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1 Take the Mystery out of SBA Loans Michael Foutch Business Development Specialist Nebraska District Office

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Presentation on theme: "1 Take the Mystery out of SBA Loans Michael Foutch Business Development Specialist Nebraska District Office"— Presentation transcript:

1 1 Take the Mystery out of SBA Loans Michael Foutch Business Development Specialist Nebraska District Office

2 Nebraska District Office How do we help entrepreneurs? 2 Financing Technical assistance and counseling Government contracting Advocacy Disaster assistance So, why small business?

3 Over the past 20 years, Nebraska has seen a decided shift toward small business growth, and away from job growth in bigger businesses. – From 1992 to 2001, Nebraska saw a jump of nearly a quarter of a million jobs. – But from 2002 to 2008, we saw a loss of nearly 84,000 jobs 62,000 of those from businesses with greater than 500 employees. Nebraska District Office 3

4 On the other hand: – From 1992 to 2001, Nebraska saw a growth of 78,000 jobs from small businesses (those less than 100 employees) – And from 2002 to 2008, we saw an increase of another 50,000 from small businesses (those less than 100 employees). Nebraska District Office 4 Source: Nebraska Workforce Development

5 Nebraska District Office In Fiscal Year 2011 to date, we helped our entrepreneurs to: Obtain $137 million in 423 SBA loans; Win millions in government contracts for 8(a) firms; As a result, companies created nearly 2,000 new jobs! Nebraska District Office 5

6 Financing What are banks looking for? Payment history (35%) Amounts owed (30%) Length of credit history (15%) New credit (10%) Types of credit used (10%) 6 Nebraska District Office

7 Financing SBA Loan Guarantee Program Guarantees the loan for the bank Helps start-ups and businesses with little collateral SBA loans have been made through 90 banks alone this year. Every bank in the state can do business with the SBA. 7 Nebraska District Office

8 Financing Why are guarantee loans important? Allows lenders to diversify lending portfolio Guaranty amount doesn’t count against lending limits Interest rate is negotiated between the borrower and lender, capped by the SBA. 8 Nebraska District Office

9 What does the SBA consider unreasonable terms in debt restructuring? 9 Nebraska District Office Term Debt with Demand Feature or Balloon Payment Debt with Interest Rate Over SBA’s Maximum Credit Card Debt Over-collateralized Debt Revolving Lines of Credit Debt with an Inappropriate Maturity Debt that No Longer Meet the Small Business’ Needs (Standard Guaranty Only)

10 Express Programs Small business owners meet with their lenders Lender certifies it cannot provide funding on reasonable terms without SBA guaranty Lender must be an SBA partner and meet certain portfolio standards FEES 2 to 3.75 percent on the guarantee amount (sliding scale) depending on the size of the loan. Nebraska District Office SBA Guaranteed Loans 10

11 SBA Express Loans 170 Express loans in Nebraska in FY 2011 $22 million in loan volume All sorts of industries Electrical contractors Architects Chiropractors Advertising agencies Used car dealerships Restaurants Nebraska District Office SBA Guaranteed Loans 11

12 SBA Express Loans $1 million loan amount through Sept. 27 Previously, max amount was $350,000 SBA guaranty is 50 percent Interest rates can be fixed or variable Capped at 6.5% over the base rate (LIBOR) for loans less than $50K 4.5% above base rate for loans above $50K Line of credit up to seven years Nebraska District Office SBA Guaranteed Loans 12

13 SBA Express Loans Turnaround time for application is 36 hours Can be as quick as 20 minutes if lender files application electronically Lender uses own forms and procedures Not required to take collateral for loans up to $25K May use own collateral policy for loans up to $350K; some lenders still require a large amount of collateral even with an SBA guarantee. Nebraska District Office SBA Guaranteed Loans 13

14 Patriot Express Loans Up to $500,000 with a 85% guarantee for loans below $150K, 75% for loans above Who is eligible? Veterans with a DD-214 in hand Active duty eligible for TAP Reservists and National Guard Current spouses of the above Widows of a service member who died during service or of a service-connected disability Nebraska District Office SBA Guaranteed Loans 14 THIS IS THE ONLY LOAN PROGRAM FOR VETERANS

15 Patriot Express Loans What can you use it for? Start-up costs Purchase equipment Business-occupied real estate purchase Inventory Setting up to sell products and services to the government Preparing your business for possibility of your deployment Nebraska District Office SBA Guaranteed Loans 15

16 Patriot Express Loans Nebraska District Office SBA Guaranteed Loans 16 John F. Carroll of law firm Watson & Carroll Air Force veteran (medic) Patriot Express line of credit 19 Patriot Express Loans in Nebraska in FY 2011 $3 million in loan volume

17 Small Loan Advantage Open to Preferred Lender Program banks and credit unions Up to $250, same guarantee terms as 7(a) Most applications approved within 5-10 days Two-page application for borrowers Community Advantage Also up to $250K with same terms as 7(a) Non-profit lenders expected to maintain at least 60 percent of SBA portfolio in underserved markets Nebraska District Office SBA Guaranteed Loans 17

18 Rural/Small Lender Advantage: Streamlined process for $350,000 following the 7(a) program guidelines for the guaranty. Nebraska District Office SBA Guaranteed Loans 18

19 504 loans Designed as an economic development program to support small business growth Helping communities with: Business expansion Job creation Provides long-term, fixed-rate, subordinate mortgage financing for acquisition and/or renovation of capital assets. Nebraska District Office SBA Guaranteed Loans 19

20 Microloans Omaha Small Business Network 24 th and Lake, Omaha (402) x160 Rural Enterprise Assistance Project (REAP) Monica Braun (402) Community Development Resources Lincoln (402)

21 Nebraska District Office Where do you start? One-on-one free mentorship Basic startup assistance Business plans Advice on financial projects Management and marketing 21

22 Pre-Business Workshop First Wednesday (6-10 p.m.) and Thursday (6:30-10 p.m.) of each month Bedford Avenue, Omaha Planning and Business Plans Business Insurance Loans and Capital Marketing and advertising Taxes Legal advice (such as incorporation) Records and Accounting Call Pre-registration by credit card, check or cash is $50 per person. Please make checks payable to “SCORE Chapter 40” 22

23 Government Contracting SBA programs assist specific groups in securing federal contracts: These certifications provide eligibility to receive special procurement opportunities: Women-owned Small Business Service-Disabled Veteran-owned Small Business Veteran-owned Small Business (for Veteran’s Administration procurements and subcontracts). Begin your registration here, at

24 Procurement Technical Assistance Centers Work with federal agencies to identify prime contracting opportunities. Recommend reserving procurement for competition among small businesses. Provide small business sources to federal buying agencies. Announces available business opportunities Identifies contracts over $25,000 Government uses simplified procedures for purchases between $3,000 and $100,000. These purchases are generally reserved for small businesses. Go to: Identifying Contracting Opportunities

25 Procurement workshops Third Thursday of each month Bedford Avenue 8-10 a.m. Omaha Empowerment Breakfasts Second Friday of each month Regency Lodge, 107 th & Pacific 7:15 to 8:30 a.m. Veterans in Business Forum breakfast First Friday of every month, Mammel Hall 7:45 to 9:15 a.m. Outreach events 25

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