unguaranteed portions of SBA-guaranteed loans.

Certifying Lender Signature: Date:

Printed Name:Title:

Lender Telephone: Lender Email:

In order to enroll the Loan into NC-CAP, please scan and email the: Loan Enrollment Form, Borrower’s Certification, Proof of Lender Deposit and Borrower Deposit and any supporting documentation of eligibility to .

NC RURAL CENTER USE ONLY

Total Borrower/Lender Payment: $ %Date:

Verify Borrower Payment Received: $ %

Verify Lender Payment Received: $ %

Rural Center Matching Payment: $ %Date:

US Census Tract #:

NC-CAP Program Authorization Date

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