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WPASGL Small Business Lending Conference Seven Springs Mountain Resort

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Presentation on theme: "WPASGL Small Business Lending Conference Seven Springs Mountain Resort"— Presentation transcript:

1 WPASGL Small Business Lending Conference Seven Springs Mountain Resort
March 13, 2014 SBA Office of Financial Assistance Linda Rusche, Director

2 SBA Loan Programs Tools that enable lenders to meet the needs of their small entrepreneurs Public/private partnership Creating jobs Stimulating economic activity

3 7(a) & 504 Portfolio Overview
7(a) Balance Sheet 504 Balance Sheet Gross Active Balance $59,303,856  Active Loans 235,296 Current Balance $55,663,081 Past Due Balance $490,515 Deferred Balance $122,484 Delinquent Balance $769,284 Liquidation Balance $2,258,491 Non-Current Balance $3,640,775 Active Purchases $6,164,557 Total Exposure $65,468,414 Note: dollars in thousands Data as of December 31, 2013 Gross Active Balance $27,142,193  Active Loans 60,927 Current Balance $25,858,842 Past Due Balance $101,105 Deferred Balance $79,683 Delinquent Balance $371,015 In Catch-up Balance $731,546 Non-Current Balance $1,283,351 Active Purchases $1,566,930 Total Exposure $28,709,123 Note: dollars in thousands Data as of December 31, 2013

4 7(a) Loan Production

5 7(a) Portfolio Comparison
The 7(a) active portfolio has been experiencing a trend of increasing dollars and decreasing loans since the expiration of the Jobs Act, which increased loan ceilings, at the beginning of FY 2011

6 504 Production Since Fiscal Year 2010, SBA loan volume and dollars has remained fairly consistent, with the exception of FY 2012, which included American Reinvestment and Recovery Act stimulus for the 504 Debt Refinancing program. In 2013 there were 7,708 loan approvals under the 504 loan program totaling more than $5.2 Billion. FY 2012 increase was impacted by 504 Refinance Program which ended 9/27/2012.

7 504 Portfolio Comparison 504 Active Portfolio has been experiencing a trend of increasing dollars and loans over the past 4 fiscal years. While this trend was showing prior to the Jobs Act, the increased loan limits at the beginning of FY 2011 have intensified this trend.

8 504 Program Job Creation The primary goal of the 504 Loan program is local economic development and job creation/retention. It is estimated that since between FY 2010 and FY 2013 the 504 Program will create nearly 287,199 jobs and retain an additional 111,621 jobs that most likely would be lost if the financing were not provided. That is nearly 400,000 jobs created or saved in 4 years. That equates to slightly more than 12 jobs per loan, or 1 job created or retained for every 53,200 in debenture funds approved,

9 504 Public Policy Achievements
In FY 13, the data available reflects that of the 7,708 loans approved by SBA, 6,184 had met at least one of the public policy goals or community development goals set forth in 13 CFR § It is noted that this data is not presently required to be submitted for loan approval unless the loan does not meet the job creation requirement, or under the manufacturing or energy public policy goal. Community Development Goals Improving, diversifying or stabilizing the economy of the locality: 1,263 loans Public Policy Goals Business District Revitalization: 370 Expansion of Exports:  79 Women-Owned: 986 Veteran-Owned: 221 Minority Business Development: 1,155 Rural Development: 1,210 Increasing Productivity and Competitiveness: 53 Businesses restructuring from Federally mandated policies affecting the environment: 5 Businesses affected by Federal Budget Cutbacks: 39 Reduces Unemployment in Labor Surplus Area: 720 Energy Public Policy goals: 83 (Reduce energy use by 10%: 44; Sustainable building designs: 11; Generate renewable fuels: 28) Total Loans reflecting a Public Policy or Community Development Goal: 6,184

10 What's New?? SOP 50 10 5 (f) Effective January 1, 2014
Streamlined small loan program underwriting Clarified collateral requirements 1919/1920 replaces former form 4/4-I for larger loans 504 forms also revised to align 504 and 7(a) Regulation to be published soon

11 7(a) PARRiS Review Protocol
The PARRiS concept identifies five key components of lender risk to SA. P Performance - Calculated Risk Rating and cash flow A Asset Management - Quality of key lender origination, servicing and workout processes R Regulatory Compliance Reporting & SBA regulatory (CFR, SOP, etc.) compliance Ri Risk Management- Corporate governance, and internal controls S Special Items - Additional high risk lender behaviors identified by OCRM

12 504 SMART Protocol S A R T S M Solvency and Financial Condition
Management and Governance A Asset Quality and Servicing R Regulatory Compliance T Technical Issues and Mission

13 SBA One SBA One will lower lender transaction costs
Streamlining SBA process will reduce the cost of making a standard SBA loan by an estimated $6,806 and save 87.5 hours of processing time. SBA One will lower improper payments and repairs/denials Performing eligibility screening upfront will deter ineligible loans from being approved. SBA One will reduce paperwork Unifying 7(a) lending under one set of forms will simplify documentation for borrowers and lenders. SBA One will connect borrowers to SBA lenders Leveraging an improved data management system will expand access to capital through SBA’s extensive lending network.

14 SBA Veterans Advantage
Effective January 1, 2014 Express loan product Veterans, spouses and related individuals (see SOP) Zero fees on all loans $350,000 and less See SBA Notice

15 Community Advantage The Community Advantage Network has 79 mission-based lenders across the country providing 7(a) loans to underserved markets CA Lenders have had success partnering with national and local banks for capitalization support and also deal referrals – doing loans the banks won’t due, providing borrowers with necessary technical assistance, etc. 3 CA Lenders are in PA: The Progress Fund, Regional Development Funding Corporation, Washington County Council on Economic Development 3 Nationwide CA Lenders: Empire State CDC, CDC Small Business Finance, and Local Initiative Support Corporation Program currently has $84 million in loan approvals since it was initially created in FY11

16 Community Advantage CDCs are an eligible organization which may be approved as a Community Advantage Lender New Program Guide to be published shortly 7(a) loans of $150,000 or less are up in FY14 versus the same time period in FY13 Up 7.6% in numbers of approvals and 11.3% in dollars approved 7(a) loans to minorities are also up in FY14 across all categories/ethnicities HQ Contact: Grady Hedgespeth, Director, Office of Economic Opportunity

17 7(a) Program Contacts 7(a) Loan Program Branch Dianna Seaborn, Chief Sloan Coleman, Financial Analyst Justine Alston, Financial Analyst Meghan Milloy, P(202) SBA Sacramento Loan Processing Center (SLPC) Frank Pucci, Center Director

18 504 Program Contacts 504 Loan Program Branch Linda Reilly, Chief Warren Boyd, Financial Analyst Bob Carpenter, Financial Analyst Eric Wall, Financial Analyst SBA Sacramento Loan Processing Center (SLPC) Richard Taylor, Center Director

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