1. Your Small Business Resource Helping Small Business
U.S. Small Business Administration
Hancock Bank Plaza th Street Suite 103
Gulfport, MS
SBA Loan Programs
Lance Foster
Your Small Business Resource
Helping Small Business
start, grow and succeed

2. Our Mission SBA’s Purpose Assist Small Business
Counseling & Training Opportunities
Administer
SBA Guaranty Loan Programs
Facilitate
Government Contracting
Provide
Disaster Assistance
Training & Counseling
Credit
Contracting
Disaster Assistance

3. SBA Defines A Small Business As
A Business must be For Profit
One that is Located in the United States
Owned by U.S. Citizens or legal permanent residents
Net-worth less than $15,000,000
Net-profit (after taxes) less than $5,000,000

4. Mitigates Loss to Lender Provides Additional Services to Borrower
What is an SBA Loan?
Federal Loan Guaranty For Small Businesses
Needs Capital
Provides Capital
Mitigates Loss to Lender
Provides Additional Services to Borrower
Borrower
Bank
SBA

5. Who is the SBA Borrower? A borrower who may be short on collateral
A borrower who doesn’t fit the lenders standards of lending
A start-up with no proven history
A borrower who currently has non-SBA financing under less than favorable terms

6. The SBA Loan Guaranty
The SBA promises to reimburse a lender for losses at an agreed percentage of loss
Up to 90%
As low as 50%
Lender Benefits
Reduced Risk
Increased Liquidity
Borrower Benefits
Access to business credit
Better terms and rates

7. Where Does the SBA Loan Fit?
Factors that determine this range:
Business Profile
Most Viable Least Viable
Experienced Management High Debt Service Cash flow Sterling Credit Fully Collateralized Growth/Mature Industry High Retained Earnings
Cash flows w/ longer terms Covers Reasonable Collateral Shortfall Quality Start-up Regulation/Liquidity Environment
No Management experience No potential chance of repayment Impractical business idea No financial reserves No equity investment
Lender Range
SBA Range
No Range

8. How the Guaranty Works Borrower is approved a $1,000,000 loan
Lender disburses loan fully
SBA provides a guaranty on 75% of the loan
Borrower defaults
Lender liquidates assets & collateral
SBA pays lender for 75% of the loan that is charged off
Any payments after the loan is charged off are distributed pro rata to the lender and the SBA.
$500,000 balance
$100,000 recouped
SBA pays $300,000 (75%) of the remaining balance back to the lender
Borrower still owes $400,000

9. SBA’s Major Guaranty Loan Programs
7(a) Term Loan
SBA Express Loan
Patriot Express Loan
CDC-504 Loan
See loan comparison chart

10. 7(a) Term Loan See loan comparison chart Up to $5 Million
Refinance Business Debt
Change of Ownership
Lease Buildings
Working Capital
Start Up Costs
Inventory
Fixtures
Equipment & Real Estate/Buildings
7 to 10 year maturity for Working Capital & Equipment
25 year maturity for real estate
See Loan Chart For Interest Rates & Other Info
See loan comparison chart

11. SBA Express
Up to $350,000
Business Debt Refinancing Change of Ownership
Leasing Building
Working Capital
Start Up Costs
Inventory
Fixtures
Equipment & Real Estate/Buildings
Typically Used as a revolving Line of Credit &
Carries Higher Interest Rates
See Loan Chart For Interest Rates

12. Patriot Express For Veterans
Up to $500,000
Business Debt Refinancing
Change of Ownership
Leasing, Working Capital
Start Up Costs
Inventory
Fixtures
Equipment & Real Estate/Buildings
Maturities for WC & RE same as Standard 7(a)
See Loan Chart For Interest Rates

13. CDC-504 Loans $25,000 to $5,000,000 ($5,500,000 for manufacturers)
Create 1 job / $65,000 (Vets/Women Owned Exempt)
For financing real estate and or equipment only
Loan-to-Value program
Three part loan
Commercial lender provides 50% (1st Lien)
504-CDC portion is up to 40% (2nd Lien)
Owner/Borrower makes up the difference
504-CDC part term
20 year fixed rate for real-estate
10 year fixed rate for equipment
Occupancy requirement
51% of existing & 60% of new construction
*Administered through Certified Development Companies*

14. Other SBA Loan Programs
Exporting
International Trade Loan Program
Export Express Loan Program
Export WC Loan Program
Self Liquidating Lines of Credit
Contractors
Seasonal Businesses
Business that sells on credit

15. Loan Programs Just to Make Sure You Know Start up costs
Depending on the program, proceeds can be used for:
Start up costs
Working Capital
Inventory
Equipment
Fixtures
Business Acquisition/Change of Ownership
Business Debt Refinancing
Purchase land and buildings
Leasing

16. Credit Criteria Is Business Realistic/Eligible
If Refinancing Debt, does it improve the finances of the business?
Do You Have Management Ability
Repayment Ability
Adequate Cash Flows
Sufficient Down Payment
Collateral
Good Credit
*The business must be able to meet all of it’s debt payments (Not Just the SBA Portion) when being considered for a loan*

17. Things You Should Know SBA Does Not Have a Grant Program
Generally No 100% Financing
Financing can take extended periods of time so be patient
Denial for a loan does not preclude applying at another bank
Some business operations are not eligible for SBA financing i.e. Speculative Ventures

18. Things You Should Know Cont.
Prepare for your meeting with the lender like you would a job interview
Familiarize yourself with language of “Finance”
Create a network of people who can be of assistance as you pursue your business
“The goal is to get the right people on the bus and in the right seat”.
Jim Collins, Author
“From Good to Great”

19. Preparing a Loan Package
Business Plan
Answers the who doing the what, where and when
Amount of a Loan & Uses
Answers how much and why its needed.
Collateral Offered to Secure Loan
Current Financial Statements for Business & Personal
3 Years Business & Personal Income Tax Returns
1 Year Projected Income & Expense
Projected Financials
Attorney & Accountant
Make a Appointment with Your Favorite Lender

20. Before you call/approach a Lender
Find out the rules for business loans
Is the lender active in your industry
Ask for a loan application ahead of time
Make an appointment
Rehearse
The lender is in essence your first customer
Never assume they understand the language of your industry.
Your presentation should empower them to seek more info regarding what you do

21. Meeting with the Lender
Dress appropriately
Have documents organized and presentable
Be positive and confident
Know your industry
Answer negatives with positives
Document your meeting with notes
Be open to various forms of financing offers depending on your lender
Nothing is personal unless you make it personal

22. Questions You May Want to Ask
What is the lender’s loan process like? Localized or Centralized?
What SBA lending authorities does the lender have? (not all SBA Lenders are created equal)
Inquire about the lender’s SBA loan volume via your local SBA office
What types of industries does this lender like to lend to?
What are the bank’s collateral guidelines?

23. Lender Questions How much of a loan request?
How was this amount determined?
How will you use the loan proceeds?
What Collateral is available to secure the request?
How much are you able to invest in the business?

24. 8 C’s What a Lender Looks For Capacity to Repay Capital Collateral
Skin in the Game AKA Equity
Collateral
Assets to secure the loan
Conditions
Business’s needs are justified
Character
Credit
Commitment
Cash Flow (Working Capital)
8 C’s

25. SBA Deal Breakers Non-profit businesses
Businesses primarily engaged in lending / investment
Apartments, investment or rental property – landlords
Business or applicant that the Government has experienced a loss
Pyramid plans – Multi-level sales distribution plans
Speculation, R&D
Restricts patronage – i.e. men or women only health clubs
Gambling activities
On parole or probation

26. What if you are rejected?
Ask why and ask for it in writing
Are you “turned down” or can it be remedied?
Will other lenders have the same issues?
Will alternative financing sources mitigate the issues identified?
No matter what, remember that at this point you know more than you did before

27. Top Mistakes No Equity Capital Not Enough Projected Working Capital
Lack of skin in the game indicates you either cannot accept the risk or are unable to
Not Enough Projected Working Capital
The “Blood” of your small business
Entrepreneurs tend to underestimate their needs
Not Paying Yourself
A livable wage should be garnered from your business

28. Because Nothing is Free
Guaranty Fee
Computed based on guaranteed amount
Up to $150,000 (7(a) Loan 85% guaranteed)
2.0% of $127,500 amounts to $2,550
$150,000 to $700,000 (7(a) Loan 75% guaranteed)
3.0% of $525,000 amounts to $15,750
$5,000,000 (7(a) Loan 75% guaranteed)
3.5% of $3,750,000 amounts to $131,250
0.25% on > $2,750,000 amounts to $6,875
Total of $138,125
Can be rolled into the loan

29. Methods of Financing Commercial Term Loans Lines of Credit Leasing
SBA Loan Guaranty Programs
Lines of Credit
Credit Cards
Home Equity Loans - Real Estate Loans
Leasing
Investors – Partners
Seller Financing
Friends and Family
Seed & Venture Capital
Equity Investors

30. Resources Information to help you start and maintain your business
Financial Assistance
Federal Government Contracting Assistance
Business Training and Counseling
Disaster Assistance
Visit for SBA Mississippi office/resource locations

31. Resources SBA Free Online Training – www.sba.gov Local SBA Workshops
Service Corps of Retired Executives (SCORE)
Small Business Development Center (SBDC)
The SBA’s Jackson District Office
The SBA’s Gulfport Branch Office
Your local PTAC Office

33. U.S. Small Business Administration
Thank You