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U.S. Small Business Administration

U.S. Small Business Administration. Small Business Financing. U.S. Small Business Administration. Indiana District Office Peter D. Smith Lender Relations Specialist (317) 226-7272 x119 Peter.smith@sba.gov. U.S. Small Business Administration. Millions of entrepreneurs use

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U.S. Small Business Administration

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  1. U.S. Small Business Administration Small Business Financing

  2. U.S. Small Business Administration Indiana District Office Peter D. Smith Lender Relations Specialist (317) 226-7272 x119 Peter.smith@sba.gov

  3. U.S. Small Business Administration Millions of entrepreneurs use SBA resources and programs to: • Start a new business • Grow an existing business • Export goods and services Have you explored the Small Business Advantage?

  4. SBA Loan Guaranty Requirements • Business must qualify as “Small” based on the North American Industry Classification System (NAICS) • Business must be operated for profit • Business must be open to the general public • Owners must be U.S. citizens or have permanent residence status • Owners must make reasonable investment into business, usually 10-25% • Owners must be of good character

  5. What is a Small Business?

  6. What is a Small Business? Alternative Size Standard Maximum tangible net worth not more than $15,000,000 and average net income after taxes for the full 2 fiscal years prior to the application not more than $5,000,000

  7. U.S. Small Business Administration The Role of SBA: • SBA is primarily a guarantor of loans made by private and other institutions. • The SBA does not offer grants to start or grow small businesses.

  8. The 7(a) Loan Program 7(a) Guaranty Loan Program

  9. The 7(a) Loan Program 7(a) Guaranty Loan Program • SBA’s primary business loan program • Wide range of financing needs • Maximum loan amount of $ 5.0 million • Maximum guaranty of $ 3.75 million

  10. The 7(a) Loan Program Uses for 7(a) Loan Proceeds • Expansion/renovation • Land/equipment/fixtures purposes • Working capital • Inventory • Exporting

  11. The 7(a) Loan Program 7(a) Loan Program Maturities • Maximum maturities • Up to 7 years for working capital • Useful life or 10 years for equipment • Up to 25 years for real estate

  12. The 7(a) Loan Program 7(a) Loan Program Maximum Interest Rates • Base Rate + 2.25% for loansof 7 years or less • Base Rate + 2.75% for • loans over 7 years • Rates can be higherfor smaller loans

  13. The 7(a) Loan Program Three Options for Base Rate • Prime Rate* • LIBOR (One month)* • SBA Peg Rate • * Rate in effect on first business day of the month

  14. The 7(a) Loan Program Maximum Rate Examples • $75,000 – 10 year loan • Prime Rate: 3.25% + 2.75% = 6.00 % • LIBOR (One month): .24% + 2.75% + 3.00% = 5.99% • SBA Peg Rate: 2.25% + 2.75% = 5.00% • 3.00% added to One Month Libor

  15. The 7(a) Loan Program 7(a) Loan Program Guaranty Fees • Based on guaranteed portion • Fee = 2% to 3.75% • Maturity 12 months or less – fee = ¼%

  16. The 7(a) Loan Program 7(a) Guaranty Fee Examples • $30,000 loan 85% SBA guaranty • $30,000 x 85% = $25,500 guaranteed portion • $25,500 x 2% = $510 guaranty fee • $1,000,000 loan 75% SBA guaranty • $1,000,000 x 75% = $750,000 guaranteed portion • $750,000 x 3.5% = $26,250 guaranty fee

  17. SBA Express • Streamlined approval process • Loans of $350,000 or less • Credit not reviewed by SBA • Term or revolving loans • Lender uses own bank forms • Lender must be pre-approved

  18. Patriot Express • For members of the Military Community • Maximum loan amount $500,000 • Term or revolving loans • One day SBA Approval

  19. PatriotExpress • Veterans • Service-disabled veterans • Soon to be discharged active-duty service members • Reservists and National Guard members • Current spouse of: • any Veteran (other than dishonorably discharged), • any Service-Disabled Veteran, • any Active Duty Military member, or • any Reservist or National Guard member • Widowed spouse of: • a service member who died while in service, or • a veteran (other than dishonorably discharged) who died of a service-connected disability Eligible participants:

  20. Express & Patriot Express Collateral Policies • No collateral required under $25,000 • Lenders use existing collateral policy for loans between $25,000 up to $350,000 • Lenders must take all available collateral for PE loans greater than $350,000

  21. The 7(a) Loan Program CapLines • Short-term/seasonal revolving line of credit • Maximum loan amount: $ 5.0 million • Maturity: up to 5 years • Maximum interest: vary with amount/type/length of loan

  22. International Trade Loan Program The 7(a) Loan Program • Maximum loan amount: $ 5.0 million • Uses: acquiring long-term, fixed assets or refinancing debt for that purpose • Maturity: up to 25 years • Maximum interest:vary with amount/type/length of loan

  23. Export Working Capital Program The 7(a) Loan Program • Maximum loan amount: $ 5 million (may be combined with International Trade Loan) • Uses: short-term working capital for exporters • Maturity: generally 1 year or 1 transaction cycle • Maximum interest: no cap

  24. The 504 CDC Loan Program 504 Certified Development Company Loan Program

  25. The 504 CDC Loan Program 504/Certified Development Company Loan Program • Project costs: 504 CDC Loan 30% to 40% • Third party lender 50% • Borrower injection 10% to 20% • Maximum debenture amount: $5.0 to $5.5 million • Uses: long-term; fixed assets • Maturity: 10 or 20 years • Maximum interest: fixed rate established when debenture backing sold

  26. The 504 CDC Loan Program 504/Certified Development Company Loan Program Example of $1 million dollar project:

  27. The 504 CDC Loan Program SBA Indiana Certified Development Companies Regional Development Company – Portage, IN Business Development Corporation - South Bend, IN Community Development Corporation - Fort Wayne, IN Indiana Statewide Certified Development Corporation – Indianapolis, IN Premier Capital Corporation – Indianapolis, IN

  28. Lender Visit – Be Prepared What to take to the lender: • Written business plan • Personal tax returns • Business tax returns • Business financial statements

  29. U.S. Small Business Administration SBA’s Resource Partners: • SCORE • Small Business Development Centers (SBDC) • Women’s Business Centers (WBC)

  30. U.S. Small Business Administration SBA’s Resource Partners: • SCORE • Lafayette Branch – Chapter 6 • Lafayette Chamber of Commerce • 337 Columbia Street • Lafayette, IN 47901 • Phone: (765) 742-4041

  31. U.S. Small Business Administration SBA’s Resource Partners: • Small Business Development Centers (SBDC) • Hoosier Heartland ISBDCBurton D. Morgan Ctr. 1201 West State StreetWest Lafayette, IN 47907Toll Free: (866) 961-7232

  32. Your SBA For more information about your Indiana SBA resources go to: www.sba.gov/in

  33. U.S. Small Business Administration Indiana District Office Peter D. Smith Lender Relations Specialist (317) 226-7272 x119 Peter.smith@sba.gov

  34. Small Business Financing QUESTIONS?

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