American Recovery & Reinvestment Act of 2009 Martha D. Soffer, MBA Business Development Specialist U.S. Small Business Administration Merle O’Brien, CPA Sr. Stakeholder Liaison CLD SB/SEIRS Internal Revenue Service April 14, 2009

American Recovery & Reinvestment Act of 2009 Martha D. Soffer, MBA (212)

(212) (212) ARRA Overview  The American Recovery and Reinvestment Act of 2009, (ARRA) signed into law on February 17, is an unprecedented effort to jumpstart our economy, create and save millions of jobs, and put a down payment on addressing challenges so that our country can thrive in the 21 st century.

(212) (212) ARRA Overview  It is an extraordinary response to a crisis unlike any since the Great Depression. It includes “stimulus” measures to modernize our nation’s infrastructure, enhance energy independence, expand educational opportunities, preserve and improve affordable health care, provide tax relief and protect those in greatest need.

(212) (212) ARRA Overview  The ARRA assigns a key role in this effort to the U.S. Small Business Administration (SBA). It provides the SBA with program tools that offer new economic incentives to small businesses and lenders alike.

(212) (212) ARRA What’s in it for Small Businesses?  Financial relief to encourage borrowing by (and lending to) for-profit companies (existing and start-up).  Tax relief benefits and tax incentives  Unlocked credit markets  Temporary elimination of some loan fees

(212) (212) ARRA What’s NOT in it for Small Businesses?  Contrary to some popular misconceptions, ARRA does not provide “grants” to small business owners or individuals.

(212) (212) ARRA and U.S. Small Business Administration  ARRA makes the SBA part of the solution.  $730 million allocated to the SBA to make changes to it’s lending and investment programs.  In addition, $28 billion budgeted for SBA small business lending and credit.

(212) (212) Key ARRA Components 1. Temporary Elimination of Loan Fees 2. Temporary 90 Percent Guarantees 3. Secondary Market Liquidity for 7 (a) loans 4. America’s Recovery Capital (ARC Stabilization Loans) 5. Expanded Microloan Program 6. Surety Bond Program Expansion

(212) (212) Nine Key ARRA Components 7. Secondary Market for First Mortgages (For purchase of commercial real-estate and fixed-asset securities ‘outstanding loans’) 8. Expanded Refinancing Project (For refinancing commercial real-estate and fixed-assets) 9. SBIC Program Expansion (Venture Capitalist Investments)

(212) (212) Elimination of Loan Fees  All upfront guarantee fees associated with SBA’s main 7 (a) lending program are eliminated through December 31,  7(a) loans go as high as $2 million.  Fees eliminated on Patriot Express and Export Express and other 7 (a) loans, but not on SBA Express.

(212) (212) Elimination of Loan Fees  Fees on SBA 504 CDC financing program (for the purchase of land, real-estate, fixed assets and major construction) eliminated.  SBA 504 goes as high as $4,000,000.  Borrower invests as little as 10% cash.

(212) (212) Elimination of Loan Fees  Borrowers who paid SBA guarantee fees on any of these loans since February 17, 2009 will receive refunds!  SBA allocated over $12 billion to cover fees.  Borrowers save $ thousands on larger loans.

(212) (212) Temporary 90% Guarantees  The SBA is now offering a 90% guarantee on all SBA 7(a) loans and SBA 504 CDC financing (SBA Express Loan remains at 50% guarantee)  In case a borrower fails to repay, the SBA repays the bank up to 90%.  SBA government guarantees reduce risk to lenders and encourage them to make loans.

(212) (212) Temporary 90% Guarantees  In 2008, of the $18 billion in SBA backed loans, 35% went to start-ups, 32% to minority-owned businesses and 23% to women-owned businesses.  Borrowers apply for these loans directly with their lending institutions.

(212) (212) Who Currently IS Lending?? (October 1, 2008 – March 31, 2009) – New York District Office go to for full list of lenderswww.sba.gov/ny/ny LENDER$ DOLLARS# OF LOANS New York Business Development Corporation$9,790,00022 Broadway National Bank$8,466,00026 PNC Bank (located in NJ – loans to NY)$7,106,30011 Newbank (located in Queens – loans to NY)$6,715,00022 TD Bank (formally Commerce Bank)$5,645,00014 Home Loan Investment Bank$5,124,2009 Bank Asiana$4,940,00010 JPMorgan Chase$3,343,60051 Community National Bank$3,200,0006 Nara Bank$3,200,0007 Sovereign Bank$2,140,00027

(212) (212) Who Currently IS Lending?? (October 1, 2008 – March 31, 2009) – New York District Office go to for full list of lenderswww.sba.gov/ny/ny LENDER$ DOLLARS# OF LOANS Manufacturers and Traders Trust$1,613,00020 HSBC$1,549,20026 Flushing Savings Bank$1,507,40011 Banco Popular N.A.$ Innovative Bank (on-line bank loans only)$1,200,00034 Only lenders with more than 5 loans for a total Of at least $1,000,000 are shown. Go to for a complete listing

(212) (212) Secondary Market Liquidity  Under normal economic conditions, many banks sell about 40% of their SBA 7 (a) backed securities (‘outstanding loans’) to brokers and companies.  These brokers and firms then “resell” these securities to investors.  “Resale” on the “secondary market” provides banks with the cash to make new loans.

(212) (212) Secondary Market Liquidity  This “secondary market” came to a virtual halt in October 2008, severely restricting many lenders ability to make new loans.  Banks have been weighted down with about $15 billion in outstanding securities.

(212) (212) Secondary Market Liquidity  As of March 31, 2009, the Federal Reserve Bank of New York and the U.S. Treasury Department under “TALF” legislation gave a jumpstart to “credit markets” by funding the direct purchase of $15 billion of outstanding securities.  Funding for the purchase of new outstanding securities will continue throughout  Cash-strapped banks will soon be lending again.

(212) (212) Americas Recovery Capital (Business Stabilization Loans)  If you currently own a business and have an outstanding business loan, you may be eligible for a low-interest deferred-payment loan of $35,000.  This program has been passed into legislation but is still in the developmental phase.  This loan will be 100% guaranteed by the SBA.

(212) (212) Americas Recovery Capital (Business Stabilization Loans)  This loan can only be used to repay up to 6 months of an existing business loan.  Monthly repayments will begin 12 months after receipt of your final loan money.  Keep in touch with the SBA or visit to stay updated.

(212) (212) Expanded Microloan Program  SBA Microlenders ARE lending.  Microloans typically go up to $25,000.  ARRA Legislation increases lending for the SBA Microloan program by $30 million through September 30, 2010.

(212) (212) Expanded Microloan Program  In addition, $24 million is provided for Microlender “entrepreneurial training” and “technical assistant” programs.  Visit for a list of SBA Microlenders in your area.

(212) (212) Surety Bond Program  Small businesses need surety bonds in order to bid on and obtain many federal and other contracts.  ARRA legislation raises the maximum SBA guaranteed surety bond amount from $2 million to $5 million, and, under certain circumstances, to $10 million.  Visit to locate SBA Surety Bond brokers.

(212) (212) Secondary Market for Fixed Assets  SBA 504 CDC financing program (purchase of commercial real-estate) has three-parts. For example, an existing business: Dollars Commercial Lender (bank) 50% SBA backed CDC Loan40% Owner Equity10%  Prior to ARRA legislation, commercial lender loans could not be resold on the “secondary market”. Note: CDC = Community Development Company, i.e. NYBDC

(212) (212) Secondary Market for Fixed Assets  Now, the SBA is empowered to set up a “Secondary Market Lending Authority” to make direct loans to broker-dealers to purchase commercial lender “secondary loans”.  This will encourage more commercial lenders to participate in the SBA 504 CDC program.

(212) (212) Expanded Refinancing Project  Now for the first time, SBA 504 CDC financing program can be used to “refinance” commercial real-estate and fixed assets.  Interest rates are at an historic low.  This will help business owners keep their property, expand their development projects, and create jobs.

(212) (212) SBIC Program Expansion  SBA-licensed Small Business Investment Companies (SBICs) (venture capitalists) invest funds into small businesses.  These venture capitalists can invest up to 10% of total capital into a promising small business.

(212) (212) SBIC Program Expansion  The SBA can now provide SBICs up to (3x) three times the private capital raised by those companies, up to $150 million per SBIC.  25% percent of a licensee SBIC’s investments MUST be invested in small businesses.  If you are seeking venture capital investments, visit for a list of SBICs in your area.

(212) (212) TAX INCENTIVES In addition, there are tax incentives to help:  Generous bonus depreciation terms that extends section 179 expensing through  Small businesses can carry back net operating losses to offset earnings from 3 to 5 years.  Lowers estimated tax payments from 110% to 90% for small business owners with adjusted gross incomes under $500,000.

(212) (212) TAX INCENTIVES In addition, there are tax incentives to help:  Tax credits for hiring disadvantaged people and veterans.  Partial exclusion on gains made when small business owners sell original stock in their business.  See your tax specialist for details. Don’t miss out !!

(212) (212) WHERE TO GET FREE SBA HELP ?  The SBA funds a network of “Resource Partners” to help you for free with business advise, business plans, government contracting, and loan packaging.  Visit and click on “Local Resources” to locate a “SCORE” or “Small Business Development Center (SBDC)” or “Women’s Business Center”.  Baruch College Small Business Development Center has a Turkish-speaking professor and business advisor: Mr. Ulas Neftci, to help. Contact him at: (646)

(212) (212) SBA, ARRA and our Nation WE ARE ON OUR WAY KEEP THE FAITH ! HANG IN THERE !