CEI 2016 Annual Report

Fork Food Lab

Portland, ME

Connection is the Key Ingredient

Inside Fork Food Lab, Portland’s first food incubator, members representing 27 specialty food companies who rent out shared kitchen space are making more than food products; they are building businesses and connections. Whether placing orders together to bring down costs, sharing information about experiences with a packaging consultant, or giving tips on increasing production volume, each individual enterprise is part of a larger collective effort. “We wanted to start Fork to create an environment where lots of food entrepreneurs can work around each other to collaborate, learn, and have fun. At the end of the day, humans want to connect. We do better mentally and business-wise when we’re around other people,” said co-founder Neil Spillane. Building that human connection was at the core of Fork Food Lab’s philosophy from the beginning.

In order to make the dream a reality, Neil Spillane and Eric Holstein, co-founders, needed to first demonstrate the potential for a food incubator in Portland, and ultimately find the funding necessary. With overwhelming community support and networking prowess, Spillane and Holstein tapped into every resource they knew. “There wasn’t one person on the radar that I didn’t approach,” said Spillane. They realized early on that assembling a funding package would be the greatest challenge, as Fork fell into a rare area of the investment and financing spectrum. The co-founders worked with CEI loan officer Art Stevens to determine the best possible financing options for Fork Food Lab. Among the various funding sources, they identified an SBA loan, coupled with a gap loan from CEI for equipment financing. “Art Stevens distinctly had the success of our business as a top priority. CEI was the first one in as a professional financier,” said Spillane.

CEI’s Agriculture and Food Sector specialists immediately recognized that Fork presents a unique opportunity for small food producers, many of whom are creating recipes and products out of local ingredients in their home kitchens. “We are so excited about Fork because it offers a proven model for these makers to grow and begin to scale production without taking on a costly facility of their own,” said Daniel Wallace of CEI. “Essentially, Fork provides a safe ‘middle ground’ for these companies, backed up by a host of services and connections to new markets.”

In addition to the gap loan and technical assistance, Fork Food Lab has worked with the Women’s Business Center at CEI who currently has six clients working at the food incubator, the Workforce Development team, and the Start Smart program connecting immigrant-owned startups and businesses to the food incubator. At the Taste the World public event held in November, Fork Food Lab welcomed CEI clients Ameera Bread, Asmara Restaurant, and Babylon Restaurant to showcase ethnic foods, teach about other cultures, and offer a space for food entrepreneurs and the Portland community to connect over a shared love of food. “We hope to continue this type of collaboration with Fork and other community organizations with the ultimate goal of supporting early stage immigrant owned food businesses,” added John Scribner, Director of CEI’s StartSmart program. This is just one of a robust lineup of events promoting the talents and products of the Fork member community and connecting them with businesses and individuals outside the walls of the incubator.

Fork Food Lab has gained a tremendous amount of excitement and momentum, and has quickly become one of Portland’s premier venues of workspace, event space, entrepreneurship, resources, knowledge-sharing, opportunity, and connection. “We’re convinced that Fork will catalyze significant growth for the small food producers entering Maine’s local food economy,” remarked Daniel Wallace. “Plus, the principals (Neil and Eric) are awesome and deeply engaged in the local community.”

Dovetail Bat

Shirley Mills, ME

Big League Manufacturing in Maine

In the small town of Shirley Mills, in Piscatiquis County, a manufacturing business reaches far beyond its rural Maine roots. Dove Tail Bats, LLC, owned by husband and wife Paul and Teresa Lancisi, specializes in manufacturing custom wood baseball bats made from Maine-grown northern white ash, yellow birch, and rock maple at both the retail and wholesale level, providing bats to amateurs and professionals alike throughout the US, Latin America, Canada, Japan as well as Australia.

After being turned down by other lenders, Paul and Teresa Lancisi came to CEI with a need for working capital. Their business had been in operation for 11 years, but in order to grow the business while maintaining their high quality custom-made bats, they needed financing. “The inability to acquire financial backing in a capital-intensive business is a major hurdle to overcome,” said CEI loan officer, Cole Palmer. “Paul and Teresa have carefully considered every business decision. In one word, they are resourceful.”

“CEI was willing to go to bat for us when other institutions were not. This loan enabled us to have the working capital necessary to grow our business by acquiring faster, high tec equipment and at the same time increasing our buying power to drastically lower our material costs,” said Paul Lancisi, owner.

While the majority of their competitors have grown too large to focus on the importance of personalized service both at the professional level and the amateur level of baseball, Dove Tail Bats views themselves as a niche player where quality, value, and a strong focus on customer service wins them new customers over time.

CEI’s loan helped the Lancisi’s purchase a CAD (computer aided design) system which replaced the physical template process, creating the ability to expand template options, improve production, and free some much-needed space in their warehouse. The loan also supported various renovations to their warehouse space, and provided working capital to invest in labor, inventory, and accounts receivable as the business continues to grow. Theresa commented, “CEI worked hard to promote our best interests in the loan application process. They were extremely professional and caring about our business and I would highly recommend them to other Maine Businessesbusinesses.”

As one of just a handful of bat manufacturing companies under contract with Major and Minor League Baseball, and the only company of its kind in Maine, Dove Tail Bats is growing rapidly and can’t keep up with the production demand. In 2016, the business doubled its production to keep up with production demand., added their ownThe addition of a split billet mill enablesing them tothe purchase and use of locally grown wood., and added New customers include MLB players including Eric Hoser, Alex Gordon, and Mike Moustakas from the Kansas City Royals, Bryce Harper from the Nationals, and Yoan Moncada of the White Sox. Dove Tail Bats continues to provide the highest quality bats to its dedicated following among players who put their faith in the strength of Maine-grown trees.

Premium Peanut, LLC

Douglas, GA

To be a peanut farmer in Southern Georgia is an exercise in taking in leaps of faith in the face of short-term volatility. and short-term planning. Under current practices, contracts between growers and processors usually last no more than one year and vary widely in availability and pricing from one year to the next. This dynamic disproportionately benefits the buyers and creates uncertainty in the farmer's revenue stream, making it difficult to plan for crop rotation, capital needs and other issues.

The development of the Premium Peanut shelling facility in Douglas, Georgia, aims to bring more stability to these farmers by helping them gain better access to the market, improve their profitability, and help smooth out the common boom or bust cycles through vertical integration. In order to achieve these goals, Premium Peanut has brought together 225 member farmers from within a 70-mile radius of the facility in a cooperative-like arrangement that exchanges investment in Premium Peanut with guaranteed multi-year contracts that include a pricing premium over the government standard, as well as a proportional distributions of Premium Peanut profits.

As a start-up with large capital needs and 225 individual partners, securing conventional non-recourse financing to complete its the new facility and fund initial operations was challenging. To assist Premium Peanut with these financing hurdles, CEI Capital Management LLC (CCML) utilized the New Markets Tax Credit (NMTC) program to provide flexible and affordable private capital to the project.

In addition to supporting 225 small to medium-sized farms, the shelling facility has created 115 direct jobs, plus an additional 55 indirect jobs* at the storage facilities--, to date, a 15% increase over pre-closing estimates. The majority of direct jobs are unskilled positions available to low-income individuals, and all pay a living wage for a single adult in the county, and include benefits such as paid time off, a 401(k), and subsidized health insurance. Premium Peanut also offers training opportunities and has approached the local technical college regarding job placement and workforce training.

CCML allocated $20 Million in NMTC capacity to finance the project. Suntrust Community Capital provided an additional $3 Million in NMTC allocation, as well as the NMTC equity, while Premium Peanut provided the debt financing for the transaction which closed October 30, 2015.

* Unless otherwise noted, all jobs data contained herein is taken directly from the Transactional Level Reports submitted by CCML to the US Treasury’s CDFI Fund. All jobs data is reported by the project Borrower and is not independently verified by CCML.

Hyperlite Mountain Gear

Biddeford, ME

Revitalizing Community and Textile Manufacturing

The recently expanded production floor at Biddeford’s historic Pepperell Mill is buzzing with tattooed millennials and baby boomers alike, moving fluidly among shelves of fabrics and rows of machines. With a promise to create quality jobs, Hyperlite Mountain Gear’s workforce exemplifies a commitment to American-made, sustainable products manufactured with the highest level of efficiency and precision.

Hyperlite Mountain Gear was established seven years ago by brothers Mike and Dan St. Pierre out of necessity for a durable, lightweight product for their own adventures. After about a year of prototyping and testing various products in a family camp, they officially launched the company in Biddeford’s Pepperell Mill with aspirations of developing a superior product for both outdoor enthusiasts and everyday backpack-wearers. Now, after six years and three expansions in the mill, Hyperlite Mountain Gear employs 37 individuals, has multiple job openings, and anticipates a staff numbering 45 by the end of 2017’s first quarter.

Biddeford’s historic Pepperell Mill, established in the 1840’s sprawling along the Saco River, was a primary location for textile manufacturing for over a century. Thousands of people moved to Biddeford to secure jobs at the mill, and many made careers of their textile work in the growing urban community. Though the rich textile history of Pepperell Mill has waned significantly, the St. Pierre’s see growth in Hyperlite Mountain Gear’s future at the mill.

Where many manufacturing startups make the transition from cottage industry production to internationally exported manufacturing, Hyperlite Mountain Gear has held true to its “hand-built in America” motto and keeps production completely in-house. “We can’t use products that have mistakes. With a small inventory hold, we can make changes in production, when necessary, happen in real-time. Keeping production in-house is a necessity if we want to provide the highest quality for consumers,” said Mike.

From CAD programming to cutting and stitching, the committed craftspeople of Hyperlite Mountain Gear have all gone through thorough job-specific training. Regardless of experience, all production workers train alongside seasoned employees for anywhere from two to four months. Because of the technical fibers used in the company’s gear, precision sewing, manufacturing, and quality control are paramount in Hyperlite Mountain Gear’s production model.

After several years of approaching CEI for financing, Mike and Dan St. Pierre (CEO and CFO) sealed the deal in 2016 with a $250,000 investment from CEI Ventures. “Mike and Dan are incredibly committed to building a sustainable business through continuous improvement, employee engagement, and financial control. I am thoroughly impressed by their understanding of the Hyperlite Mountain Gear core user and their ability to design and create winning, high quality products,” said Chandler Jones, Principal, CEI Ventures.

While the St. Pierre’s have faced challenges in every area of business ownership and production, they embody the quality of a true entrepreneur: a motivation to continuously persevere. “Any good entrepreneur needs to have a singular focus or vision, and a willingness to solve any problem that comes your way. You need to have passion in the product and continually push forward,” remarked Dan.

High performance textile companies like Hyperlite Mountain Gear are mixing innovative technologies with traditional practices to revitalize the local Biddeford community as well as the US-made textile industry.

Bumbleroot Organic Farm

Windham, ME

Establishing Roots in Southern Maine

Acquiring land was paramount in Bumbleroot Organic Farm’s origination. Jeff and Abigail Fisher, along with their friends Ben Whalen and Melissa Law, began farming on just 2 acres of leased land in Buxton, Maine in 2014. With the dream to establish an organic flower, herb, and vegetable farm serving the Greater Portland area, they quickly set out to find a piece of land of their own. “For new farmers, finding land that is affordable with the necessary infrastructure to run a business is challenging. You really have to make do with what you have and make it work,” said Jeff.

When the former Weeks Farm in Windham went up for sale, the owners envisioned Bumbleroot Organic Farm there. The greatest obstacle in following their dreams and purchasing the 88-acre property was financing. When time and money was tight, CEI stepped in to support Bumbleroot Organic Farm through financing and technical assistance. “We had a short window (about 4 months) between when we found out the property was for sale and when we needed to secure financing. CEI was one of the first lenders we contacted and from day one everyone at CEI was supportive of our proposal and helped us to articulate our business plan and vision for the property. As a multi-member LLC made up of two couples, having just finished our first farm season, we might have seemed like less than ideal candidates for a loan. But CEI recognized what we had accomplished in our first year and believed in our potential to deliver on our plans for the future,” said Jeff Fisher, co-owner Bumbleroot Organic Farm.

In order to secure purchase of The Weeks Farm, a business plan involving a Maine Farmland Trust Land Easement which significantly offset costs and protected the farmland, plus technical assistance and a loan from CEI was set in motion.

Establishing roots at the new location in Windham has helped the farmers not only grow their production, but also their clientele. With daily reach into the Greater Portland area, Bumbleroot is already expanding their CSA offerings and membership.

Bumbleroot Organic Farm is a rising leader in the southern Maine community because of its commitment to increasing access to locally-grown farm-fresh food which is distributed to low-income and disadvantaged Mainers through programs including Creative Trails in Portland and My Place Teen Center in Westbrook, as well as accepting SNAP benefits.

So what’s next for Bumbleroot? Growing from two acres to 88 acres of land will allow the farmers to add livestock, perennial crops, cover crops, and winter greenhouses. “With CEI's help we will be able to continue to connect people with the land and food that sustains them,” Jeff concluded.

Millers’ Wharf

Tenants Harbor, ME

For several generations, a small family owned wharf in the fishing village of Tenants Harbor, Maine, has grown and expanded, driving economic activity and spurring innovation. What once was a tidal facility fished by only a few family members is now a robust commercial fishing wharf, protected by the Working Waterfront Access Program, with all tide access, 4 hoists and an innovative vertically integrated fisherman’s co-op. Landings have nearly doubled in recent years, and the fishermen at the Tenants Harbor Fisherman’s Co-op are beginning to expand into aquaculture. CEI has been there for over a decade, providing financing for the expanded wharf operations and guidance on the working waterfront program.

CEI Housing Counseling

From Foreclosure to Home Recovery

“CEI is here to help people like me get back on our feet. My home did not become part of the foreclosure statistics of Maine.”–Karen Griffin, CEI Housing Counseling client

One month after a divorce, Karen Griffin was served foreclosure papers on her Swan’s Island home, a financial burden that seemed too great to overcome. Although filing for bankruptcy looked like the only option, Griffin was determined to find another solution.

She first reached out to the State of Maine Consumer Protection Agency, which referred her to CEI. She quickly learned that government programs existed to help save her home from foreclosure.

The process began with a tremendous amount of paperwork, much of which was unfamiliar to Karen. After gathering months of financial statements, payroll stubs, and income status forms, she filed for mediation to help the process move forward. Mediation provided a vehicle for Karen’s voice to be heard, with assistance from a representative of the State of Maine, and CEI Housing Counseling & Education Director Jason Thomas.

“That entire year I stayed in limbo just doing everything I was asked to do, but living in a state of not knowing what the end result would be. Jason not only helped me assemble the paperwork, but he was on the other end of the phone when I gave in to fear and confusion as to why CitiMortgage would not make a decision,” said Karen.

Over a year after being served foreclosure papers, Karen was approved for a temporary plan requiring her to make three mortgage trial payments before final approval. During the payment period, Jason counseled her through legal struggles regarding signatures and ownership. Jason also advised her to return to a full time job as a civil service worker as she continued to make mortgage payments beyond the trial period. After over 17 months, Karen received a letter stating that she was no longer in foreclosure.

“This is not a handout by any stretch,” said Karen. “CEI and Jason Thomas were invaluable in this endeavor. Very little is available to the individual American when dealing with large banks and corporations. The fact I am now making a $1,419 mortgage payment for a home that I did not want to lose through bankruptcy is a testament to the fact I was not looking for handout–just help and guidance to save my home. It took a whole lot more than the [federal] Making Home Affordable program to make this happen. That was the door, and the CEI team that got me through.”

“While each homeowner’s situation and challenge is unique, Karen’s story is one that has been all too familiar in the years since the housing crisis,” said CEI’s Jason Thomas. “Servicers and banks unprepared for the great numbers of people that rightfully seek assistance often had cases ‘fall through the cracks’ and become elongated beyond all reasonable expectation. While many national lenders would try to assuage borrowers’ fears, it’s much easier said than done to simply ‘relax’ when it’s your own home under threat of foreclosure. Our constant hope is that we can assist Maine homeowners in navigating what can be a challenging and confusing process at a very stressful time in their lives.”

Sleepy Poet Antique Mall

Gastonia, NC

Dream Comes True for Antique Mall

Dickson Shreffler, owner of Sleepy Poet Stuff, Inc., was the perfect candidate for C7a. He started the antique mall business about 20 years ago in Charlotte. Sleepy Poet Antique Mall provides space for independent vendors to sell their wares. Vendors are very loyal, rarely leaving once they join the retail space. In fact, ten of them have been with Sleepy Poet Antique Mall for more than 12 years.

Mr. Shreffler approached two different local banks about his expansion plans and need for a loan to finance the building acquisition and renovation costs but was turned down by both. Needing a solution, he turned to an online tool designed by the Small Business Administration (SBA) which allows business owners to complete a basic online questionnaire that is then matched to interested lenders. He was matched with C7a which works with small businesses owners to help them secure financing when turned down by a bank or face challenging loan terms.

“C7a didn’t just offer us a loan; they had the flexibility to structure the loan in a way that worked for us,” said Dickson Shreffler.

The C7a loan will do more than allow Sleepy Poet’s expansion to Gastonia. It will also be a catalyst for new foot traffic for the western side of Main Street as new small businesses expand the prime downtown shopping district creating new opportunities for local vendors and for the historic downtown area.

Dear Friends,

2016 WAS A YEAR OF SIGNIFICANT CHANGE. CEI and its subsidiaries, CEI Capital Management, CEI Ventures, and CEI 7(a) Financing, settled into new LEED-certified headquarters in Brunswick, Maine. Our board of directors conducted a national search to replace founder, President and CEO Ron Phillips, who retired in 2016. We welcomed Betsy Biemann as CEO and Keith Bisson as President, while celebrating Ron’s incredible accomplishments at the helm.

Throughout this period of celebration and transition, the CEI team continued to exceed impact goals for financing, advising and policy. CEI provided loans and investments to a total of 80 businesses, helping to create 1,421 jobs. To support targeted financing and services to entrepreneurs with low incomes, CEI received a highly-competitive $1.75 million Financial Assistance Award from the CDFI Fund and was selected to borrow up to $20 million from USDA Rural Development for financing community facilities in rural regions of Maine and other states beginning in 2017. The U.S. Department of the Treasury allocated $80 million—one of the highest award levels—in New Markets Tax Credit capacity to CEI’s subsidiary, CEI Capital Management.

Amplifying the impact of our financing dollars—our colleagues in lending, housing counseling, business advising, and workforce solutions work daily with borrowers, business leaders and partners. Every business that starts or grows—whether a Washington County farm, a New Mainer’s new business in Portland, a solar array in Massachusetts or a peanut processing facility in Georgia—generates a ripple effect of greater self-sufficiency, resilience and economic mobility. We are honored to share the economic journey of people and businesses in rural regions, and to help create jobs, environmental sustainability, and shared prosperity. We welcome your engagement in, and support for, our work.

Sincerely,

Ellen Seidman, Board Chair

Betsy Biemann, CEO

Keith Bisson, President