REVOLVING LINE OF CREDIT AND LONG-TERM DEBT

Granite Falls Energy:

GFE has two credit facilities with a lender. The first is a seasonal revolving operating loan facility in the amount of $6,000,000. The second is a revolving term loan facility in the amount of $8,000,000. However, the amount available for borrowing under this facility reduces by $1,000,000 every six months, beginning September 1, 2013, with final payment due March 1, 2017.

The interest rates for both facilities are based on the bank's "One Month LIBOR Index Rate," plus 2.65% and 2.9% on the seasonal and revolving term commitments, respectively. Both facilities are available through March 2017. The outstanding balance on the revolving term loan on July 31, 2013 and October 31, 2012 was $4,375,970 and $4,891,952, respectively. GFE currently has no outstanding balance on the seasonal revolving operating loan facility.

The credit facilities require GFE to comply with certain financial covenants. As of July 31, 2013 and October 31, 2012, GFE was in compliance with these financial covenants and expects to be in compliance throughout fiscal 2013.

The credit facilities are secured by substantially all assets of the Company. There are no savings account balance collateral requirements as part of this new credit facility.

At July 31, 2013, GFE also had letters of credit totaling $337,928 with the bank as part of a credit requirement of Northern Natural Gas. These letters of credit reduce the amount available under the seasonal revolving operating loan to approximately $5,662,000.

As part of the acquisition of Project Viking discussed in Note 3, GFE assumed a note payable with Granite Falls Bank with a principal amount of $5,000,000. The note was due upon the demand of Granite Falls Bank, or if no demand is made, on September 23, 2013. Interest accrued on the note at a rate of 3.99% per annum and was secured by all of Project Viking's assets. This note was paid in full on August 19, 2013.

Also, as part of the acquisition of Project Viking discussed in Note 3, GFE issued a note payable to the previous owners of Project Viking with a principal amount of $4,024,500. The note matured on August 30, 2013 and interest accrued on the note at a rate of 4% per annum. This note was paid in full on August 26, 2013.

Heron Lake BioEnergy:

Line of Credit

On May 17, 2013, HLBE renegotiated its revolving line of credit to extend the maturity date of the revolving line of credit to September 2016. Amounts borrowed by HLBE under the term revolving loan and repaid or prepaid may be re-borrowed at any time prior to maturity date of the term revolving loan, provided that outstanding advances may not exceed the amount of the term revolving loan commitment. Amounts outstanding on the term revolving loan bear interest at a variable rate equal to the greater of a LIBOR rate plus 3.50% or 5.0%, payable monthly. At July 31, 2013, the revolving line of credit carried an interest rate of LIBOR plus 3.50% but not less than 5.00%. HLBE also pays an unused commitment fee on the unused portion of the term revolving loan commitment at the rate of 0.35% per annum, payable in arrears in quarterly installments during the term of the term revolving loan. At July 31, 2013, the outstanding balance on this line of credit was $10,650,377, plus a fair value adjustment premium of approximately $722,000 as part of the GFE acquisition. At July 31, 2013, HLBE had an additional $9,800,000 available under this revolving line of credit. The amount available under the revolving line of credit is reduced by $2,000,000 at October 31st each year until September 2016 when the unpaid balance is due.

Term Note

On May 17, 2013, HLBE renegotiated its term loan with AgStar in the amount of $17,400,000. HLBE must make equal monthly payments of principal and interest on the term loan based on a 10-year amortization, provided the entire principal balance and accrued and unpaid interest on the term loan is due and payable in full on the maturity date of September 1, 2016. In addition, HLBE is required to make additional payments annually on debt for up to 25% of the excess cash flow, as defined by the agreement, up to $2,000,000 per year. Through September 1, 2014, the loan bears interest at 5.75% as long as HLBE is in compliance with their debt covenants. On September 1, 2014, the interest term loan will be adjusted to LIBOR plus 3.50% but not less than 5%. The loan agreements are secured by substantially all business assets and are subject to various financial and non-financial covenants that limit distributions and debt and require minimum debt service coverage, net worth, and working capital requirements. As described above, HLBE was in compliance with the covenants of its master loan agreement with AgStar as of July 31, 2013.

Subordinated Debt

On May 17, 2013, HLBE's Board of Governors loaned HLBE $1,407,000 in convertible secured subordinated debt. The notes bear interest at 7.25% and are due in the aggregate principal amount during May 2018. On October 1, 2014, or immediately prior to the effective time of any sale of all or substantially all of HLBE assets, each holder has the right at the holder's option to irrevocably convert all of such holder's interim subordinated notes into class A units of HLBE, at the rate of $0.30 per class A unit. HLBE reserves the right to issue class B units upon conversion if the principal balance of the 7.25% subordinated secured notes exceeds the authorized class A units at the conversion rate.

Long-term debt consists of the following:



	July 31, 2013			October 31, 2012
Granite Falls Energy:
Capital One Equipment Leasing/Finance (GFE):
Shuttlewagon Railcar Mover (5 year term at 3.875%)	$	412,013		$	497,636
Revolving Term Loan (GFE)	4,375,970			4,891,952
Heron Lake BioEnergy:
Term note payable to lending institution (HLBE) (including premium of approximately $1.4m)	18,505,863			—
Assessments Payable (HLBE) (including premium of approximately $223k)	2,981,353			—
Notes payable to electrical company (HLBE)	312,500			—
Corn oil recovery system note payable (HLBE)	750,835			—
Notes payable on pipeline assets (HLBE)	1,123,064			—
Subordinated Debt (HLBE)	1,407,000			—
Total debt	29,868,598			5,389,588
Less: Current Maturities	(3,329,924		)	(114,718		)
Total Long-Term Debt	$	26,538,674		$	5,274,870