American Recovery & Reinvestment Act of 2009

1. American Recovery & Reinvestment Act of 2009 Merle O’Brien, CPA Sr. Stakeholder Liaison CLD SB/SEIRS Internal Revenue Service merle.g.obrien@irs.gov Martha D. Soffer, MBA Business Development Specialist U.S. Small Business Administration martha.soffer@sba.gov April 14, 2009

2. American Recovery & Reinvestment Act of 2009 Martha D. Soffer, MBA (212) 264-2734

3. The American Recovery and Reinvestment Act of 2009, (ARRA) signed into law on February 17, is an unprecedented effort to jumpstart our economy, create and save millions of jobs, and put a down payment on addressing challenges so that our country can thrive in the 21st century. ARRA Overview

4. It is an extraordinary response to a crisis unlike any since the Great Depression. It includes “stimulus” measures to modernize our nation’s infrastructure, enhance energy independence, expand educational opportunities, preserve and improve affordable health care, provide tax relief and protect those in greatest need. ARRA Overview

5. The ARRA assigns a key role in this effort to the U.S. Small Business Administration (SBA). It provides the SBA with program tools that offer new economic incentives to small businesses and lenders alike. ARRA Overview

6. Financial relief to encourage borrowing by (and lending to) for-profit companies (existing and start-up). Tax relief benefits and tax incentives Unlocked credit markets Temporary elimination of some loan fees ARRAWhat’s in it for Small Businesses?

7. Contrary to some popular misconceptions, ARRA does not provide “grants” to small business owners or individuals. ARRAWhat’s NOT in it for Small Businesses?

8. ARRA makes the SBA part of thesolution. $730 million allocated to the SBA to make changes to it’s lending and investment programs. In addition, $28 billion budgeted for SBA small business lending and credit. ARRA and U.S. Small Business Administration

9. Temporary Elimination of Loan Fees Temporary 90 Percent Guarantees Secondary Market Liquidity for 7(a) loans America’s Recovery Capital (ARC Stabilization Loans) Expanded Microloan Program Surety Bond Program Expansion Key ARRA Components

10. Secondary Market for First Mortgages (For purchase of commercial real-estate and fixed-asset securities ‘outstanding loans’) Expanded Refinancing Project (For refinancing commercial real-estate and fixed-assets) SBIC Program Expansion (Venture Capitalist Investments) Nine Key ARRA Components

11. All upfront guarantee fees associated with SBA’s main 7(a) lending program are eliminated through December 31, 2009. 7(a) loans go as high as $2 million. Fees eliminated on Patriot Express and Export Express and other 7(a) loans, but not on SBA Express. 1. Elimination of Loan Fees

12. Fees on SBA 504 CDC financing program (for the purchase of land, real-estate, fixed assets and major construction) eliminated. SBA 504 goes as high as $4,000,000. Borrower invests as little as 10% cash. 1. Elimination of Loan Fees

13. Borrowers who paid SBA guarantee fees on any of these loans since February 17, 2009 will receive refunds! SBA allocated over $12 billion to cover fees. Borrowers save $ thousands on larger loans. 1. Elimination of Loan Fees

14. The SBA is now offering a 90% guarantee on all SBA 7(a) loans and SBA 504 CDC financing (SBA Express Loan remains at 50% guarantee) In case a borrower fails to repay, the SBA repays the bank up to 90%. SBA government guarantees reduce risk to lenders and encourage them to make loans. 2. Temporary 90% Guarantees

15. In 2008, of the $18 billion in SBA backed loans, 35% went to start-ups, 32% to minority-owned businesses and 23% to women-owned businesses. Borrowers apply for these loans directly with their lending institutions. 2. Temporary 90% Guarantees

16. Who Currently IS Lending??(October 1, 2008 – March 31, 2009) – New York District Officego to www.sba.gov/ny/ny for full list of lenders

17. Who Currently IS Lending??(October 1, 2008 – March 31, 2009) – New York District Office go to www.sba.gov/ny/ny for full list of lenders

18. Under normal economic conditions, many banks sell about 40% of their SBA 7(a) backed securities (‘outstanding loans’) to brokers and companies. These brokers and firms then “resell” these securities to investors. “Resale” on the “secondary market” provides banks with the cash to make new loans. 3. Secondary Market Liquidity

19. This “secondary market” came to a virtual halt in October 2008, severely restricting many lenders ability to make new loans. Banks have been weighted down with about $15 billion in outstanding securities. 3. Secondary Market Liquidity

20. As of March 31, 2009, the Federal Reserve Bank of New York and the U.S. Treasury Department under “TALF” legislation gave a jumpstart to “credit markets” by funding the direct purchase of $15 billion of outstanding securities. Funding for the purchase of new outstanding securities will continue throughout 2009. Cash-strapped banks will soon be lending again. 3. Secondary Market Liquidity

21. If you currently own a business and have an outstanding business loan, you may be eligible for a low-interest deferred-payment loan of $35,000. This program has been passed into legislation but is still in the developmental phase. This loan will be 100% guaranteed by the SBA. 4. Americas Recovery Capital(Business Stabilization Loans)

22. This loan can only be used to repay up to 6 months of an existing business loan. Monthly repayments will begin 12 months after receipt of your final loan money. Keep in touch with the SBA or visit www.sba.gov/recovery to stay updated. 4. Americas Recovery Capital(Business Stabilization Loans)

23. SBA Microlenders ARE lending. Microloans typically go up to $25,000. ARRA Legislation increases lending for the SBA Microloan program by $30 million through September 30, 2010. 5. Expanded Microloan Program

24. In addition, $24 million is provided for Microlender “entrepreneurial training” and “technical assistant” programs. Visit www.sba.gov for a list of SBA Microlenders in your area. 5. Expanded Microloan Program

25. Small businesses need surety bonds in order to bid on and obtain many federal and other contracts. ARRA legislation raises the maximum SBA guaranteed surety bond amount from $2 million to $5 million, and, under certain circumstances, to $10 million. Visit www.sba.gov to locate SBA Surety Bond brokers. 6. Surety Bond Program

26. SBA 504 CDC financing program (purchase of commercial real-estate) has three-parts. For example, an existing business:Dollars Commercial Lender (bank) 50% SBA backed CDC Loan 40% Owner Equity 10% Prior to ARRA legislation, commercial lender loans could not be resold on the “secondary market”.Note: CDC = Community Development Company, i.e. NYBDC 7. Secondary Market for Fixed Assets

27. Now, the SBA is empowered to set up a “Secondary Market Lending Authority” to make direct loans to broker-dealers to purchase commercial lender “secondary loans”. This will encourage more commercial lenders to participate in the SBA 504 CDC program. 7. Secondary Market for Fixed Assets

28. Now for the first time, SBA 504 CDC financing program can be used to “refinance” commercial real-estate and fixed assets. Interest rates are at an historic low. This will help business owners keep their property, expand their development projects, and create jobs. 8. Expanded Refinancing Project

29. SBA-licensed Small Business Investment Companies (SBICs) (venture capitalists) invest funds into small businesses. These venture capitalists can invest up to 10% of total capital into a promising small business. 9. SBIC Program Expansion

30. The SBA can now provide SBICs up to (3x) three times the private capital raised by those companies, up to $150 million per SBIC. 25% percent of a licensee SBIC’s investments MUST be invested in small businesses. If you are seeking venture capital investments, visit www.sba.gov for a list of SBICs in your area. 9. SBIC Program Expansion

31. In addition, there are tax incentives to help: Generous bonus depreciation terms that extends section 179 expensing through 2009. Small businesses can carry back net operating losses to offset earnings from 3 to 5 years. Lowers estimated tax payments from 110% to 90% for small business owners with adjusted gross incomes under $500,000. TAX INCENTIVES

32. In addition, there are tax incentives to help: Tax credits for hiring disadvantaged people and veterans. Partial exclusion on gains made when small business owners sell original stock in their business. See your tax specialist for details. Don’t miss out !! TAX INCENTIVES

33. The SBA funds a network of “Resource Partners” to help you for free with business advise, business plans, government contracting, and loan packaging. Visit www.sba.gov and click on “Local Resources” to locate a “SCORE” or “Small Business Development Center (SBDC)” or “Women’s Business Center”. Baruch College Small Business Development Center has a Turkish-speaking professor and business advisor: Mr. Ulas Neftci, to help. Contact him at: (646) 312-4780Ulas_Neftci@baruch.cuny.edu WHERE TO GET FREE SBA HELP ?

34. WE ARE ON OUR WAY KEEP THE FAITH ! HANG IN THERE ! SBA, ARRA and our Nation