Date: Thu, 18 Dec 1997 11:44:01 GMT Server: Apache/1.2.0 Connection: close Content-Type: text/html Small Business Loans

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We are small business finance specialists. Making loans to entrepreneurs is what we do. Read on for details of our various financial products.

Historical Overview

Allied Capital is a publicly traded nationwide finance organization that specializes in providing financing to small businesses throughout the United States. Since 1958, Allied Capital has provided financial products and services to small businesses. Allied Capital specializes in four primary areas: venture capital, international expansion capital, small business lending, and commercial real estate finance. We have over $864 million in combined total assets dedicated to small business financing, and offer a number of financial products for the small business entrepreneur. We are a unique financial institution because we understand the needs of the small business entrepreneur and can provide creative and flexible financing quickly. To learn about some of our current investments, visit some of our portfolio companies or peruse our database of representative investments.

Venture Capital

Allied Capital is one of the oldest and largest publicly traded venture capital companies in the nation. Our typical investment is to a small business looking for between $2 and $8 million in growth or acquisition capital. Most investments are structured as subordinated loans with equity components such as stock, options or warrants. Loans typically bear a current interest rate of about 12%, and generally have maturities of five to seven years with an interest-only period for the first three years. Entrepreneurs find our product very appealing because we act like lenders, and our equity participation is small. We aren't like the "vulture capitalists" who often take the majority of the upside away from the small businessman, or intrude in the daily business operations.

We have significant expertise in providing this kind of financing to the service sector as well as media (especially radio), distribution, software development, manufacturing, environmental and retail concerns. We aren't very high tech, so experimental technologies such as bio-tech, space, or cutting edge information systems do not appeal to us. We also do not currently provide financing for early-stage or start-up companies.

International Expansion Capital

Allied Capital is fortunate to have an arrangement with the Overseas Private Investment Corporation (OPIC) through which we are able to provide capital to small businesses that are expanding internationally. For many small businesses, such expansion-type capital is very difficult to secure; for companies expanding internationally, it can be even more difficult. The structure of our international expansion capital investments is very similar to our subordinated debt product, with the added requirement that the small business be expanding into OPIC-designated countries.

SBA-Guaranteed Loans

Through the Small Business Administration (SBA), Allied Capital is able to provide small business loans quickly. Don't be fooled! Not all SBA-lenders are alike! Because Allied Capital has such a strong track record, we have been designated as a Preferred Lender by the SBA. This enables us to close loans quickly --much more quickly than other SBA-guaranteed loan providers. These loans are generally between $0.2 and $2.5 million, and are flexibly priced with generous amortization terms. We provide long-term loans as well as financing for acquisition, growth, restructuring and construction in a wide array of industries including manufacturing, retail, service, radio, convenience store/gas stations, restaurants, delicatessens, bars, hotels and motels.

Commercial Real Estate Loans

Small businesses often experience difficulty in finding commercial real estate mortgages to finance the real estate component of their business. Allied Capital has focused on this issue and carved a niche in this area by providing such financing to entrepreneurs nationwide through several specialized programs.

Hard-To-Finance Program
Allied Capital provides short-term bridge financing, long-term real estate financing, sale-leaseback financing and participation real estate financing between $1 million and $15 million. The common thread to our real estate financing is that the real estate is tied to an enterprise or entrepreneur. Typical loans are to an enterprise with real estate facilities that a bank won't mortgage because the small business is the sole tenant. Instead, we view sole tenantship as sufficient and take on such credit as a small business loan, with the real estate acting as collateral. Types of properties we finance include office condominiums, anchored and unanchored retail buildings, industrial sites, convenience store/gas stations, warehouses, and mobile home parks. We do not provide financing for multi-family or single family projects.

Rapid-Close Program
This program is directed toward borrowers who have stronger credit, but for some reason do not meet all of the parameters of a conduit, bank, or insurance company. Allied Capital will offer the same products as those in our hard-to-finance program but at less expensive rates ranging from: 325 to 450 basis points over Treasuries for longer term loans, and 325 to 450 basis points over 1-month LIBOR for shorter term loans. This program, similar to the others, is available for such properties as office condominiums, anchored and unanchored retail buildings, and industrial sites, to convenience store/gas stations, warehouses, and mobile home parks. Again, this program is not available for multi-family or single family businesses.

Representative Investments

To learn more specific details about some of the investments we've made, we've created a database of representative investments organized by industry. This data does not represent any one portfolio, but represents a broad cross-section of all of our portfolios. We hope this data will help potential entrepreneurs and business brokers to gain a better understanding of how we structure our investments, the types of companies we lend to, and our lending criteria. We will continue to update this database periodically.

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