SBA Loan Guarantee ProgramPresented by SBA and DC SCOREMarium Eamen & Karen Williams
washingtondc.score.org www.sba.gov
August 22, 2017
Today’s Presenters
KarenWilliamsDCSCORE
MariumEamenSBA
Today’s Webinar
• Sponsored by DC SCORE and the Metropolitan District of the Small Business Administration
• Question can be submitted online during the session
• A copy of this webinar will be posted on www.washingtondc.score.org
SBA WashingtonMetropolitan Area District
• District of Columbia• Montgomery County, MD
• Prince George’s County, MD• Fairfax County, VA• Loudoun County, VA
• Arlington County, VA• Cities of Alexandria and
Fairfax
Today’s Session Objectives
• Develop an understanding of SBA-guaranteed bank loan products, eligibility, and how to apply
• Find out how to move forward
• Now . . . a little bit about SCORE
SCORE is America’s small business resource
• One-on-one mentoring in person & online
• Workshops, seminars & events in our community
• Business tools & templates at www.score.org
Free & confidential mentoring
• We help small biz grow
• Jelly Belly $160mm rev
• Vera Bradley $288mm rev
• Over 10 million served since 1964
• 370,000 assisted this year
What is SCORE?
We Help Small Businesses
SCORE is a non-profit resource partner of the
United States Small Business Administration
SCORE: An Overview
About SCORE:SCORE was formed in 1964 as a resource partner of the Small Business Administration whose mission is to help aspiring and existing businesses succeed. Since then, we’ve helped over 11 million people in pursuit of their business goals.
over 300 chapters across the nation plus online mentoring and resources
SCORE offers
Small Business…Huge Impact
SCORE offers
Small Business…Huge Impact
over 10,000 volunteer business mentors with expertise in over 62 industries
Last year SCORE helped
Small Business…Huge Impact
Create over 53,000 new businesses
Create over 65,000 new
jobs
Over 38,000 businesses
increase revenue
Of SCORE’s Clients:
Small Business…Huge Impact
56% were women
31% were minorities
12% were veterans
Who Does SCORE Help?
OpeningGrowth
Research & Planning
Pre-Startups
Startups
In Business Firms
• Mentoring: Free face-to-face mentoring in each of its 300+ chapters and also provides online advice through www.score.org
• Workshops: Educational sessions on a myriad of topics for entrepreneurs, ranging from business planning to marketing and financing
• Online Resources: Wide collection of articles, templates, assessments, blogs, and other tools that can be used to learn and implement new strategies
SCORE is here to help you find success as an entrepreneur.
How SCORE Can Help You
Get Started Today
Don’t Wait.Contact us today to § Start or grow your business§ Become a SCORE volunteer
Call or visit us online:§ (202) 619-1000§ www.washingtondc.score.org
WASHINGTOND.C.METROAREADISTRICTOFFICE4093rd StreetS.W.2nd Floor,Washington,D.C.20416(202)205-8800
SBA LOANGUARANTEEPROGRAM
HOWTHESBALOANPROCESSWORKSvSmallBusinessappliesforLoantoBank
vBankApproval- SubjecttoSBAGuaranty
vBanksubmitsGuarantyRequesttoSBA
PURPOSEOFTHESBA
vSBA’spurposeistohelpsmallbusinesseswithareasonablechanceofsucceeding,obtainfinancingonequitableterms.
“SBA will not make a bad loan good, but will make a good loan possible.”
BenefitsToSmallBusinesses
vGivessmallbusinessesaflexiblefinancingalternativewhenfundingisnototherwiseavailableonreasonableterms
vAllowsforlongertermsandlowerpaymentsthantraditionalloans
vEquity/Downpaymentrequirementsmaybemoreflexiblethantraditionalfinancing
WHENASBAGUARANTYMAYBENECESSARY
v StartupBusinesses
v LackofCollateral
v LowerThanNormalDownpayment/Equity
v LongerTerm/LowerPaymentsRequiredtoMeetDebtCoverageRequirements
v RiskierIndustries(Entertainment,High-Tech,Service,Retail)
v UnevenHistoricalRevenuesorProfits
v TighterThanNormalDebtCoverage
v ChangeofOwnership/Management
v LendingLimits
v RelianceonProjections
ELIGIBILITYvOnlySmallBusinessesdefinedbyNAICSvGoodCharactervAbilitytoRepayvFeasibleBusinessPlanvManagementExpertisevAdequateWorkingCapitalvCitizenorLegalResidentvEligibleuseofLoanProceedsvCreditHistory
6C’SOFCREDIT
vCharactervCapacity(cashflow)vCapitalvCollateralvConditionsvCommonsSense
FICOSCORECOMPOSITIONv 35%- Anindividual’shistoryofmakingcreditpaymentson
time
v 30%-Totalamountofdebtbeingcarriedalongwithavailablecredit
v 15%- Ageofindividual’sopencreditline
v 10%- Frequencywithwhichsomeoneappliesforcredit
v 10%- Wildcardfactorssuchasthetypesofcreditlines
ELIGIBLEUSESOFSBALOANPROCEEDS
v RealEstatevAcquirelandand/orbuildingsvConstruction,RenovationorLeaseholdImprovements
v PurchaseofFixedAssets(M&E,F/F)
v Inventory
vWorkingCapital
v DebtRefinancing
v Somefranchises:seewww.franchiseregistry.com
INELIGIBLEUSESOFSBALOANPROCEEDS
v Businessesprincipallyengagedinteaching,instructing,counselingorindoctrinatingreligionorreligiousbeliefsv (Whetherinareligiousorsecularsetting)
v Investmentorientedbusinesses:v Stocks/Realestateinvestments
v Nospeculativebusinessv Businessesengagedin
lending:v Banks,financecompanies,andfactors
v AbusinessorapplicantdefaultedonaFederalloan
v Non-profitbusinessesv (forprofitsubsidiariesareeligible)
v Lifeinsurancecompaniesv Pyramidsalesdistribution
plansv Privateclubsandbusinesses
v Limitmembershipsforreasonsotherthancapacity
v Stocks/Realestateinvestmentsv Passivebusinessesownedby
developersandlandlords
Mustbelegal underFEDERALLAW
GUARANTYFEE
vFY17SBA FEE WAIVER:vLoans< $150,000vSBAExpress<$350,000&VeteranOwnedBusiness
LOANAMOUNT GUARANTYFEE
$150,001 - $700,000 3.0%
$700,001 - $1,000,000 3.5%
$1 million 3.75%
12 months or less 0.25%
SBALOANPROGRAM
7(A)GUARANTYLOANPROGRAM
vMaximumLoanAmount:$5,000,000
vRepaymentTerms:12months- 25years
vAverageGuaranty:75%- 85%v (SBAExpress50%&Exporting90%)
vInterestRates:determinedbythelenderwithanallowablemaximum
7(a)LOANSUB-PROGRAMS
vSBAExpress
vCAPLine
vInternationalTradeLoan
vExportWorkingCapital(EWCP)
vExportExpress
vCommunityAdvantage
vMicroloanProgram
SBAEXPRESSLOANvVETERANS ADVANTAGE
v SBAGuarantyFeeforVeteranownedbusinesseswaived
vUpto$350,000vTerm&RevolvingvExpeditedSBAApprovalvLenderusestheirownapplicationprocessvReducedSBAGuarantyof50%
CAPLinev ContractCAPLine
v Fundsallcontractcostsascontractiscompletedv Nolongerrequiresassignmentofcontractinallcases
v SeasonalCAPLinev Financeseasonalincreasesinaccountsreceivableandinventory
v Builder’sCAPLinev Fundsconstructionorsubstantialrenovationofresidentialorcommercialbuildingsfor
resale
vWorkingCapitalCAPLinev Fundshorttermworkingcapitalneedv Upto10yearmaturityv Governedbyaborrowingbasecertificateormustbefullycollateralizedona1:1
collateralratiov Advancesallowedupto80%ofA/Rand50%ofInventory
INTERNATIONALTRADE/EXPORTEXPRESS/EWCP
v VarietyofloanprogramstosupportUSExportingeffortsbasedontheneedsofthebusiness
v 90%Guarantyand$5,000,000maxloanamount
v ExportExpress:upto$500,000v Maybeusedtoenhanceafirmsexportdevelopmentv Inoperationatleast12months
v ExportWorkingCapital(EXCP)v Short-termworkingcapitalneedsofexportersv 90%guaranty
v InternationalTrade:• HelpsUSbusinessestoenter&expandinto
internationalmarkets
COMMUNITYADVANTAGEvProvidedbyMission-FocusedLenders
v CDFI,CDC,Micro-Lenders
vLoansupto$250,000
vOffertechnicalassistance&economicdevelopmentsupporttounderservedareas
vQualifyingcriterionsameas7(a)
MICROLOANPROGRAM:$500- $50,000
v Purpose:Toassistsmallbusinessesinneedofsmallamountsoffinancialassistance
v Technicalassistanceisusuallyacomponentoftheapplication
v OfferedthroughNon-ProfitCommunityGroupswholenddirectlytoborrowers• $500to$50,000
v LoanUses:• Workingcapital,equipment,inventory,fixtures,andleaseholds• Notforrealestateordebtrefinancing
504LOANPROGRAMv Purpose:FixedAssetsOnly- Noworkingcapitalordebt
refinancingv ApplydirectlythroughparticipatingCDCv Borrowerbringstotable- atleast10%ofprojectcost- upto
20%injectionmayberequiredv CDC- maximumof40%ofprojectcost- fromsaleofSBA
guaranteedDebentures- secondmortgageonassetsbeingacquired
v Private-sectorlender- 50%ofprojectcost- firstmortgageonassetsbeingacquired
vMaximumSBAparticipationis$5,000,000• $5,000,000forManufacturers&EnergyEfficientProjects
vMinimum SBAparticipationis$50,000vMaturityforDebentureis10or20yearsvMustcreateorretainonejobforevery$65,000guaranteed
($100,000formanufacturers)ormeetSBApublicpolicygoals
CERTIFIEDDEVELOPMENTCOMPANIES
v BusinessFinanceGroup(FormerlyVirginiaAssetFinancingCo)(703)352-0504Services:WashingtonDC,Maryland,andVirginia
v ChesapeakeBusinessFinanceCorporation(202)625-4373Services:WashingtonDC,Maryland,andVirginia
v PrinceGeorge’sFinancialServicesCorporation(301)883-6900Services:PrinceGeorge’sandMontgomeryCountiesinMaryland
v RappahannockEconomicDevelopmentCorporation(REDCO)(540)373-2897Services:Virginia
OTHERSBAFINANCINGPROGRAMS
vDisasterLoanProgram
v(SBIC)SmallBusinessInvestmentCompanies
vSuretyBonding
THANKYOU!!!
Ifyouhavefurtherquestions,pleasecontact
LiboSuenLenderRelationsSpecialist
VeteransOfficer/[email protected]
MariumEamenLenderRelationsSpecialistSBDCProgramOfficerTel:[email protected]
NEXT STEPS
Questions?
• Assistance in the SBA Loan Guarantee Program available from SBA and at the DC SCORE office
• Contact SCORE:
– Request a mentor at www.washingtondc.score.org
– Call (202) 619-1000 and request an appointment with a SCORE mentor
• Prepare for a long, but fruitful journey
Summary
• Question for DC SCORE can be sent to [email protected]
• Question for SBA can be sent to [email protected]
• A copy of this webinar will be posted on www.washingtondc.score.org
Contact SCORE:washingtondc.score.org
(202) 619-1000