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					                                                            New Jersey District Office
                                                       Two Gateway Center – 15th floor
                                                                  Newark, NJ 07102
                                                                       973-645-2434




        SBA’s Mission & Loan Programs


                                             January 19, 2010

        U.S. Small Business Administration                           Your Small Business Resource

www.sba.gov
                   Overview of SBA’s Mission
  Financial Assistance
       •         7(a) Guaranty Loans
       •         504 Loans
       •         Microloans
       •         Surety Bonds
       •         SBIC Program
  Business Counseling & Training
       •         SCORE – Counselors to America’s Small Business
       •         Small Business Development Centers (SBDC)
       •         Women’s Business Centers (WBC)
       •         US Export Assistance Centers (USEAC)
  Opportunities in Government Contracting
       •         Small Business Set-Asides (federal contracts & subcontracts)
       •         8(a) Business Development Program
       •         HUBZone Contracting Program

           U.S. Small Business Administration                      Your Small Business Resource

www.sba.gov
                        SBA’s Mission (cont’d)

Advocacy
    •    Your voice in government
    •    Principal resource for small business statistics and business trends
    •    Monitors regulatory and policy proposals of more than 20 federal agencies
         for impact on small business

Disaster Assistance
    •    Direct loans from the SBA for:
           Uninsured losses on real estate and property for homeowners and
            renters
           Uninsured losses on business real estate and property
           Economic injury for businesses (working capital)
           Economic injury to firms impacted by Military Reservists called to
            active duty



         U.S. Small Business Administration                    Your Small Business Resource

 www.sba.gov
                   7(a) Loan Guaranty Program
Maximum Amount           $2,000,000

SBA Guaranty             75% for loans > $150,000
                         85% for loans < $150,000
                         Guaranty is limited to $1,500,000
  ** On a temporary basis, SBA can guaranty up to 90% on most 7(a) loan applications.

Use of Proceeds
    Working capital; inventory acquisition; refinance debt for compelling reasons; lines of credit.
    Renovation or construction of new facility; purchase land & buildings; purchase of equipment &
    fixtures; leasehold improvements.

Maturity
    Based on ability to repay; generally working capital is 5-10 years. Up to 25 years for fixed assets but
    not to exceed life of asset.

Interest Rates
    Negotiable with lender. If maturity is 7 or more years, maximum rate allowed is 2.75% over prime;
    if under 7 years maximum is 2.25% over prime. In NJ, we have 165+ participating lenders.
             U.S. Small Business Administration                                  Your Small Business Resource

  www.sba.gov
          7(a) Loan Program Enhancements
                                       Benefits to small business owners
•   SBA’s traditional loan guaranty ranges between 50% to 85%. Recovery Act funding, with
    additional amounts approved in December 2009, allows SBA to increase our guaranty to 90%
    (with a maximum of $1.5 million) on most loans.
           The 90% guaranty decreases lender risk and increases your ability to obtain a loan.

          Note - SBA Express loans remain at a 50% guaranty. The increased guaranty is offered
          on a “first come first served” basis through 2/28/10 or earlier if funds are exhausted.

•   SBA charges a guaranty fee on approved loans. The fee is paid to SBA by the lender. They
    are allowed to charge this cost to the small business borrower, who typically reimburses the
    lender from loan proceeds. Recovery Act funding, with additional amounts approved in
    December 2009, allows SBA to eliminate the guaranty fee. Fee elimination is also offered on a
    “first come first served” basis through 2/28/10 or earlier if funds are exhausted.
                                   Examples of fee elimination savings :
                                             $150,000 loan = $2,500
                                            $500,000 loan = $11,250
                                           $2,000,000 loan = $53,750
            U.S. Small Business Administration                             Your Small Business Resource

    www.sba.gov
  504 Loans & SBA Certified Development Companies

Maximum Amounts
    The SBA portion, commonly referred to as the 504 loan, is limited to $1.5 million. If loan meets
    SBA’s Public Policy Goals, the maximum amount can be $2.0 million. If loan is made to a firm
    engaged in manufacturing, the maximum amount increases to $4.0 million.
SBA Guaranty & Loan Structure
    In a typical 504 project, a Certified Development Company (CDC) provides a loan for up to 40% of
    the project. This loan is backed by a 100% SBA guaranteed debenture and is secured by a 2 nd lien on
    project assets. A private sector lender finances 50% of project, receives a 1 st lien on assets and is not
    guaranteed by SBA. Their protection is the favorable loan to value ratio of the financed assets. The
    small business borrower injects the remaining 10% of costs. Currently, 4 CDCs are providing 504
    loans in NJ.
Use of Proceeds
    Purchase of fixed assets such as land, buildings or equipment; major improvement, construction &
    renovation costs. Qualified debt refinancing is allowable. Funds for working capital are not allowed.
Maturity & Interest Rates
    Offered for terms of 10 or 20 years. Current interest rates are approximately 4% to 6% and are
    based on market rates for 5 and 10 year Treasury issues plus an increment above the Treasury rate.


             U.S. Small Business Administration                                    Your Small Business Resource

  www.sba.gov
       504 Loan Program Enhancements
                               Fees temporarily eliminated
 Recovery Act funding, with additional amounts approved in December 2009, allows
 SBA to eliminate the following fees on a “first come first served” basis through
 2/28/10 or earlier if funds are exhausted:
      1. The CDC processing fee paid by the small business borrower (1.5% of the
      debenture)
      2. The participation fee paid by the 1st mortgage lender (.5% of the 1st
      mortgage financing)
             New debt refinancing rule (permanent change) effective 6/23/09
 If project involves expansion of a small business applicant, existing debt that does
 not exceed 50% of the cost of the expansion may be refinanced provided that the
 proceeds of the debt were used for purposes that would have been eligible for a
 traditional 504 loan. Examples – purchase of land or building, construction or
 acquiring qualified fixed assets.
 Other refinancing requirements are that the debt must have been collateralized by
 fixed assets and has been in a current status for the past year. Refinancing must
 also bring a substantial benefit to the small business and is defined by the new
 installment payment being at least 10% less than the existing payment.

        U.S. Small Business Administration                       Your Small Business Resource

www.sba.gov
                             7(m) Microloan Program
•   Maximum Amount                     $35,000

•   SBA Guaranty                       Not Applicable

    SBA funds program with a 10 year low interest loan to an approved intermediary.
    Loan is used to establish a revolving loan fund controlled by the SBA intermediary
    who has full authority to approve and service loans made under this program.
    SBA also provides intermediary with grant funding to provide technical assistance
    to the microloan borrower. There are 4 microloan intermediaries in NJ.

•   Use of Proceeds

    Working capital; purchase of equipment, furniture & fixtures, inventory
    acquisition; may not be used for debt repayment or real estate purchase.

•   Maturity                           Maximum term is 6 years

•   Interest Rates                     Negotiable with lender; generally between 8% to 12%
            U.S. Small Business Administration                             Your Small Business Resource

    www.sba.gov
    America’s Recovery Capital (ARC) Loan Program
• A temporary loan program established by the 2009 Recovery Act.
• Only available until funding is expended or 9/30/10.
• Up to a $35,000 loan for short-term cash flow needs of existing businesses
  impacted by the recession.
• Loans are through SBA’s participating lenders and carry a 100% SBA
  guaranty – lender has zero risk.
• Loan proceeds are limited to making up to 6 months of payments on
  qualifying business loans.
• ARC loans have no fees and are interest free (SBA pays the interest).
• Principal repayment can extend to 5 years and first payment is deferred for
  12 months after last disbursement.
   To qualify - Applicant must be a viable ,for-profit small businesses in the
   US that is experiencing financial hardship. Financial statements must show
   profitable operations in at least 1 of the past 2 years. Be able to project
   sufficient cash flow to meet all future loan payments over the next 2 years.
          U.S. Small Business Administration                Your Small Business Resource

  www.sba.gov
                           Other Items of Interest
In 2009, funds from the Recovery Act allowed SBA to:
•    Expand the microloan program by providing $25 million to support new lending
     and $24 million to increase technical assistance grants to microloan intermediaries.
•    Increase the level of support under our SBA’s Surety Bond Guarantee program.
     Bonding levels have been permanently increased from $2 million to $5 million.
     Small businesses requiring bonding for a federal contract are now eligible for
     support up to $10 million.


In 2010, at the request of the President, Congress will consider legislation to:
•    Extend the fee eliminations and the increased guaranty levels on 7(a) & 504 loans
     from 2/28/10 through 12/31/10.
•    Increase the maximum amounts of SBA’s lending programs.
          -- 7(a) loan program from $2 million to $5 million.
          -- 504 loan program from $2 million to $5 million and for manufacturers
             from $4 million to $5.5 million.
          -- microloan program from $35,000 to $50,000.
            U.S. Small Business Administration                       Your Small Business Resource

    www.sba.gov
                               What is a Small Business ??
SBA establishes small business size standards based upon primary industries and related
economic & industry segment competitive data.
Manufacturing – 500 to 1500 employees             Wholesalers – 100 employees

Service/retail/construction – ranges from $2 to $35.5 million per year in averaged annual
   receipts (AAR) over a 3 year period. The common “anchor” standard in this segment is $7.0
   million in AAR.
•   Examples – special trade contractors @ $14 million; general contractors @ $33.5 million;
   supermarkets/convenience stores/gas stations @ $27 million; new car dealers @ $29million;
   hospitals @ $34.5million; facilities support services @ $35.5 million.

Small business size standards for SBA’s financial assistance programs.
•    7(a) & microloans – the standard for the industry (see above) or the alternative size standard:
     Including affiliates, tangible net worth not in excess of $8.5 million and average net income
     after Federal income taxes (excluding any carry-over losses) for the preceding two completed
     fiscal years not in excess of $3.0 million.
•     504 loans – see above alternative size standard for 7(a) loans
•     Surety bonds – $7.0 million AAR
             U.S. Small Business Administration                             Your Small Business Resource

    www.sba.gov
                            Additional Information
• Key Contacts
      –   James Kocsi, District Director, 973-645-3680
      –   William Boone, ADD for Lender Relations, 973-645-2179
      –   Frank Burke, ADD for Marketing & Outreach, 973-645-6049
      –   Richard Zilg, ADD for 8(a) Business Development, 973-645-2531
      –   Donald Swartz, Business Development for southern NJ, 856-415-2283



•    SBA’s NJ office web page – www.sba.gov/nj
•    NJ small business resource guide – www.smallbusiness3.com
•    Info on SBA’s recovery efforts – www.sba.gov/recovery
•    Small business size standards – www.sba.gov/size
             U.S. Small Business Administration            Your Small Business Resource

    www.sba.gov

				
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