Bankers Roundtable in Charleston, SC

At BDC, we're announcing an additional approach to our business model that we're confident will bring new business to you while helping Business Development Corporation (BDC) of South Carolina make the most of our ability to serve the Palmetto State's small business community and banking industry.

As you know, bank consolidations along with SBA having increased the maximum loan amount from two million dollars to five million dollars have intensified competition for everyone, especially from large, out-of-state operations. In fact, of the 57 SBA lenders operating in South Carolina in the past year, 22 lenders (39%) have in-state presence and 35 of these lenders (61%) had no in-state presence. At BDC, we've also seen a decline in membership (59 member banks in 2000 to 38 now) and an increase in the number of SBA loans that are now being handled in-house by member banks. Altogether, this leaves us with the capacity to handle more business, and a need to look differently at how we generate that business.

Many of you have attended the productive roundtable sessions we recently held on this and other topics in Greenville, Columbia, and Charleston and your participation, input and support is greatly appreciated. It was particularly comforting to receive your understanding and support in each of these sessions. We stressed during these sessions and continue to stress now: BDC will continue to make every effort not to compete with member banks but rather to support you.

Approach Benefits Member Banks

Our additional approach to business development will benefit the commercial, industrial, professional and business banking markets in South Carolina as well as BDC, which is detailed below:

• DIRECT MARKETING APPROACH
  In addition to welcoming and handling referrals from our bank partners in the same manner as always, BDC will now be prospecting for direct business. This is an opportunity to add to your portfolio loans that you might otherwise have missed, as we locate and work with new borrowers to secure SBA-backed funding.
• MEMBER BANK GETS INITIAL OFFER
  With our new direct marketing approach, when we find a potential borrower, we will offer to sell half of each new loan back to a member bank in that customer's market on an equal basis. The first offer would be to the borrower's current bank if that bank is a member. If not, then the offer would be made to a member bank of the borrower's choice.
• SHORT-TERM BENEFITS
  Short term, loans resulting from this arrangement will give the participating bank the opportunity to purchase a participation in half the guaranteed and half the non-guaranteed portion of the loans, and the income that generates. (If asked by the bank, we would still repurchase the guaranteed portion of the loan.)
• LONG-TERM BENEFITS
  Long term, this presents opportunity for participating banks to provide ancillary services on a lasting basis to these new customers. This also is new opportunity to help small businesses to a point that they can become direct borrowers at our state's banks without SBA assistance.

For BDC, adding direct loan prospecting to our long-standing reliance on referrals will help us address the issue of under-utilized capacity while helping the banking community with SBA loans. This new model will help BDC continue to remain strong and active in the months and years ahead and will allow us to continue what we were created to do – help finance small businesses in South Carolina, ultimately creating new jobs for the citizens of the Palmetto State.

Please don't hesitate to contact me to discuss this additional approach and how BDC can better serve you and the banking community in South Carolina. As always, we appreciate the relationships with each of you and thank you for the business that you currently refer.

Sincerely,

Edwin O. Lesley
President & CEO