sba

Presented by the Tennessee District Office of the SBA Why SBA Loans are Important to Small Business • SBA loan guarantees give banker’s an added incentive to make small business loans • SBA loans can provide longer terms for borrowers • SBA loan guaranties allow banks to provide funds when bank policy prohibits a loan Financial Assistance SBA Borrower Requirements • Good character • Management expertise and commitment to succeed • Reasonable personal contribution or business equity • Feasible business plan • Sufficient collateral • Ability to repay loan from projected operating cash flow Financial Assistance Eligibility Requirements Business must: • Be operated for profit • Not exceed size standards • Not be engaged in lending, real-estate development, investments or speculation • Not be engaged in promotion of a specific religion • Not restrict patronage • Not engage in prurient sexual materials or services • Not be a gambling enterprise Financial Assistance SBA Serves a Wide Variety of Capital Needs $500K $350 k $2.0 mil $1.5 mil $250 k SBA Express Patriot Express 504 Loans 7(a) Loans Small/ Community Rural $35 k Express Lender Microloans Advantage Financial Assistance MICROLOANS Financial Assistance MicroLoans 7(m) MicroLoan Program • • • • • Direct loans through nonprofit intermediaries Loans of up to $35,000 Fast turnaround Up to six years to repay Used for — – Machinery, equipment, fixtures – Leasehold improvements – Inventory – Working capital • Technical and management assistance available Financial Assistance COMMUNITY EXPRESS Financial Assistance CommunityExpress Eligibility • For small businesses whose principal office is located in a HUBZone or Community Reinvestment Act (CRA) designated area http://map.sba.gov/hubzone/init.asp http://www.ffiec.gov/Geocode/default.aspx • For loans of $25,000 or less regardless of where the business’s principal office is located Financial Assistance CommunityExpress Eligibility • For Headquarters-approved district office initiative to support local community/economic development Financial Assistance CommunityExpress • • • • Underwriter uses own forms -- not SBA’s Use bank’s lending policies -- not SBA’s Loans or revolving lines of credit to $250,000 Standard guaranty of 90% until 12/31/09 or funds are depleted • Interest rates 2.25% to 4.75% • Technical assistance is required Financial Assistance SBA EXPRESS Financial Assistance SBAExpress • • • • • Underwriter uses own forms -- not SBA’s Use bank’s lending policies -- not SBA’s Loans or revolving lines of credit to $350,000 SBA guaranty is 50% Interest rate maximums apply Financial Assistance SBA Small/Rural Lender Advantage EXPRESS Financial Assistance SBA Small/Rural Lender Advantage • One page application • Loans or revolving lines of credit to $350,000 • Standard SBA guaranty of 90% until 12/31/09 or funds are depleted • Interest contingent on amount borrowed and repayment term Financial Assistance PATRIOT EXPRESS Financial Assistance PatriotExpress Loan Initiative • For the military community • Loans up to $500,000 • SBA guaranty of 90% until 12/31/09 or funds are depleted • Interest rate-prime plus 2.25 to 4.75% Financial Assistance 504 Financial Assistance A Typical 504 Project • Up to $1.5 million in SBA-backed debentures • A private sector loan covering up to 50% • A loan from the CDC covering up to 40% and • At least 10% equity from the small business • Participating lender has first lien on assets Financial Assistance 7(a) Loan Guaranty Financial Assistance Basic 7(a) Loan Guaranty Program • You apply for a loan guaranty with an SBA participating lender for loans $2,000,000 and under • In some instances, lender submits application for SBA review and approval prior to disbursement of funds • Other banks have full autonomy Financial Assistance Terms • Flexible maturities: – Generally 7 to 10 years for working capital – Generally up to 25 years for fixed assets: • Real estate • Construction • Equipment (Not to exceed useful life of equipment) • Interest rates: – Negotiated between borrower and lender – Typically cannot exceed prime rate plus 2.75% Financial Assistance SBA One-Time Borrower Fees Waived until 12/31/09 or funds are depleted Maturity Year or Less Over 1 Year Over 1 Year Over 1 Year Total Loan Amount Any amount up to $1 million $150,000 or less Over $150,001 to $700,000 Over $700,001+ Guaranty Fee 0.25% 2.0% 3.0% 3.5% * Fees apply only to guaranteed portion of loan Financial Assistance Fee Calculation Example of Waived Fees Total Loan $150,000 $700,000 $1,000,000 x Guaranty % = x 85% = = = Max. Guaranty $127,500 $525,000 $750,000 Total Fee $ 2,550 $15,750 $26,250 x 75% x 75% Financial Assistance Questions? Financial Assistance U. S. Small Business Administration Jacqueline Merritt 615/736-7465 jacqueline.merritt@sba.gov