Small Business Administration Created in 1953 to develop and aid small businesses in the U.S. Types of Financing Real Estate Franchises Inventory Accounts Receivable Equipment Business Acquisition Working Capital Refinancing
SBA 7(a) SBA Express Small Loans (less than $350K) Large Loans (greater than $350K) Contract Line of Credit Program Loan Products
Small Contractor LOC CAPline Revolving Line of Credit Export Working Capital Program International Trade Loan SBA 504 Program Loan Products cont.
Contract Line Overview Loans are used to provide financing for assignable contracts or purchase orders Applicants must be able to demonstrate history of successful bidding & completion of contracts Maximum loan amount $5,000,000 PLP processing available
For Profit & Not Dominant Retail less than $7-million in sales Wholesale less than 100 employees Manufacturing less than 500 employees Alternative Size Standard – Less than $5 million income after tax and $15 million net worth. Eligibility
Contracts must be assignable Demonstrate managerial/technical ability in profitable bidding & completion of contracts Payment of purchase orders must be deposited into a controlled account Demonstrate prior prompt payments to suppliers & subcontractors Additional Eligibility
Last 3 years business & personal tax returns Business F/S (> 180 days) Personal F/S (all principals < 20%) Personal and company debt schedule Cash flow projection for project to be financed Personal history & resume (all principals) Proposed contract or purchase order Application
Use of Proceeds Proceeds can include 100% of the cost of labor & materials necessary to complete assignable contract or purchase order
Establishing Loan Amount Single line may fund multiple projects without additional SBA approval Multiple projects must include projections showing borrowing need Must document labor & materials costs
Up to 5 years for master note Loans to finance single transaction should be tied to project completion date Terms
Maximum adjusting rate is Prime Can be fixed or variable – fixed rates can be higher rates Based on negotiation with lender SBA will allow interest rates to be increased for “excess” servicing Rates
Assignment of contract being financed Lender is allowed to take additional collateral if available and necessary Collateral
SBA charges a guarantee fee ranging between 2% to 3.875% on the guaranteed portion of the loan on loans over $150,000 For loans of less than 12-month the fee is ¼ of 1% Through December 31, 2016, Oklahoma legislation allows the lender to take a state income tax credit equal to the amount of the guarantee fee paid SBA Guarantee Fees
Application/packaging fees allowed Credit Report & Filing Fees Borrowing Costs
QUESTIONS?? Kent Faison BancFirst Commercial Capital 600 NW Fifth Street Moore, OK (405)