Transcript Slide 1
New Jersey District Office Two Gateway Center – 15
th
floor Newark, NJ 07102 973-645-2434
SBA’s Mission & Loan Programs
Your Small Business Resource
U.S. Small Business Administration
www.sba.gov
Overview of SBA’s Mission
Financial Assistance
•
7(a) Guaranty Loans
• •
504 Loans Microloans
• •
Surety Bonds Small Business Investment Company (SBIC) Program Business Counseling & Training
•
SCORE – Counselors to America’s Small Business
• •
Small Business Development Centers (SBDC) Women’s Business Centers (WBC)
• •
US Export Assistance Centers (USEAC) Small Business Training Network (SBTN) Opportunities in Government Contracting
•
Small Business Set-Asides (federal contracts & subcontracts)
•
8(a) Business Development Program
•
HUBZone Contracting Program
U.S. Small Business Administration
www.sba.gov
Your Small Business Resource
SBA’s Mission (cont’d)
Advocacy
•
Your voice in government
•
Principal resource for small business statistics and business trends
•
Monitors regulatory and policy proposals of more than 20 federal agencies for impact on small business Disaster Assistance
•
Direct loans from the SBA for:
Uninsured losses on real estate and property for homeowners and renters
Uninsured losses on business real estate and property Economic injury for businesses (working capital) Economic injury to firms impacted by Military Reservists called to active duty
U.S. Small Business Administration
www.sba.gov
Your Small Business Resource
Maximum Amount
7(a) Loan Guaranty Program
$2,000,000 SBA Guaranty 75% for loans > $150,000 85% for loans < $150,000 Guaranty is limited to $1,500,000
** On a temporary basis, SBA can guaranty up to 90% on most 7(a) loan applications.
Use of Proceeds Working capital; inventory acquisition; refinance debt for compelling reasons; lines of credit. Renovation or construction of new facility; purchase land & buildings; purchase of equipment & fixtures; leasehold improvements. Maturity Based on ability to repay; generally working capital is 5-10 years. Up to 25 years for fixed assets but not to exceed life of asset. Interest Rates Negotiable with lender. If maturity is 7 or more years, maximum rate allowed is 2.75% over prime; if under 7 years maximum is 2.25% over prime. In NJ, we have 165+ participating lenders.
U.S. Small Business Administration
www.sba.gov
Your Small Business Resource
•
7(a) Loan Program Enhancements
Benefits to small business owners
SBA’s traditional loan guaranty ranges between 50% to 85%. Recovery Act funding, with subsequent extensions, allows SBA to increase our guaranty to 90% (with a maximum of $1.5 million) on most loans .
The 90% guaranty decreases lender risk and increases your ability to obtain a loan.
Note - SBA Express loans remain at a 50% guaranty. The increased guaranty is offered on a “first come first served” basis through 5/31/10 or earlier if funds are exhausted.
•
SBA charges a guaranty fee on approved loans. The fee is paid to SBA by the lender. They are allowed to charge this cost to the small business borrower, who typically reimburses the lender from loan proceeds. Recovery Act funding, with subsequent extensions, allows SBA to eliminate the guaranty fee. Fee elimination is also offered on a “first come first served” basis through 5/31/10 or earlier if funds are exhausted.
Examples of fee elimination savings :
$150,000 loan = $2,500 $500,000 loan = $11,250 $2,000,000 loan = $53,750
U.S. Small Business Administration
www.sba.gov
Your Small Business Resource
504 Loans & SBA Certified Development Companies
Maximum Amounts The SBA portion, commonly referred to as the 504 loan, is limited to $1.5 million. If loan meets SBA’s Public Policy Goals, the maximum amount can be $2.0 million. If loan is made to a firm engaged in manufacturing, the maximum amount increases to $4.0 million. SBA Guaranty & Loan Structure In a typical 504 project, a Certified Development Company (CDC) provides a loan for up to 40% of the project. This loan is backed by a 100% SBA guaranteed debenture and is secured by a 2 nd lien on project assets. A private sector lender finances 50% of project, receives a 1 st lien on assets and is not guaranteed by SBA. Their protection is the favorable loan to value ratio of the financed assets. The small business borrower injects the remaining 10% of costs. Currently, 3 CDCs provide 504 loans in NJ.
Use of Proceeds Purchase of fixed assets such as land, buildings or equipment; major improvement, construction & renovation costs. Qualified debt refinancing is allowable. Funds for working capital are not allowed.
Maturity & Interest Rates Offered for terms of 10 or 20 years. Current interest rates are approximately 4% to 6% and are based on market rates for 5 and 10 year Treasury issues plus an increment above the Treasury rate.
U.S. Small Business Administration
www.sba.gov
Your Small Business Resource
504 Loan Program Enhancements
Fees temporarily eliminated
Recovery Act funding, with subsequent extensions, allows SBA to eliminate the following fees on a “first come first served” basis through 5/31/10 or earlier if funds are exhausted: 1. The CDC processing fee paid by the small business borrower (1.5% of the debenture) 2. The participation fee paid by the 1 st mortgage financing) mortgage lender (.5% of the 1 st
New debt refinancing rule (permanent change) effective 6/23/09
If project involves expansion of a small business applicant, existing debt that does not exceed 50% of the cost of the expansion may be refinanced provided that the proceeds of the debt were used for purposes that would have been eligible for a traditional 504 loan. Examples – purchase of land or building, construction or acquiring qualified fixed assets.
Other refinancing requirements are that the debt must have been collateralized by fixed assets and has been in a current status for the past year. Refinancing must also bring a substantial benefit to the small business and is defined by the new installment payment being at least 10% less than the existing payment.
U.S. Small Business Administration
www.sba.gov
Your Small Business Resource
• •
Maximum Amount SBA Guaranty
7(m) Microloan Program
$35,000 Not Applicable SBA funds program with a 10 year low interest loan to an approved intermediary. Loan is used to establish a revolving loan fund controlled by the SBA intermediary who has full authority to approve and service loans made under this program. SBA also provides intermediary with grant funding to provide technical assistance to the microloan borrower. There are 5 microloan intermediaries in NJ.
•
Use of Proceeds Working capital; purchase of equipment, furniture & fixtures, inventory acquisition; may not be used for debt repayment or real estate purchase.
• •
Maturity Interest Rates Maximum term is 6 years Negotiable with lender; generally between 8% to 12%
U.S. Small Business Administration
www.sba.gov
Your Small Business Resource
America’s Recovery Capital (ARC) Loan Program
• • • • • • •
A temporary loan program established by the 2009 Recovery Act.
Only available until funding is expended or 9/30/10.
Up to a $35,000 loan for short-term cash flow needs of existing businesses impacted by the recession.
Loans are through SBA’s participating lenders and carry a 100% SBA guaranty – lender has zero risk.
Loan proceeds are limited to making up to 6 months of payments on qualifying business loans.
ARC loans have no fees and are interest free (SBA pays the interest).
Principal repayment can extend to 5 years and first payment is deferred for 12 months after last disbursement.
To qualify - Applicant must be a viable, for-profit small business in the U.S. that is experiencing financial hardship. Financial statements must show profitable operations in at least 1 of the past 2 years. Be able to project sufficient cash flow to meet all future loan payments over the next 2 years.
U.S. Small Business Administration
www.sba.gov
Your Small Business Resource
Other Items of Interest
• •
In 2009, funds from the Recovery Act allowed SBA to: Expand the microloan program by providing $25 million to support new lending and $24 million to increase technical assistance grants to microloan intermediaries.
Increase the level of support under our SBA’s Surety Bond Guarantee program. Bonding levels have been permanently increased from $2 million to $5 million. Small businesses requiring bonding for a federal contract are now eligible for support up to $10 million.
• •
In 2010, at the request of the President, Congress will consider legislation to: Extend the fee eliminations and the increased guaranty levels on 7(a) & 504 loans from 5/31/10 through 12/31/10.
Increase the maximum amounts of SBA’s lending programs. -- 7(a) loan program from $2 million to $5 million.
-- 504 loan program from $2 million to $5 million and for manufacturers from $4 million to $5.5 million. -- microloan program from $35,000 to $50,000.
U.S. Small Business Administration
www.sba.gov
Your Small Business Resource
Other Items of Interest (cont’d)
•
A temporary expansion of working capital loans by increasing the cap on SBA’s Express loans from $350,000 to $1 million. This will allow small firms to access much-needed working capital lines of credit that are available through the Express loan program.
•
A temporary expansion to SBA’s 504 loan program to support refinancing for small business owner-occupied commercial real estate loans that are maturing in the next few years. This will allow small businesses to lock in stable long-term financing that are unable to secure new financing and will save jobs by protecting small businesses from unnecessary foreclosure actions.
•
Establish a nationwide $30 billion Small Business Lending Fund that will transfer federal funds to small community banks to expand lending to the small business sector.
U.S. Small Business Administration
www.sba.gov
Your Small Business Resource
Small Business Innovation Research (SBIR) Program Small Business Technology Transfer (STTR) Program
• • • • •
SBA’s Office of Technology administers the SBIR & STTR programs. Through these programs, SBA ensures that the nation's small, high-tech, innovative businesses are a significant part of the federal government's research and development efforts.
Eleven federal departments participate in the SBIR program and five departments participate in the STTR program. Combined, they award $2 billion annually to small high-tech businesses.
The SBIR program is a competitive three-phase award system which provides qualified small business concerns with opportunities to propose innovative ideas that meet the R & D needs of the Federal Government. Phase I is the startup phase with awards up to $100,000 for 6 months. Phase II awards up to $750,000, for as many as 2 years, to expand Phase I results and to evaluate commercialization potential. Phase III moves the Phase II innovation from the laboratory into the marketplace. No SBIR funds support this phase and the small business must find funding in the private sector or other non-SBIR federal agency funding. The STTR program is also a competitive three-phase program that reserves a specific percentage of federal R & D funding for award to small businesses in partnership with non-profit research institutions to move ideas from the laboratory to the marketplace, to foster high-tech economic development and to address the technological needs of the Federal Government. The three phase award system mirrors the SBIR program.
Web link for more info www.sba.gov/sbir
U.S. Small Business Administration
www.sba.gov
Your Small Business Resource
What is a Small Business ??
SBA establishes small business size standards based upon primary industries and related economic & industry segment competitive data.
Manufacturing – 500 to 1500 employees Wholesalers – 100 employees
•
Service/retail/construction – ranges from $2 to $35.5 million per year in averaged annual receipts (AAR) over a 3 year period. The common “anchor” standard in this segment is $7.0 million in AAR.
Examples – special trade contractors @ $14 million; general contractors @ $33.5 million; supermarkets/convenience stores/gas stations @ $27 million; new car dealers @ $29million; hospitals @ $34.5million; facilities support services @ $35.5 million.
•
Small business size standards for SBA’s financial assistance programs.
7(a) & microloans – the standard for the industry (see above) or the alternative size standard:
• •
Including affiliates, tangible net worth not in excess of $8.5 million and average net income after Federal income taxes (excluding any carry-over losses) for the preceding two completed fiscal years not in excess of $3.0 million.
504 loans – see above alternative size standard for 7(a) loans Surety bonds – $7.0 million AAR
U.S. Small Business Administration
www.sba.gov
Your Small Business Resource
Additional Information
•
Key Contacts
– – – – –
James Kocsi, District Director, 973-645-3680 William Boone, ADD for Lender Relations, 973-645-2179 Frank Burke, ADD for Marketing & Outreach, 973-645-6049 Richard Zilg, ADD for 8(a) Business Development, 973-645-2531 Donald Swartz, Business Development for southern NJ, 856-415-2283
• • • •
SBA’s NJ office web page
–
www.sba.gov/nj NJ small business resource guide – www.smallbusiness3.com
Info on SBA’s recovery efforts – Small business size standards
–
www.sba.gov/recovery www.sba.gov/size
U.S. Small Business Administration
www.sba.gov
Your Small Business Resource