Presentation is loading. Please wait.

Presentation is loading. Please wait.

U.S. Small Business Administration Small Business Financing.

Similar presentations

Presentation on theme: "U.S. Small Business Administration Small Business Financing."— Presentation transcript:

1 U.S. Small Business Administration Small Business Financing

2 U.S. Small Business Administration Indiana District Office Peter D. Smith Lender Relations Specialist (317) 226-7272 x119

3 Millions of entrepreneurs use SBA resources and programs to: Start a new business Grow an existing business Export goods and services Have you explored the Small Business Advantage? U.S. Small Business Administration

4 SBA Loan Guaranty Requirements Business must qualify as “Small” based on the North American Industry Classification System (NAICS) Business must be operated for profit Business must be open to the general public Owners must be U.S. citizens or have permanent residence status Owners must make reasonable investment into business, usually 10-25% Owners must be of good character

5 What is a Small Business? Manufacturing 500-1,500 employees Wholesaling 100 employees for financial assistance programs (500 employees for contracting assistance programs) Services $6 million to $29 million in annual receipts, or 1,500 employees Retailing $6 million to $24.5 million in annual receipts General and heavy construction $17 million to $28.5 million in annual receipts Special trade construction $12 million in annual receipts Agriculture From $750,000 to $6 million in annual receipts

6 What is a Small Business? Alternative Size Standard Maximum tangible net worth not more than $15,000,000 and average net income after taxes for the full 2 fiscal years prior to the application not more than $5,000,000

7 The Role of SBA: The SBA does not offer grants to start or grow small businesses. U.S. Small Business Administration SBA is primarily a guarantor of loans made by private and other institutions.

8 The 7(a) Loan Program 7(a) Guaranty Loan Program

9 The 7(a) Loan Program SBA’s primary business loan program 7(a) Guaranty Loan Program Wide range of financing needs Maximum loan amount of $ 5.0 million Maximum guaranty of $ 3.75 million

10 The 7(a) Loan Program Expansion/renovation Land/equipment/fixtures purposes Working capital Inventory Exporting Uses for 7(a) Loan Proceeds

11 The 7(a) Loan Program Maximum maturities –Up to 7 years for working capital –Useful life or 10 years for equipment –Up to 25 years for real estate 7(a) Loan Program Maturities

12 The 7(a) Loan Program Base Rate + 2.25% for loans of 7 years or less 7(a) Loan Program Maximum Interest Rates Base Rate + 2.75% for loans over 7 years Rates can be higher for smaller loans

13 The 7(a) Loan Program Prime Rate* LIBOR (One month)* SBA Peg Rate * Rate in effect on first business day of the month Three Options for Base Rate

14 The 7(a) Loan Program $75,000 – 10 year loan Prime Rate: 3.25% + 2.75% = 6.00 % LIBOR (One month):.24% + 2.75% + 3.00% = 5.99% SBA Peg Rate: 2.25% + 2.75% = 5.00% –3.00% added to One Month Libor Maximum Rate Examples

15 The 7(a) Loan Program Based on guaranteed portion 7(a) Loan Program Guaranty Fees Fee = 2% to 3.75% Maturity 12 months or less – fee = ¼%

16 The 7(a) Loan Program $30,000 loan 85% SBA guaranty $30,000 x 85% = $25,500 guaranteed portion $25,500 x 2% = $510 guaranty fee 7(a) Guaranty Fee Examples $1,000,000 loan 75% SBA guaranty $1,000,000 x 75% = $750,000 guaranteed portion $750,000 x 3.5% = $26,250 guaranty fee

17 SBA Express Streamlined approval process Loans of $350,000 or less Credit not reviewed by SBA Term or revolving loans Lender uses own bank forms Lender must be pre-approved

18 Patriot Express For members of the Military Community Maximum loan amount $500,000 Term or revolving loans One day SBA Approval

19 Patriot Express Veterans Service-disabled veterans Soon to be discharged active-duty service members Reservists and National Guard members Current spouse of: –any Veteran (other than dishonorably discharged), –any Service-Disabled Veteran, –any Active Duty Military member, or –any Reservist or National Guard member Widowed spouse of: –a service member who died while in service, or –a veteran (other than dishonorably discharged) who died of a service-connected disability Eligible participants:

20 Express & Patriot Express Collateral Policies No collateral required under $25,000 Lenders use existing collateral policy for loans between $25,000 up to $350,000 Lenders must take all available collateral for PE loans greater than $350,000

21 The 7(a) Loan Program CapLines Maximum loan amount: $ 5.0 million Short-term/seasonal revolving line of credit Maturity: up to 5 years Maximum interest: vary with amount/type/ length of loan

22 International Trade Loan Program Maximum loan amount: $ 5.0 million Uses: acquiring long-term, fixed assets or refinancing debt for that purpose Maturity: up to 25 years Maximum interest: vary with amount/ type/length of loan The 7(a) Loan Program

23 Export Working Capital Program Maximum loan amount: $ 5 million (may be combined with International Trade Loan) Uses: short-term working capital for exporters Maturity: generally 1 year or 1 transaction cycle Maximum interest: no cap The 7(a) Loan Program

24 The 504 CDC Loan Program 504 Certified Development Company Loan Program

25 The 504 CDC Loan Program Maximum debenture amount: $5.0 to $5.5 million Uses: long-term; fixed assets Maturity: 10 or 20 years Maximum interest: fixed rate established when debenture backing sold Project costs: 504 CDC Loan 30% to 40% Third party lender 50% Borrower injection 10% to 20% 504/Certified Development Company Loan Program

26 The 504 CDC Loan Program Example of $1 million dollar project: 504/Certified Development Company Loan Program EntityAmount% of Project TermsInterest Rate Collateral Bank$500,00050 %10 yearsMarket1 st DOT CDC$400,00040 %20 yearsFixed2 nd DOT Borrower$100,00010 % $1,000,000100 %

27 The 504 CDC Loan Program Regional Development Company – Portage, IN Business Development Corporation - South Bend, IN Community Development Corporation - Fort Wayne, IN Indiana Statewide Certified Development Corporation – Indianapolis, IN Premier Capital Corporation – Indianapolis, IN SBA Indiana Certified Development Companies

28 Lender Visit – Be Prepared What to take to the lender: Written business plan Personal tax returns Business tax returns Business financial statements

29 SBA’s Resource Partners: SCORE Small Business Development Centers (SBDC) Women’s Business Centers (WBC) U.S. Small Business Administration

30 SBA’s Resource Partners: SCORE Lafayette Branch – Chapter 6 Lafayette Chamber of Commerce 337 Columbia Street Lafayette, IN 47901 Phone: (765) 742-4041 U.S. Small Business Administration

31 SBA’s Resource Partners: Small Business Development Centers (SBDC) Hoosier Heartland ISBDC Burton D. Morgan Ctr. 1201 West State Street West Lafayette, IN 47907 Toll Free: (866) 961-7232 U.S. Small Business Administration

32 Your SBA For more information about your Indiana SBA resources go to:

33 U.S. Small Business Administration Indiana District Office Peter D. Smith Lender Relations Specialist (317) 226-7272 x119

34 Small Business Financing QUESTIONS?

Download ppt "U.S. Small Business Administration Small Business Financing."

Similar presentations

Ads by Google