Investment Overview

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Busisness Credit Income Fund

FUND SUMMARY


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FUND TERMS


  • The General Partner aims to deliver attractive, risk-adjusted returns for Limited Partners, redeemable in cash at a Limited Partner's option each quarter
  • Management fee of 1.75%
  • Performance carry of 20% of returns, but only after Limited Partners have received a preferred net return of 2% for any calendar quarter
  • Minimum commitment of $5,000,000, subject to lesser amounts being accepted at the discretion of the General Partner
  • Open-ended fund; one-year lock-up in Custodial Account
  • In general, realized gains income will be allocated in the following sequence every quarter:
    1. 2% preferred return, if any, per quarter to the Limited Partners;
    2. After the 2% preferred return hurdle has been met for the quarter, the General Partner will receive a "catch-up" of 0.5%;
    3. Thereafter, 80% to Limited Partners and 20% to the General Partner
  • The General Partner will pay all of the Fund's initial set-up costs

PORTFOLIO INVESTMENTS


Portfolio companies:

The Fund will target SMBs with a proven, scalable business model and exceptional long-term growth prospects and with a minimum of three years of historical growth performance (>10% CAGR), annual revenues of up to $100 million and EBITDA of $500,000 to $10 million, an experience management team, and marketable assets for securitization.

Representative Terms

  • Senior secured debt investments
  • Investment size of $1 million to $10 million
  • Loan term of 36 months, fully amortized
  • Board of Directors observation rights

Investment structures:

  • Growth Capital: Capital to support business expansion, such as developing new products and entering into new markets
  • Refinancing: Improved financing structures to facilitate business growth or accommodate changes to a business
  • Recapitalization: Improvement of capital structure and preservation of cash flow
  • Bridge Financing: Short-term asset-based loans to maintain operations to foreseeable recapitalization event
  • Acquisition Financing: Capital for contingent merger or acquisition event

MARKET OPPORTUNITY*


SMB are the engine of the U.S. economy. These businesses consistently demonstrate attractive performance metrics, with revenue growth for companies with $10 million to $100 million of revenue being higher and significantly more stable than that of the S&P 500. The lower and middle market has consistently delivered strong performance during both recessionary and growth periods of the overall economy.

Since the recent financial crisis, there has been a significant increase in the credit quality of many growth-oriented SMBs. However, large banks have curtailed their SMB lending, and smaller banks have been facing greater regulatory oversight since they took severe losses during the financial crisis in commercial real-estate lending. As a result, many SMBs now find themselves unable to access capital from the traditional banking sector to finance ongoing operations, fund expansion plans, or launch other strategic initiatives. Consequently, smaller companies have been increasingly seeking financing from alternative capital sources.

* Source: US Capital Business Credit Income Fund, LP, Confidential Private Placement Memorandum (October 31, 2016).


MANAGEMENT TEAM


US Capital Investment Management, LLC is led by industry veterans with deep investment banking, financial advisory, operational, and direct lending experience. Importantly, this includes a strong specialization in underwriting and collateral management. The team is supported by analysts, underwriters, and financing specialists with significant expertise in SMB lending.

Jeffrey SweeneyJeffrey Sweeney, Founder and Co-Managing Partner, and Chairman of Investment Committee. A seasoned industry veteran with deep experience in structured debt finance, Mr. Sweeney is Chairman and CEO at US Capital Partners Inc., a leading private investment bank for SMBs. He has a strong entrepreneurial approach, which he has applied in the investment banking and equipment leasing arena for over 15 years. In 1998, he purchased the assets of US Capital Corporation, a small equipment leasing company. Changing the focus of the company to structured asset-based lending and investment banking, he grew the business to over $4 billion in potential funding opportunities each year. Until September 2014, Mr. Sweeney served as a Managing Partner at Breakwater Investment Management, LLC, an investment firm that specializes in direct growth-capital investments into SMBs. He was seminal in architecting the firm's inaugural $250 million credit fund.

Charles TowleCharles Towle, Co-Managing Partner. Mr. Towle is Managing Partner of US Capital Partners, Inc. and the Division Head and licensed principal of US Capital Global Securities, Inc., the placement agent for the Fund. He has over 10 years of business development, asset management, corporate finance, capital markets, and general business management experience. He gained extensive entrepreneurial and investment experience, serving as a limited partner, financial officer, or board member of various investment and endowment funds and SMBs, both in the United States and abroad. He holds Series 24 and 79 registrations from FINRA.


Ish SpencerIsh Spencer, Member of Investment Committee Mr. Spencer serves as Managing Director and Partner at US Capital Partners Inc., and brings extensive multi-disciplinary experience to the Investment Committee. A serial entrepreneur and corporate finance specialist, Mr. Spencer has over 15 years of business development, asset management, private investment, asset and market evaluation, business analysis, and general business management and operations experience.


PLACEMENT AGENT FEE


Units in the Fund are being offered through US Capital Global Securities, Inc. ("USCGS"), which is acting as the placement agent for the offering on a "best efforts" basis. USCGS will receive a placement agent fee of 20% of the total carry paid to USCIM. Any such fee will be paid by USCIM or its affiliates out of their own assets. No deduction will be made from a Limited Partner's subscription amount with respect to such fees.


RISK FACTORS


You should be aware that an investment in Interests in the Fund involves considerable risks, including the possible loss of all or a material portion of your investment. The abbreviated risks set forth below, as well as the detailed risk factors set forth in the Confidential Private Placement Memorandum, are not the only risks facing investors:

  • The Fund may suffer losses in its portfolio.
  • Poor economic conditions may cause the Fund to suffer higher default rates on its loans and decreased value of the assets it holds as collateral.
  • Investments are generally risky and offer no guarantee of success.
  • The Fund's performance is dependent on key personnel and the loss of one or more of those key personnel may materially and adversely affect the Fund's performance and prospects.
  • The Fund may lack diversification which could increase the negative impact of the performance of a small number of investments.
  • The Fund will make unspecified investments so Limited Partners must rely solely on the General Partner.
  • The Fund's portfolio will lack liquidity.
  • The Fund has no operating history.
  • Portfolio investment selection may not fulfill investment objective.
  • Projections may have no relation to actual events.
  • Partnership investments are subject to general credit and interest rate risk.
  • Leverage at portfolio company level increases Partnership's exposure.
  • Leverage by the Fund could result in Fund losses.
  • Lender liability and equitable subordination may impede the Fund's performance.
  • The markets in which we operate are subject to the risk of natural disasters.
  • The Fund and General Partner are subject to government regulation.
  • Substantial competition in the market could adversely affect the Fund.
  • The Fund is subject to systems, accounting and internal control risks.
  • Our information systems may experience an interruption or breach in security.
  • Our controls and procedures may fail or be circumvented.
  • There is no participation by limited partner investors in the management of the Fund.
  • The General Partner and its members enjoy limited liability.
  • No negotiation of terms or independent legal representation.
  • Valuations and appraisals at discretion of General Partner.
  • Incentive allocation may lead to increased risk-taking by managers.
  • Limited transferability of the Partnership interests.
  • Long-term nature of investment and illiquidity.
  • There is recourse to the Partnership's assets and indemnification liabilities which could result in losses to Limited Partners.
  • A Limited Partner may be liable for the return of distributions.
  • Reserves may expose Limited Partners to losses.
  • The General Partner may enter into side letters with certain Limited Partners.

CONFLICTS OF INTEREST


The General Partner and USCGS are affiliated entities. Charles Towle is Co-Managing Partner of the General Partner, the Division Head and licensed principal of USCGS, and a stockholder of the parent company of the General Partner and USCGS. Jeffrey Sweeney is Co-Managing Partner of the General Partner and is also Chairman, CEO, and the controlling stockholder of the parent company of the General Partner and USCGS. Conflicts of interest may arise in connection with Mr. Towle's and Mr. Sweeney's control of both the General Partner and USCGS. Investors should be aware that these conflicts of interest, and a number of other conflicts of interest relating to the General Partner and its affiliates, are permitted under the terms of the Fund's offering documents. You should not invest in the Fund unless you are willing to accept these conflicts of interest and the associated risk.


DISCLOSURES


This presentation does not constitute an offer to sell or a solicitation of an offer to buy any security and may not be relied upon in connection with the purchase or sale of any security. Any offer would only be made by means of a formal Confidential Private Placement Memorandum. No offer or solicitation will be made prior to delivery of a Confidential Private Placement Memorandum, Agreement of Limited Partnership, and Subscription Agreement (together, the "Offering Documents").

This presentation does not purport to be all-inclusive or to contain all of the information that the recipient may require and is qualified in its entirety by reference to the Offering Documents. This presentation is not a part of or supplemental to the Offering Documents or such definitive documentation. The Offering Documents and any supplements will supersede this presentation in its entirety. Projections and other forward-looking information as to events that may occur in the future (including projections of revenue, expense, net income and stock performance) are based on information provided by the Fund and other publicly available information as of the date of this presentation. There is no guarantee that any of these estimates or projections will be achieved. The recipient should not rely on any information contained herein. No investment, divestment or other financial decisions or actions should be based solely on the information in this presentation. Actual results will vary from any projections in this presentation, and such variations may be material, including the possibility that an investor may lose some or all of its invested capital.

This presentation is confidential. By acceptance hereof, you agree that (i) the information must not be used, reproduced, or distributed to others without prior written consent; (ii) you will maintain the confidentiality of all information herein that is not already in the public domain; and (iii) you will use the information contained herein solely for preliminary informational purposes.

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Securities offered through US Capital Global Securities, LLC, member FINRA, SIPC.

IMPORTANT: All investing is risky, and no investor should decide to commit funds without first consulting with a competent professional adviser. Some or all invested funds can be lost. The past performance of any investment, investment strategy or investment style is not indicative of future performance. Future results may vary, and are not guaranteed. The value of investments and their income may increase or decrease, and a loss of principal – including all principal – may occur.

For more investor information or support please call 415-889-1010 or email support@uscgs.com