1. AddressingCreditUnionChallengesinSmallBusinessLendingNAFCU2012StrategicGrowthConference Rohit Arora,CEOBiz2Credit 3/14/2012 2010, Biz2Credit, LLC. All Rights Reserved - Proprietary and Confidential

2. Agenda Biz2CreditOverview OpportunitiesforCreditUnionsintheSMBlendingmarket ChallengesforCreditUnionsintheSMBlendingmarket CaseStudies:HowCreditUnionscanhelpsmallbusinessowners NextSteps 2010, Biz2Credit, LLC. All Rights Reserved - Proprietary and Confidential 3. Biz2Credit:WhoweareBiz2Credit is a secure online community that connects small business ownersseeking loans with financial institutions willing to lend. Proprietarytechnology matches borrower requirements with optimum funding options,and business services, while managing the exchange of information anddocuments. Funded over $500 million to date Over 1,100 lenders on our platform Have direct reach to our network of over 1.6million small and medium sized business (SMB)owners Community driven content, expert advice aswell as regular updates on small business news Rated by Entrepreneur.com as the top smallbusiness financing resource in 2012 2010, Biz2Credit, LLC. All Rights Reserved - Proprietary and Confidential 4. CreditUnionSMBloanscontinuetoincreaserelativetoBigBankSMBloansChangeinSMBlendingChangeinSMBloanapprovalpercentage June2010 June2011(1)January2011 January2012(2) +8.7% 1.1% *Source:1.TheIncreasingImportanceofCreditUnionsinSmallBusinessLending,JamesA.Wilcox,Sep20112.SmallBusinessLendingIndex,Biz2Credit,Jan2012 2010, Biz2Credit, LLC. All Rights Reserved - Proprietary and Confidential 5. Highbankrejectionratesrepresentanopportunity forCreditUnionstoenter/expandtheirSMBshare Ourstatebystateanalysisofrejectionratesforwellqualifiedexisting customers*showsthescaleoftheopportunity NEWYORKARIZONA CALIFORNIA % %% 4040 40 3030 30Rejectionrate 2020 20 1010 10000Note: *Bigbanklendingapprovalstoexistingcustomersinbusinessformorethan2years,with$150k+inrevenuesanda personalcreditscoreof680ormore 2010, Biz2Credit, LLC. All Rights Reserved - Proprietary and Confidential 6. CreditUnionshavebeguntakingadvantageofsmallbusinesslendingopportunitiesOutstandingMBLsreachedrecordlevelsin2011,indicating$Billions%change1430.0%12+23.3%20.0%10 +15.1% +8.7%+10.5% 10.0% 80.0% 617.4%10.0% 4 220.0% 9.2 11.3 9.310.711.9 030.0% 2007 20082009 20102011N=7,091Outstandingmemberbusinessloans12monthgrowthSource: Callahan&AssociatesFirstLook,dataasof12/31/2011 2010, Biz2Credit, LLC. All Rights Reserved - Proprietary and Confidential 7. AchangingregulatoryenvironmentwillalsoaffectthecurrentenvironmentforSMBloans Appliestobankswith$50Bn+inassetsBaselIII Raisesthecapitalrequirementsfortheseinstitutions Regulations Thisincreasesthecostofmakingloansforbigbanks, particularlySMBloans (ahighriskclassification) Allfinancialinstitutionsmust complywithover400new DoddFrankregulationslistedinthe2,300pageact Regulation Theremaybeadditionalcomplianceburdensforboth banksandCreditUnions Currentlawcapsbusinesslendingat12.5%ofacredit CreditUnion unionsassets Lending Afederalbilltoraisethecapto27%is currentlygoingLimits throughcongress Newson thebillmaycomeassoonastheendof2012 2010, Biz2Credit, LLC. All Rights Reserved - Proprietary and Confidential 8. OurlendingindexisdrivingincreasedawarenessofSMBopportunitiesforCreditUnionsOurmonthlyupdatesarereportedbygovtagencies,andintradepress 2010, Biz2Credit, LLC. All Rights Reserved - Proprietary and Confidential 9. CUChallenges: UnfavorableCreditMarkets Lendingcriteriahavebeentightenedatmanyfinancialinstitutionssincethecrisis,aslendinghasbecomeriskier Slowbigbankresponsetothechangingcreditenvironmenthasleftmanysmallbusinessownersunabletosecureloans Lowrateslimittheattractivenessoftakingadditionallendingrisk In 2011, the number of small employers obtaining credit from financial institutions wasapproximately the same as the two years prior. However, demand for credit increasedin 2011, meaning more small employers were shut out of the credit market than inprior years. ... National Federation of Independent Business (NFIB)CreditUnionlendingtotheircommunitiescanprovidealowerrisksolutionfor localSMBowners,andreducethepressureonbankstoincreaselending 2010, Biz2Credit, LLC. All Rights Reserved - Proprietary and Confidential 10. CUChallenges: HighMemberAcquisitionCosts ManyCreditUnionslackthemarketingbudgettoeffectivelyreachtargetSMBs CreditUnionscurrentlyhavenoaccesstogeographicallygranulardatatoreachlocalSMBsseekingloans Likewise,SMBsseekingloansstruggletofindlendinginstitutionsbeyondtheirexistingbank CreditUnionscurrentlylackthebranchnetworkandexpertisetomanagethischallenge These are large costs in relation to the net interest margin and fees yielded by these accounts, which means increasing efficiency of acquisition has a big impact on bottom line performance and the rate of capital growth ... Flowtracker Bank Analytics TargetingSMBswithspecificattributes(e.g.,creditscores,timeinbusiness,localgeography,etc.)canreduceSMBcustomeracquisitioncosts 2010, Biz2Credit, LLC. All Rights Reserved - Proprietary and Confidential 11. CUChallenges: FinancialKnowledgeGap Alackoffinancialunderstandingcaninhibitentrepreneursaccesstocapitalbymakingoptionsseemlimitedandthelendingmarketopaque Smallbusinessownershavelittlevisibilityintohowtheycanimprovecreditscoresoraddressissuestoensureapplicationsarenotrejected CurrentloanproviderslacksensitivitytolocalSMBdemands... Access to capital continues to be the most difficult challenge for small business owners... potential entrepreneurs may lack the business savvy to articulate what they need in business terminology; and such inexperienced business persons may also fail to present a wellthought out longrange alternative plans ... Financing Small Business Enterprises, Library of CongressCreditUnionscanleveragetheirdetailedunderstandingofthelocal communitytobridgethegapbetweenSMBsandfinanciallendinginstitutions 2010, Biz2Credit, LLC. All Rights Reserved - Proprietary and Confidential 12. CUChallenges: Memberretention ProvidingSMBloanscanbeagoodwaytostrengthentherelationshipbetweenCreditUnionsandthecommunitiesandcustomersthattheyserve CustomerswithexistingdepositrelationshipsmaybeagoodentrypointtothelendingmarketfortheirCreditUnions Reducingthecomplexityandtimingofloanapplications,aswellasannualverificationofaccountingandcreditdataforexistingloancustomers,strengthenstheserelationshipsfurther Theyre missing out on an opportunity... Small business owners want a relationship. They want to be able to talk about ideas. They want a partner and credit unions can offer that ...Dorinda Edwards, President/CEO of American Partners FCU(via Credit Union Times) CreditUnionsshouldutilizetheirknowledgeoftheircommunitytoprovidetargetedSMBloans &takeadvantageoftechnologyforongoingloanmgmt 2010, Biz2Credit, LLC. All Rights Reserved - Proprietary and Confidential 13. CUChallenges: Ongoingriskmanagement ThethreatofloandefaultorthewithholdingofinterestpaymentscanbecomeasignificantbarriertoSMBlendingbyCreditUnions Manysmallbusinessownersdonotcontacttheirfinancialinstitutionsaboutthethreatofdefaultuntiltheirfinancialsituationhasdeterioratedsignificantly CloserrelationshipsandinformationsharingwithcustomerscanallowCreditUnionstomonitoroutstandingloans,providinganearlywarningandreducingrisk A potentially powerful addition to annual financial data on SMEs is...evidence of company default on credit agreements and/or trade credit payments or whether the firm is late to file its financial statements ...The Value of Qualitative Information in SME Risk ManagementAltman, Sabato & Wilson CreditUnionscancontinuallymonitortheaccountsandfilinginformationfortheirSMBloancustomers,allowingincreaseddefaultrisktobeidentifiedearly 2010, Biz2Credit, LLC. All Rights Reserved - Proprietary and Confidential 14. CUChallenges: Resourceconstraints Significantresourcesarerequiredfordocumentcollectionandprocessinginassessingloanapplications HighcostofdocumentprocessingandstorageforalargenumberofapplicationscanlimitCreditUnionsabilitytoprocessloansandrenewals Currentdocumentcollectionsystemsrepresentabottleneckintheloanreviewprocessassources(e.g,IRS)cantakeweekstoprovidepertinentdata Document processing represents a major opportunity to reduce costs. ... many financial services institutions work with hard copy documents and spend millions on courier services to overnight documents during account initiation. ...Xerox ConsultingCreditUnionscantakeadvantageofexistingtechnologiestooptimizetheloanapplicationreviewprocessandreduceprocessingtimes 2010, Biz2Credit, LLC. All Rights Reserved - Proprietary and Confidential 15. SuccessStory:TheopportunityforaCreditUniontostepinwhenabanksaysno FutureGreenStudioisadesignbuildfirminBrooklyn,NewYorkspecializinginlandscapeurbanismandgreenroofdesign ThefounderwasdeniedacommercialloanfromTDBankinboth2009and2010 Informationonothersmallbusinessloanoptionswaslimited Informationaboutlocallenderswaslimited Biz2Credit connectedthefounderwithBrooklynCooperativeFederalCreditUnion,wherehewasabletosecurean$80,000businessloan Biz2Credit gave us the opportunity to grow as a small business when we were sorely in need of funding to facilitate our growth ... David Seiter, Founder, Future Green Studio 2010, Biz2Credit, LLC. All Rights Reserved - Proprietary and Confidential 16. SuccessStory:TheopportunityforaCreditUniontoprovidefinancingforcommunitybusinesses AsmallbusinessownerrequiredfinancingtofundthedevelopmentoffourBaskinRobbins franchiselocationsinScottsdale,AZ Thefounderwasdeniedaloanfromotherlendingsourcesforsixmonths Biz2Credit connectedthefounderwithMountainAmericaCreditUnion,wherehewasabletosecurea$300,000businessloan Therelationshipallowedtheloantobefinancedwithoutrealestatecollateral TheloanwassecuredundertheSBA7aprogramforaspiring smallbusinessowners 2010, Biz2Credit, LLC. All Rights Reserved - Proprietary and Confidential 17. SummaryofSMBlendingopportunityThreekindsofCreditUnionSMBlenders: Currentlynotactiveinlending Doingsomelending Atornearthe12.5%assetcapThecurrentmarketstatusandnewtechnologieswillhelp: GetstartedwithSMBlendingcheaply,quicklyandeasily Increasequalifiedmemberloanssignificantly Enhancetheproductivityandlowertheriskofexistingoperations 2010, Biz2Credit, LLC. All Rights Reserved - Proprietary and Confidential 18. IsyourCreditUnionalreadylendingtoSMBs? Signuptocontributetoaspecialreporton SMBlendingwithTimemagazine ContributetotheBiz2Creditblog,which housesusergeneratedexpertopinions onthecurrentstateofSMBlending 2010, Biz2Credit, LLC. All Rights Reserved - Proprietary and Confidential 19. NextSteps:AddressingtheSMBlendingopportunity Joinusforcoffeeat3PM Stopbyourboothforadditionaldetailsonhowtosolvethechallengesdiscussedtoday! OnMarch27wewillbehostingaWebinar 2010, Biz2Credit, LLC. All Rights Reserved - Proprietary and Confidential 20. Q&A 2010, Biz2Credit, LLC. All Rights Reserved - Proprietary and Confidential