Transcript Certified Development SBA 504 Loan Program
A Division of Region IV Development
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What is Region IV Development?
Community and economic development since 1975 Networking Land use planning Workforce development Infrastructure planning and financing Business lending since 1984 SBA since 1984 Revolving Loan Fund (RLF) since 1986 Intermediary Relending Program (IRP) since 2005 Commercial Lender Presentation 2
Business Lending
Region IV Development is a Certified Development Company (CDC) that is licensed by the SBA to administer the SBA 504 program in Idaho. CDC’s process, approve, close and service the loans on behalf of the Small Business Administration. The CDC is the direct lender for the SBA 504 loan program.
Region IV also administers and packages loans utilizing other lending programs which will be discussed later this morning.
These financing tools give us the opportunity to assist businesses find financing solutions.
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www.businesslendingsolutions.org
Resources (links, forms, etc.)
Program descriptions
Contact information
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US Small Business Administration
504 Loan Program
We process, approve, close and service 504 loans on behalf of the US Small Business Administration. The SBA 504 loan program provides subordinated, long-term, low fixed-rate financing for qualified applicants and projects .
Eligible projects are for the fixed assets only.
Maximum SBA funding to a borrower is $2,000,000 (rural) Currently, most fees have been abated.
Current Effective Rates: 20 years - 5.28% 10 years - 4.92%
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The Revolving Loan Fund (RLF)
Business Lending Solutions administers this loan program which can be utilized for: • • Real estate acquisition and improvement Working capital • • Equipment Inventory • Maximum loan amount is $150,000 • Maximum amortization: 5 years for equipment and working capital; 15 years for real estate.
Funds from the RLF can be used in projects located in the following Idaho counties: Camas, Cassia, Gooding, Jerome, Lincoln, Minidoka, Twin Falls, and the southern portion of Blaine County. (south of Muldoon Canyon Road – Bellevue.)
We currently have $131,840 available to lend.
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USDA Intermediary Re-lending Program (IRP)
Business Lending Solutions administers this program which provides limited funds for loans to small businesses in rural locations to create and retain employment. Eligible uses include: • Real estate acquisition and improvement • Equipment • Working capital • Maximum loan amount is $150,000 • Maximum amortization: 5 years for equipment and working capital; 15 years for real estate.
Funds from the IRP can be used in projects located in the following Idaho counties: Blaine, Camas, Cassia, Gooding, Jerome, Lincoln, Minidoka and Twin Falls (excluding the City of Twin Falls).
We currently have $218,230 available to lend.
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Packaging for USDA Business and Industry Loan Program (B & I)
Business Lending Solutions packages loans under the U.S. Department of Agriculture Business and Industry Loan Program. This program offers guarantees to lenders who make loans to businesses in rural communities. Eligible uses of loan proceeds include: Real estate acquisition and improvement Equipment Working capital
Under certain conditions, refinancing of existing debt is allowed.
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Packaging for Idaho-Nevada Community Development Financial Institution (CDFI)
Business Lending Solutions prepares (and services) loan packages for the CDFI which provides community development financing for affordable housing projects and small business ventures. The Idaho-Nevada CDFI is a U.S. Department of Treasury designated Community Development Financial Institution and a Community Development Entity. The Idaho-Nevada CDFI focuses its lending and services primarily in those areas of Idaho and Nevada designated by the U.S. Department of Treasury as CDFI eligible. Commercial Lender Presentation 9
Packaging for US Small Business Administration 7(a) Loan Programs
We package SBA 7(a) loans which can be used to finance needs for real estate, equipment, working capital, inventory, eligible franchises, business acquisition, ownership buyout, etc.
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The Process
We are available to discuss the transaction at the beginning of the process We can assist with topics including structure, eligibility and any other questions you may have prior to and during underwriting We are available to meet with you to discuss all loan options We will assist in the completion of required paperwork and assemble the entire package for bank underwriting Once the loan is approved by the CDC and/or bank, we will submit the loan to the appropriate agencies for review and approval Commercial Lender Presentation 11
Our dilemma is that we hate change and love it at the same time; what we really want is for things to remain the same but get better. – Sidney J. Harris Even if you’re on the right track, you’ll get run over if you just sit there. – Will Rogers
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Small Business Development Center Serving the 8 Counties of South Central Idaho
CSI’s Idaho Small Business Development Center & Ec. Ed Director, Incubator Manager, Bryan J. Matsuoka Senior Consultant, Jerry Mottern Course Developer & eBay Trainer, Sherry Rust Edie Unland, Office Specialist & Mentoring Coordinator
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SBDC Services Bryan Matsuoka, SBDC Director Jerry Mottern, Consultant • FREE Business Consulting
– Research, Feasibility, Business Planning, & More
• Business Trainings • Small Business Mentoring • CSI Business Incubator • Commercial Kitchen
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History of the SBDC
Since the Idaho SBDC's establishment in 1986, it has been the mission of our staff to deliver up-to-date consulting, training, technical assistance and environmental regulatory assistance in all aspects of small business management, with a primary goal of helping small business owners and potential business owners make sound decisions for the successful operation of their business.
With six office locations throughout the state, each affiliated with one of Idaho's colleges or universities, the Idaho SBDC is uniquely positioned to serve as a focal point for linking together our partners from higher education, the private business community, and federal, state and local government. Commercial Lender Presentation 15
Events & Trainings
• Renewable Energy Conference • NxLevel Business Planning Courses – Online & Face-to-Face • Staying Up in a Down Economy • EMyth Follow-up Events • ADA Disability Awareness Training • Visit our website for a list of all of our current trainings • www.csi.edu/isbdc Commercial Lender Presentation 16
Lender Training & Roundtable American Recovery & Reinvestment Act of 2009 Ketchum– May 15, 2009
American Recovery & Investment Act
Temporarily affects all SBA 7(a) & 504-CDC Loans approved on or after Feb 17, 2009 & should be available through Dec 2009 Eliminated the upfront SBA Guaranty Fee on all 7(a) Loans Increased SBA’s Guaranty to 90% on all 7(a) Loans except SBA
Express
Loans Eliminated the Third-Party Participation Fee on 504-CDC Loans, CDC processing Fee & required deposits
U.S. Small Business Administration
Commercial Lender Presentation
SBA ONLINE CLASSROOM: GROWING A BUSINESS
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SBA Loan Programs
7(a) CLP, & PLP Guaranty Loans - Up to $2,000,000 Idaho Prime – up to $750,000 Patriot Express – up to $500,000 SBA Express – up to $350,000 504-CDC Loans (generally) up to $1,500,000 Maximum SBA Guaranty is $1,500,000
SBA Forms, Program Guides & SOP 50-10(5)A can be found at www.sba.gov/banking U.S. Small Business Administration
Commercial Lender Presentation
SBA ONLINE CLASSROOM: GROWING A BUSINESS
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7(a) SBA Borrower is
Independent business including affiliates & related companies Organized for profit Located in the U.S. A. & owned by U.S. Citizens or Legal Permanent Residents SBA Size Standards is generally revenues less than $6,500,000 & less than 100 employees
U.S. Small Business Administration
Commercial Lender Presentation
SBA ONLINE CLASSROOM: GROWING A BUSINESS
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SBA Guaranty & Guaranty Fees
SBA Guaranty is 90% on all 7(a) loans, except for SBAExpress The SBA Guaranty Fee was eliminated on all SBA 7(a) loans The increased SBA Guaranty & elimination of the SBA Guaranty Fees became effective Feb 17, 2009 & should be available through approximately December 2009 SBA
Express
Guaranty remains at 50%. The On-going Annual Fee paid by lender is 0.55%
U.S. Small Business Administration
Commercial Lender Presentation
SBA ONLINE CLASSROOM: GROWING A BUSINESS
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7(a) PLP & Patriot Express Interest Rates
Can be fixed or variable 7 years or less is Prime +2.25% 7 or more is Prime +2.75% Additional 1% on Loans $25,001 -$50,000 Additional 2% On Loans $25,000 Or Less Or based on the one month LIBOR +3.00% Interest Rates can be less
U.S. Small Business Administration
Commercial Lender Presentation
SBA ONLINE CLASSROOM: GROWING A BUSINESS
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“Idaho Prime” Loan Program
Is a 7(a), PLP or Patriot Express SBA Loan Interest rate to borrower is Prime +0% Interest rate is adjusted each Calendar Quarter Loans up to $750,000 Business located in Idaho State Treasurer purchases the Guaranteed portion at Prime -2.00% Estimated yield to lender is about Prime +11.93%
U.S. Small Business Administration
Commercial Lender Presentation
SBA ONLINE CLASSROOM: GROWING A BUSINESS
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SBA
Express
Loans up to $350,000 50% Guaranty Revolving Loans up to 7 Years - otherwise payment term is the same as 7(a) loans Allowable interest rates Over $50,001 Prime +4.5% Under $50,000 Prime +6.5% Interest Rates can be less
U.S. Small Business Administration
Commercial Lender Presentation
SBA ONLINE CLASSROOM: GROWING A BUSINESS
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SBAE
xpress
(CONT) Unsecured up to $25,000 Lender Collateral Policy applies up to $150,000 Loans over $150,000 must be secured Lender uses own forms & loan products Lender approves the loan Can be funded via E-Tran
U.S. Small Business Administration
Commercial Lender Presentation
SBA ONLINE CLASSROOM: GROWING A BUSINESS
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Patriot Express
Loans up to $500,000 Eligible for Veterans; service-disabled veterans, active-duty service members eligible for the military’s Transition Assistance Program; reservists & national guard members; current spouses of any of the above; widowed spouse of a service member or veteran who died during service or of a service-connected disability SBA Guaranty 90% - the same as 7(a) & PLP
U.S. Small Business Administration
Commercial Lender Presentation
SBA ONLINE CLASSROOM: GROWING A BUSINESS
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Patriot Express
(CONT) Revolving Loans up to 7 Years - otherwise payment term is the same as 7(a) loans Allowable interest rates – same as 7(a) Interest rates can be less Unsecured up to $25,000 Lender Collateral Policy applies up to $350,000 Loans over $350,000 must be secured Lender uses own forms & loan products Lender approves the loan Can be funded via E-Tran
U.S. Small Business Administration
Commercial Lender Presentation
SBA ONLINE CLASSROOM: GROWING A BUSINESS
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Loan proceeds
Start-up, expansion, inventory, accounts receivable, working capital, machinery, equipment, MV’s, leasehold improvements, refinance debt, change of ownership, loan fees 7 to 10 year term Purchase of Real Estate – initial o for new is 60% & 51% for Existing
ccupancy
25 year term
U.S. Small Business Administration
Commercial Lender Presentation
SBA ONLINE CLASSROOM: GROWING A BUSINESS
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Refinance Debt
Debt service reduction by at least 20% Short term loans are not subject to 20% Rule Lender is not in a position to sustain a loss Lender “certifies” it’s debt has not been more than 29 days past due in the last 36 months & provides a transcript of the disbursement – payment history Existing SBA debt – restructure rather than refinance
U.S. Small Business Administration
Commercial Lender Presentation
SBA ONLINE CLASSROOM: GROWING A BUSINESS
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Change of ownership
Must preserve and/or enhance the business Verify the sellers last 3 years income tax returns with IRS before loan can be disbursed For loans $250,000 or less, the Lender may do its own valuation For loans greater than $250,000 or if there is a close relationship between the buyer & seller, the lender must obtain an Independent business valuation from a qualified source. Valuations provided by the seller or buyer are do not meet these requirements Can finance 50% of “Good Will” up to $250,000
U.S. Small Business Administration
Commercial Lender Presentation
SBA ONLINE CLASSROOM: GROWING A BUSINESS
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Some Deals SBA can not do
Non-profit Mini-warehouses; apartments, investment or rental property - landlords Business or applicant that the Government has experienced a loss Pyramid plans Speculation, profits from price fluctuation Restricts membership – private clubs On parole or probation
U.S. Small Business Administration
Commercial Lender Presentation
SBA ONLINE CLASSROOM: GROWING A BUSINESS
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504-CDC Loan Program
The Third Party Participation Fee was eliminated effective Feb 17, 2009 & will be available through about Dec 2009 Finances fixed assets, generally real estate Is a “Loan to Value” program Generally, the maximum SBA Debenture is $1,500,000 ($2,000,000 for Public Policy Goals) Net worth less than $8,500,000, net profit less than $3,000,000, create 1 job for each $65,000 in 504-CDC funds
U.S. Small Business Administration
Commercial Lender Presentation
SBA ONLINE CLASSROOM: GROWING A BUSINESS
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Idaho Exporting
Inga Fisher Williams SBA Regional Export Finance Manager One World Trade Center 121 SW Salmon Street – Suite 242 Portland, Oregon 97204 503-326-5498 Fax 503-326-6351
www.sba.gov/localresources/district/id/ID_ITRESOURCES.html
•
U.S. Small Business Administration
Commercial Lender Presentation
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Other Resources
SBA Online Training via
www.sba.gov
SBA Banking site
www.sba.gov/banking
Service Corps of Retired Executives – SCORE
www.idahotvscore.org
Small Business Development Centers – SBDC
www.idahosbdc.org
Reviewed Franchises E-Mail
www.franchiseregistry.com
for franchise eligibility not covered in the franchise registry
U.S. Small Business Administration
Commercial Lender Presentation
SBA ONLINE CLASSROOM: GROWING A BUSINESS
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Questions and Open Discussion
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