Rural Business Investment Company (RBIC) Applicants
Interview Questions
INSTRUCTIONS
SBA and the U.S. Department of Agriculture (USDA) will interview some applicants for assistance under the Rural Business Investment Program (RBIP) after the applicants have been processed through the initial screening review, due diligence, and evaluation by a panel of the Rural Business Investment Company (RBIC) Applicationstages of the selection process. Only those applicants that receive higher than a certain score will be considered for an interview. SBA/USDA will interview. O nly those RBIC applicants whose aggregate funding requests equal approximately 150% (±10% + or -) of availableof available debenture and grant authority under the RBIP. will be requested to interview. More information about the interviews is available in the RBIC Program Announcement.
SBA and USDA will conduct all interviews in SBA’s offices in Washington, D.C and expects all principals of the RBIC applicant to participate in the interview. SBA and USDA will consider aApplicants may requests, based on hardship, thathardship, that specific principals not participate. and SBA may grant such requests based on in theirits sole discretion. An applicant may bring its attorneys with it to the interview, but only an applicant’s principals may speak on behalf of the applicant during the interview. SBA and USDA representatives may ask questions of the applicant’s representatives at any time during the interview. The time period for the interview is expected to take up to 90 minutes.
The integration of equity investing and operational assistance under the applicant’s control is a unique characteristic of the RBIC. Therefore, it is important for SBA and USDA to understand how the applicant proposes to administer the complex array of relationships, structures, cash flows, and management operations thus presented by the integration of equity investing and operational assistance.
Based on its experience with similar programs, SBA recommends that the applicant address these unique aspects of the program its operations by presenting during the interview one or more charts or diagrams (preferably in a printed Microsoft PowerPoint or equivalent format) of both the applicant’s external relationships and its internal organization and processes.
The principal purpose of the interview is for SBA and USDA representatives to test or clarify assertions or statements made by the applicant in its application or during the interview. Another purpose is to gain insight into learn about the applicant’s individual principals and how they work together as a team, including how the team will represent itself to prospective investors, potential sources of match funding, andor portfolio companiesconcerns.
RBIC Applicants Interview Instructions and Questions
The interview will consist of two parts:
(1) a Mmaximum of 30 minutes will be set aside for an oral presentation by the applicant’s management team to introduce the its principals, outline the applicant’s its proposed investment and operational assistance strategy, and explain how the applicant it will execute that strategy.
(2) a Mmaximum of 60 minutes will be set aside for questions by SBA and USDA representatives to clarify any aspect of the presentation or the application.
During the interview, SBA and USDA expect the applicant to address the unique aspects of the RBIC applicant, and how the applicant its proposesal to fulfill the program’s objectives of the program.
SBA and USDA will ask expect each applicant some or all ofto be able to answer the following questions.
1. Individual principals.
a. How do you propose to allocate the carried interest among your principals?
How do you plan to add, replace, or remove principals?
c. How much time will each principal devote to the RBIC before it closes, and then while it is in operationthe RBIC is licensed, and then after licensing?
d. Do you anticipate any circumstances that would require reducing that time commitment at any time point over in the life of the company RBIC?
2. Investment strategy.
a. How important is the operational assistance grant resources to executing your investment strategy?
ba. What will be the hurdle rate for your portfolio and what return on investment (ROI) do you plan to deliver to your investors?
cb. To what extent do you anticipate relying on others to identify prospective deals or to structure specific transactions?
c. How important is the operational assistance grant to executing your investment strategy?
3. Targeted Rural Areas.
a. What are your principals’ prior connections with the Rural Area you are planning to target?
b. What are the rural economic, social, or community development benefits you plan to create in your targeted Rural Area? How do you plan to measure those benefits?
c. How do you plan to use your operational assistance resources grant to achieve those development benefits in your targeted Rural Area?
4. Deal generation.
a. What are your sources of deal flow;, for example, will they come from community or commercial organizations with which your principals have relationships?
b. How will you create deal flow and sustain such deal flow over the entire investment period?
5. Deal review process.
a. Describe the process you plan to use to review deals and identify those who will be involved in every each stage of the process.
b. What form of tracking and database management do you plan to use in your deal review process?
c. How will the principals participate in the decision-making process on deals, at each stage in the process?
6. Development of the investment transaction.
a. How do you plan to test the validity of business plans and projections submitted to you by potential investees Portfolio Concerns?
b. How will you determine an appropriate hurdle rate for each investment?
c. How will you use outside consultants or advisors in your due diligence process for evaluating potential investments?
d. What investment structuring techniques and parameters do you plan to use?
e. How will you pay the deal costs of your investments?
7. Post-investment relationships with company management.
a. What will your principals’ activities and roles be in your pPortfolio companiesConcerns, other than board membership?
b. What will your policy be with respect to charging your pPortfolio companies Concerns for your services?
8. Exiting investments and covering financing costs.
a. How do you anticipate exiting your investments?
b. How do you plan to time your exits and realize your investments in order to meet your operating expenses?
c. How do you plan to manage your cash flow after your investment period, including servicing your SBAUSDA-guaranteed debentures?
d. What will be your policy on reinvestment of investment proceeds and repayment of USDASBA-guaranteed indebtedness?
9. Operational assistance (OA) grants.
a. How do you plan to use your grants resources for individual companies, both before and after you make investments in those companies?
c. How do you plan to administer your grant resourcess?
d. How will your principals’ time be allocated to your grant operations?
e. What is the projected annual cost of administering your grant operations?
f. How will you provide OA through your principals versus third-party providers?
g. Describe your existing or planned contractual relationships with third-party OA providers, including pricing.
h. What are your guidelines to distinguish between services you will provide to companies as an investor for a fee, versus OA you will provide to companies at no cost?
Please note: SBA is collecting the information on this form for the purpose of determining whether the RBIC applicant should be selected as an RBIC. The information collected on this form is required in order for the applicant to receive SBA/USDA assistance. The information collected will be kept confidential to the extent permitted by law. SBA is collecting this information on behalf of USDA pursuant to a delegation of authority from USDA to SBA under 7 CFR 4290.45.
Please note: The estimated burden for responding to this collection of information is 90 minutes. You are not required to respond to this collection of information unless it displays a current Office of Management and Budget (OMB) control number. If you have questions or comments concerning this collection of information, please contact the U.S. Small Business Administration, Chief, Administrative Information Branch, Washington, DC 20416 and/or Office of Management and Budget, Clearance Officer, Paperwork Reduction Project (3245-0338), Washington, DC 20503. Please do not send forms to OMB.
| File Type | application/msword |
| File Title | Draft of Ground Rules for Interviews of NMVC candidates |
| Author | Austin Belton |
| Last Modified By | Louis Cupp |
| File Modified | 2004-05-16 |
| File Created | 2004-05-11 |