1. SBA Cleveland District Office SBA Lending Update Burton D. Morgan Series Hudson Public Library Mark Hansel, Cleveland SBA mark.hansel@sba.gov 216-522-4191

2. Entrepreneurship & SBA The three “Cs” Credit, counseling and contracting Start-ups, purchases, franchises Venture capital Tech transfer SBA Cleveland District Office

3. About SBA Guaranty loans for banks and CDCs Over 60K and over $30B for FY’11 1,400 and $360M for Cleveland District Two loan programs: 7(a) and 504 About 90% of volume under 7(a) SBA Cleveland District Office

4. SBA Loan Limits $5 M for 7(a) $350 K for Express $500 K for Patriot Express $5-$5.5 M for 504 SBA Cleveland District Office

5. Types of 7(a) Loans Regular SBA approves Preferred (PLP) and Express Bank approves with nod from SBA About 80% of volume for ‘11 SBA Cleveland District Office

6. Loan Uses Working capital Equipment Real estate and leaseholds Refinance Buy-outs

7. SBA Cleveland District Office Eligible Businesses For profit Based in US Active, not passive Some types not eligible Like gambling or banking

8. SBA Cleveland District Office Eligible Owners Good character Satisfactory credit US or LPR status

9. SBA Cleveland District Office Eligible Transactions Arm’s length No partial buy-outs No payment to an “associate” No “passive” investments

10. Eligible Transactions Can refinance debt Can buy used equipment Can do eligible franchises Can do change of ownerships SBA Cleveland District Office

11. Franchises Franchise registry www.franchiseregistry.com Clear or “repaired” May not be on registry But still eligible SBA Cleveland District Office

12. SBA Usual Limits 7 years usually for working capital 10 years or more for equipment 25 years for real estate No balloons on SBA notes

13. SBA Cleveland District Office SBA Interest Rates Base rates of Prime or LIBOR+3 Usually 2.25 or 2.75 over base rates Fixed or floating Fixed rate price choice on Colson site May be higher under Express

14. Collateral Issues “Principals” must guaranty Joint PFS’s required Personal assets may be required May be short on collateral SBA Cleveland District Office

15. Collateral Issues Defer to bank on Express Bank’s usual policy Some CRE requires Phase I Assignments of life insurance SBA Cleveland District Office

16. Guaranty Fees Based on guaranteed amount 2% to $150K 3% over $150K to $700K 3.5% over $700K.25% surcharge over $1M

17. Fees in General No “origination” fees Banks may charge “packaging” fee “Extraordinary servicing” fee Permitted for DFP and CAPLines SBA Cleveland District Office

18. Revised CAPLines Full guaranty up to $5 M Easier for bank to manage Different programs (1) Working Cap(2) Seasonal (3) Contract(4) Builders SBA Cleveland District Office

19. 504 and Refinance Regular 504: Bank, CDC and Borrower 504 Refinance New revisions Up to 90% of appraised value SBA Cleveland District Office

20. Floor Planning Cars, boats, etc. Line of credit $500K to $5M SBA Cleveland District Office

21. More Information www.sba.gov Cleveland District Office 216-522-4180 SBA Cleveland District Office