1. Visit us at www.sba.gov1 SBA is not a direct lender SBA 7(a) program offers guaranty to lenders –Guaranty is a partial refund for a failed loan –Lender obtains guaranty from SBA 7(a) Loan Guaranty Program

2. Visit us at www.sba.gov2 Lenders originate and service loans The SBA loan guaranty program is not a guaranty of a low interest rate 7(a) Loan Guaranty Program

3. Visit us at www.sba.gov3 7(a) Loan Guaranty Program Not everyone needs an SBA Guaranty If risk is too high - lender comes to SBA Start-up businesses Insufficient collateral Non-standard repayment terms Industry Risk

4. Visit us at www.sba.gov4 7(a) Loan Guaranty Program SBA lending relies primarily on a demonstration of adequate cash- flow. There must be a reasonable expectation that the loan will be repaid.

5. Visit us at www.sba.gov5 Size Requirements Must be independently owned and operated Must be a small business as defined by SBA Federal standard – NAICS SBA.GOV/SIZE Maximum size examples Wholesaling – less than 100 Employees Retail/Service – average sales $4.5M to $32.5M Manufacturing – less than 500 Employees Construction – average sales $13M to $32M

6. Visit us at www.sba.gov6 Ineligible Businesses Gambling or Speculation Real Estate Investment Adult Industry Non-Profit Organizations Religious Organizations Defaulted on a Federal Loan

7. Visit us at www.sba.gov7 7(a) Use of Proceeds Working capital Inventory Lines of credit Expansion / renovation Leasehold improvements Land or buildings Furniture / fixtures / equipment Refinance debt for compelling reasons

8. Visit us at www.sba.gov8 Loan Maturity Dates Working Capital Loans - Up to 7 Years Machinery and Equipment - Up to 10 Years Construction of Plant Facilities - Up to 25 Years

9. Visit us at www.sba.gov9 7(a) Loan Amounts Maximum amount $2 million Guaranteed portion –Less than $150,000 = 85% –Greater than $150,000 = 75% –90% to a maximun of $1,500,000 thru 12/31/2009

10. Visit us at www.sba.gov10 7(a) Interest Rates Negotiated between borrower and lender Maximum interest rate: –Less than 7 Year Term = Prime + 2.25% –Greater than 7 Year Term = Prime + 2.75% –Higher rates permitted for loans of less than $50,000 and SBA Express Loans

11. Visit us at www.sba.gov11 7(a) Cost of Guaranty SBA Guaranty Fees Can be included in loan Calculated on guaranteed portion of loan –Maturity less than or equal to 1 year 0.25% –Maturity greater than 1 year Less than $150,000 = 2% $150,000 - $700,000 = 3% Greater than $700,000 = 3.5% –Guaranty greater than $1M Additional 0.25%

12. Visit us at www.sba.gov12 What is new? Reduce Fees Increase guaranty Expand Secondary Market –Up to $15 Billion to purchase loan securities on the secondary market. Refinancing using 504 loans Business stabilization loans