SBA Small Business Financing
Type Program Loan Purpose 7(a) / PLP
• Real Estate, Machinery & Equipment Purchases • Construction: Expansion Improvements • Permanent Working Capital support of Account Receivables and Inventory • Buy a Business • Refinance of business debt • 7 yrs Working Capital • 10 yrs Machinery & Equipment • 25 yrs Real Estate • $2,000,000 maximum loan; SBA Guaranty limited to $1,500,000 - aggregate limit for all SBA support to one business • Minimum loan amount - $25,000 • None required • Follow SBA Pricing Matrix (based on WSJ Prime+) • No fixed-rate pricing unless approved by SBA National Manager (fixed rates based on WSJ Prime+) • Rates outside of Matrix will need ROE Pricing Model • Up to $150,000 – 2% of guaranteed portion • $150,000 - $700,000 – 3% of guaranteed portion • Over $700,000 – 3.5% of guaranteed portion • For deals over $1,000,000, there will be an additional .25% fee assessed on the amount over $1,000,000
Business Loan Guarantees SBA Express / Patriot Express
• Same as 7(a) / PLP • Current Working Capital • Revolver Structure • We also offer SBA Export Express, which supports exporting related activities
Debenture Financing SBA 504
• Acquisition of Fixed Assets: Machinery & Equipment Real Estate • CDC/SBA 504 portion $50,000 to $1,500,000 for regular loans $2,000,000 for public policy loans $4,000,000 for small manufacturer (NAICS codes starting w/ 31, 32 & 33) • 10 yrs Machinery & Equipment or • 20 yrs Real Estate
Term Maximum
• Same as 7(a) / PLP • Lines of Credit are 7 years
Amount Maximum/Minimum
• Maximum loan size of $350,000, but typically less than • Typical Structure: $150,000 (Patriot Express maximum is $500,000) �50% Key • Loan size of $250,000 - Aggregate limit of $250,000 for all �40% CDC/SBA 504 Program SBA Express obligations; If exceeds, loan may go 7(a) / PLP �10% Borrower Equity • Minimum loan amount - $25,000 • None required • Same as 7(a) / PLP • One new job for every $50,000 borrowed under 504 debenture (different for different purposes) • Fixed rate on SBA loan portion; Rates set each month at debenture sale • Prepayment penalty on SBA’s loan for 1/2 of loan term • Bank sets rate on our 50% permanent loan; follow guidelines on daily rate sheet for pricing
Job Creation Interest Rate Maximum Permitted
Guarantee Fee Paid by Client at Closing *(subject to changes by the SBA) Bank Origination Fee or Points KeyBank Packaging Fee Permitted
• Up to $150,000 – 2% of guaranteed portion • 2.75% on the 40% SBA loan portion which is financed in the SBA loan • $150,000 - $250,000 – 3% of guaranteed portion • Patriot Express only, loans $250,000 - $500,000 – 3% of • 1/2% of Bank Loan to be paid by Bank to CDC/SBA at closing – Fee can be charged back to borrower guaranteed portion • Fees typically range about 3% of the SBA debenture and can be financed • Usual fees or points permitted
• An extraordinary servicing fee of up to 2% of the • An extraordinary servicing fee of up to 2% of the outstanding balance may be charged on construction loans outstanding balance may be charged on construction loans • Express Loans $250.00 Packaging Fee • PLP Loans <$250,000 $500.00 Packaging Fee • PLP Loans from $250,001-$500,000 $1,000 Packaging Fee • PLP Loans from $500,001-$2,000,000 $1,500 Packaging Fee • Complex deals and CLP Loans $2,000 Packaging Fee • 10% minimum (SBA expects lien on residence if business collateral coverage is less than 1:1 and if equity is 25% ) • $250
• Not applicable by Bank • CDC may charge a packaging Fee; Also CDC closing costs involved
Minimum Equity Preferred
• Same as 7(a) / PLP
• 10% required • 15% if business < 2 yrs old or if building single purpose per appraiser • 20% if both above
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CS71518
SBA Small Business Financing
Type Program Collateral Personal Guarantees % Guarantee Maximum 7(a) / PLP
• Lien on asset purchased and other business assets • Required. Need joint household Personal Financial Statement of each owner of 20% or > • 75% Loan Guaranty • 85% < $150,000
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Business Loan Guarantees SBA Express / Patriot Express
• Same as 7(a) / PLP • Required • 50% Loan Guaranty • Patriot Express and Export Express: 85% guarantee on loans of $150,000 or less and 75% guarantee on loans over $150,000 • No ESOP’s,Pollution Control, DELTA, CapLine & Export loans. • No farm, agriculture, fishing & shore operations, medical facilities, mines or foreign companies. • Cannot re-finance existing Key term debt – must go 7(a)
Debenture Financing SBA 504
• Asset being financed with 2nd lien position behind Key • Required • N.A.
Ineligible Loan Purposes/ Situations
(see also “Eligibility Screen”)
• Investment Real Estate • Pyramid Sales • Gambling • Speculative Projects • Proceeds distributed to Principals (exception of third party sale of ownership) • Business with negative equity • SBA Size Criteria • "Credit Elsewhere" Test • Excess Personal Resources • U.S. independently owned business, legal, for profit • Permanent resident of USA • Ability to repay the loan • Management capacity • Sufficient equity • IRS 4506 Tax Verification • Collateral • Bank - include in credit file - "Credit Elsewhere" test - Personal resource test - Risk data requirements • Settlement Sheet instructions • Follow up UCC 11 • Close opened-end prior mortgages • Flood Insurance, personal property • Personal Property and Residential Hazard Insurance
• Same as 7(a) / PLP • Working Capital • Refinance of Debt • Rolling Stock • Lines of Credit
Eligibility Requirements
(see also “Eligibility Screen”)
• Same as 7(a) / PLP • Signed Bank Application • Patriot Express: borrower must be a veteran or spouse of a veteran
• Same as 7(a) / PLP • Size criteria - net worth < $7,000,000 and net profit after tax < $2,500,000
Critical SBA Approval Criteria
• Same as 7(a) / PLP) • Focus on good character of applicant • IRS 4506 Tax Verification
• Ability to repay the loan • Job creation or retention • Management capability • IRS 4506 Tax Verification • Collateral • Certified Development Co.
Party Responsible to Package SBA Loan
• Same as 7(a) / PLP
Loan Booking Requirements
• Bank documents used & - SBA Form 1919 - SBA Form 159 - SBA Form 601/Construction • Same as 7(a) / PLP • Patriot Express: DD214 for veterans and proof of current marital status if a spouse • Range of 6 to 25 Business Days
• Book as two loans with a 1st lien on the 50% that will remain as the Bank’s loan, and a 2nd lien on the 40% that will support interim financing only until the SBA take out. Book on CL3.
Timing: Application to SBA Closing
• Range of 20 to 60 Business Days
• >45 Days CDC/SBA Approval • 90 Days to sell Debenture
Rev. 7/07