U.S. Small Business Administration The Three C’s of the SBA.

U.S. Small Business Administration

The Three C’s of the SBA

Created in 1953 by President Dwight D. Eisenhower

Provide the Public with: (3 C’s)• Mentoring (Counseling) • Government Procurement (Contracting)• Access to (Capital)

Small Business Resource Guide

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Veterans are 45% more likely to be self- employed.

$2.4 million, or 9 percent of all U. S. small businesses are veteran owned.

Veteran-owned small businesses generate owner $1 trillion in sales.

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Rivera Consulting, Inc. • Information Technology Solutions

Worldwide Filters, LLC • Wholesale Filters and Supplies

Behavior Services & Therapy• Improvement in Quality of Life for Individuals

with development disabilities.

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Biomet, Inc. • Medical Device Industry

Vera Bradley• Fashion Accessories

Warm Glow Candles• Candles

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NIKEStaplesAppleFederal ExpressBen & Jerry’s Ice CreamOutback SteakhouseHewett PackardPanera BreadCallaway Golf

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Counseling• Small Business Development Center (SBDC)• SCORE• Women’s Business Center (WBC)• Veterans Business Outreach Program

Contracting• Partners In Contracting Corporation• SBA Economic Development Specialists• SBA Procurement Center Representatives

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Capital• Banks• Credit Unions• Certified Development Companies (CDC)• Microlenders

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Who is eligible for SBA loans?

What criteria does the SBA evaluate?

Where do you go to get an SBA loan?

Why use the SBA loan programs?

How do you get started?

Size of Business

Type of Business

Borrower Qualifications & Character

Use of Proceeds

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For-Profit business located in the U.S.

Must qualify as “Small” per New Size Standard

• Tangible Net Worth of Applicant Not more than $15,000,000

And

• Average Net Income of Applicant Not more than $5,000,000 for the 2 full

fiscal years before the date of application

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U.S. Citizen, Lawful Permanent Residents, or Non-immigrant (documented) aliens

Good Character• Criminal Record• Personal Credit

Previous Federal Loan Payment History

Personal Resource Test

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Limited Membership Private Clubs

Purchase Partial Ownership

Repay Owners for their Investment

Pay Delinquent Taxes/Refinance Loan

Loan Packagers/Lenders

Passive Income Speculative Ventures Pyramid Structures Illegal Activities Political Activities Religious Activities Gambling Activities Sexually-oriented

Business

** Franchises = varies **

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Ability to repay the loan on time from the projected operating cash flow

Feasible business planManagement expertise and commitment necessary

for successSufficient funds to operate the business on a sound

financial basisAdequate equity invested in the business (no 100%

financing)Sufficient collateral including personal guarantees

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SBA guaranteed loans are made by business lenders at financial institutions

No direct loans from the SBA

Lenders have the forms necessary

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Cannot qualify for conventional financing on reasonable terms

Longer Maturities• Lowers Monthly Payment• Improves Cash Flow

No Balloon payments on 7(a) loans

No Prepayment Penalties on 7(a) loans

504 Certified Development Company (CDC)

Loan Program

and

7(a) Loan Program

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Long-term, Fixed-asset Financing to:• Purchase Land and Existing Building• Purchase Land for New Construction• Building Renovation or Expansion• Purchase Major* Machinery / Equipment• Refinances are limited

Occupancy Requirements:• 51% of existing building• 60% of new construction (80% long term)

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7(a) Loan Guaranty Program

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Most used SBA Loan Program

Wide range of financing needs• Funding for start-up businesses• Purchase existing business• Expand/renovate facilities• Finance working capital/receivables• Construction• Refinancing*

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‣ Export Loans

Veterans

Service-disabled veterans

Soon to be discharged active-duty service members eligible for the military’s Transition Assistance Program

Current Reservists and National Guard members

Current Spouse of any of the above

Widowed spouse of: • a service member who died while in service, or • a veteran who died of a service-connected disability

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For members of the military community* (51% owned & controlled)

Maximum Loan Amount: $350,000

Delegated Processing: Lender Underwriting Lender Closing Docs

Collateral is not required up to $25,000

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Approved Loan Amount• $350,000 or less = 0.00% of Guaranteed Amt• $350,001 to $700,000 = 3.00% of Guaranteed Amt• $700,001 to $1,000,000 = 3.50% of Guaranteed Amt• Over $1,000,000 = 3.75% of Guaranteed Amt

on portion over $1Million

• Short-term: Maturity 12 Months or Less = 0.25%

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Borrower equity injection is required(100% financing is not available)

All Borrowers must give Personal Guaranty

Personal assets required to cover shortfall

Loan is with the Lender not the SBA

SBA Guaranty is for the Lender

Borrower still liable for 100% of the loan

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Veterans Business Outreach Center

Veterans Online Business Registry

Service Disabled Owned Small Business

Indiana’s Veteran Business Enterprise Program

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Indiana – David Puls [email protected] or [email protected]

Illinois – Robert Paoni [email protected]

Kentucky – Tommie Causey [email protected]

Ohio – Joe Lauterdale - Cincinnati [email protected]

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U.S. Small Business AdministrationIndiana District Office

Presented by

Eric ArmacostLending Relations Specialist

(317) 226-7272 ext. [email protected]

www.sba.gov/in

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Our Resources. Your Success.

The S.W. ISBDC provides no-cost confidential business advising for businesses in the areas of:

Business Planning Access to Capital Market Research Budgeting/Accounting Loan Packaging Assistance

To have a positive and measurable impact on the formation, growth, and sustainability of small businesses in Indiana, and to develop a strong entrepreneurial community.

S.W. ISBDC Office

23% established business > one year

21% in business < one year

56% “pre-venture”

Client Portfolio OverviewStatus

56% Start-up assistance 16% Accounting/budgeting 10% Financing/Capital 6% Management/planning 5% Buy/sell a business 4% Market research

Lucas Oil ProductsThe first store by Lucas in the nationInvestment exceeded $2.7 milHired x# of employeesExpanding to 2nd store in fall 2012

ECS SolutionsPatented new technologyIncreased company’s bottom line with new markets and newRevenues

2008-201277 – Purchased or started new business781 – Jobs Created$3.1 million – Change in Sales$15.8 million – Cap Investment

Other: identified new products, services and new markets, secured training dollars, etc.

Call 812.425.7232

Go to the ISBDC.org website and complete the business survey

Our Resources. Your Success.

ChambersWorkOne

Accounting& Law

ISBDC

LEDOs Banks

Universities

SBDC Summary

New business creation Local investment Business expansion Job Creation Encourage entrepreneurship Regional engagement

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Export Working Capital Program

(EWCP)

International Trade

Export Express

Maximum Loan Amount

$5,000,000 $5,000,000 $500,000

Maximum Guaranty Percentage

90% 90% 90% for loans$350,000 or less

75% for loansGreater Than $350,000

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504 Certified Development Company (CDC)

Loan Program

and

7(a) Loan Program

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Long-term, Fixed-asset Financing to:• Purchase Land and Existing Building• Purchase Land for New Construction• Building Renovation or Expansion• Purchase Major* Machinery / Equipment

Financing Structure:• SBA (CDC):up to 40% of total project costs

• Lender: 50% of total project costs

• Borrower: 10%* of total project costs

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Project Size• Maximum: Unlimited

100% SBA Guaranteed Debenture (CDC)• Minimum: $25,000

• Maximum: $5.0 Million Standard

$5.0 Million Public Policy Goal

$5.5 Million Small Manufacturer

or Energy Savings

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Lender• 1st Lien Position with only 50% Loan-to-Value• 90% financing increases potential opportunities• CRA credit

Borrower• Lower down payment preserves capital• Fixed Rate with full amortization

Community• Creates or retains jobs

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Maximum Loan Amount: $5.00 Million

Maximum Guaranty Amount: $3.75 Million

Maximum Guaranty Percentage:• 85% up to $150,000• 75% over $150,000

Multiple loans permitted up to $3.75 Million Guaranty Maximum

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Real Estate• Up to 25 years

Equipment• Up to 10 years or expected useful life

Working Capital• Generally 7 years, but may be extended to 10

years depending on cash flow

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$100,000, 10 year term

Fixed Rate Option:• Base Rate: 5.47% + 2.75% = 8.22%

Variable Rate Option:

• Prime: 3.25% + 2.75% = 6.00%

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7(a) Program = 827 Loans @ $265,834,000

504 Program = 143 Loans @ $189,050,000

Combined 7(a) and 504 Statistics• 12,740 Jobs Created or Retained

• 270 Loans to Start-Ups

• 103 Veteran-Owned

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Step 1: Create / Update your Business Plan

Free Counseling Available from SBA Resource Partners

• SCORE

• Small Business Development Center (SBDC)

• Women's Business Center (WBC)

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Step 2: Visit a Lender

Lists are available from the SBA• Approved Lenders and Most Active Lenders

Lender makes initial credit decision• May or may not need SBA Guaranty• Lender has right to say ‘no’

Lender chooses appropriate SBA Loan Program• SBA decision to lender in 0-15 business days

Be Prepared• Treat meeting like a job interview• Having supporting financial documentation

Business PlanHistory/description of businessManagement experience/resumesCash flow projectionsLast 3 years of income statements and

balance sheets with interims to dateLast 3 years of filed business tax returns

and personal tax returnsAging of receivables; inventory listings

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Quotes/purchase contracts for items to be purchased with loan proceeds

Listing with terms of other business debtsFranchise agreementsLeasesDetails of criminal history: type of offense,

dates, etc. (if any)

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$500 Billion Spent Annually

23% Goals For Small Business ($115B)

DNS # Data Universal Numbering System

Register with System for Award Management SAM.gov

Register at Vetbiz.gov

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LOAN AMOUNT BASE RATE*

+ MARGIN

Maturity < 7 years

Maturity > = 7

years

Over $50,000 Fixed or Variable + 2.25% + 2.75%$25,000 to

$50,000 Fixed or Variable + 3.25% + 3.75%

$25,000 or less Fixed or Variable + 4.25% + 4.75%

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