1 / 12

SBA is not a direct lender

7(a) Loan Guaranty Program. 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. Lenders originate and service loans

basil
Download Presentation

SBA is not a direct lender

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. 7(a) Loan Guaranty Program 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 Visit us at www.sba.gov

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

  3. 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 Visit us at www.sba.gov

  4. 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. Visit us at www.sba.gov

  5. 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 than100 Employees • Retail/Service – average sales $4.5M to $32.5M • Manufacturing – less than500 Employees • Construction – average sales $13M to $32M Visit us at www.sba.gov

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

  7. 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 Visit us at www.sba.gov

  8. 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 Visit us at www.sba.gov

  9. 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 Visit us at www.sba.gov

  10. 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 Visit us at www.sba.gov

  11. 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% Visit us at www.sba.gov

  12. 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 Visit us at www.sba.gov

More Related