www.sba.gov

U.S. Small Business Administration Your Small Business Resource

Programs and services to help you start, grow and succeed

Overview of

SBA Loan/Bonding

ProgramsHubZone Industry Day

June 19, 2012

www.sba.gov

U.S. Small Business Administration Your Small Business Resource

Programs and services to help you start, grow and succeed

SBA’s Mission

• SBA was established to help small businesses get started, grow, and prosper!

• Services Include:– Federal Government Contracting Assistance– Counseling and Technical Assistance

• SCORE• Small Business Development Center (SBDC)

– Financial Assistance

www.sba.gov

U.S. Small Business Administration Your Small Business Resource

Programs and services to help you start, grow and succeed

How SBA Assists with financing

• SBA does not make direct loans or offer grants.

• All SBA loans are loans by financial institutions guaranteed by Agency.

• The SBA, in effect, acts as a co-signer for the small business.

• The first step is to get a financial institution involved

www.sba.gov

U.S. Small Business Administration Your Small Business Resource

Programs and services to help you start, grow and succeed

SBA Cleveland District Office

Primary reasons banks utilize SBA as a lending partner?

• Insufficient collateral to satisfy lender

• Need longer term than offered by conventional lender

• Start-up business or industry deemed higher risk

www.sba.gov

U.S. Small Business Administration Your Small Business Resource

Programs and services to help you start, grow and succeed

Benefits of SBA Lending Programs

• Extended Repayment term– Based on use of proceeds (max. 25 years)– Fully amortizing loans

• Better Pricing/Market rate of interest• Lower Down Payments• Flexible Repayment Options• Reduces lender’s risk, making it easier for

bank to extend required financing

www.sba.gov

U.S. Small Business Administration Your Small Business Resource

Programs and services to help you start, grow and succeed

SBA Loan Programs

• Regular 7(a) Loan Program (75-85% SBA guaranteed)

• SBAExpress (50% SBA guaranteed)/CAPLine• 504 Loan Program• Microloan Program • Export Working Capital/International

Trade/Export Express Loan Programs• Patriot Express

www.sba.gov

U.S. Small Business Administration Your Small Business Resource

Programs and services to help you start, grow and succeed

SBA Loan Parameters• Use of Proceeds

– Most general business purposes (acquire equipment, build or acquire building, leasehold improvements, working capital, acquire a business, some debt refinance)

– SBAExpress/CAPLine loans can be used as revolving line of credit

• Maximum Loan Size:– Regular 7(a) Loan Program - $5 million– SBAExpress - $350,000– Export & Patriot Express - $500,000

www.sba.gov

U.S. Small Business Administration Your Small Business Resource

Programs and services to help you start, grow and succeedCleveland District OfficeFiscal Year ComparisonTotal Loans – FY 2011

E.K.

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U.S. Small Business Administration Your Small Business Resource

Programs and services to help you start, grow and succeed

SBA Lending Volume

• Total Loans (#) FY ‘11 = 1,434• Total Loans ($) FY ‘10 = $363,595,000• Avg. Loan Size: $253,553

• Cuyahoga County Loans (#) FY ‘11 = 387• Cuyahoga County Loans ($) FY ‘11 =

$108,736,700• Total loan volume FY ‘11 (#) up 37%• Total loan volume FY ‘11 ($) up 66%

www.sba.gov

U.S. Small Business Administration Your Small Business Resource

Programs and services to help you start, grow and succeed

How do you apply for these loans?

• Borrowers apply for loans directly through lending institutions (participating banks, credit unions, CDCs)

• Lender may choose to:

• Make loan w/o SBA guaranty

• Make loan subject to SBA guaranty

• Decline to make the loan

www.sba.gov

U.S. Small Business Administration Your Small Business Resource

Programs and services to help you start, grow and succeed

“Opening the Door to Bonding”

U.S. Small Business AdministrationSurety Bond Guarantee Program

www.sba.gov

U.S. Small Business Administration Your Small Business Resource

Programs and services to help you start, grow and succeedHow Can SBA Help Small ContractorsObtain Bonding?

SBA guarantees bonds written by any surety approved to participate in the program and listed in U.S. Treasury Circular 570

SBA provides a 70%, 80% or 90% guarantee through two separate programs

The Prior Approval Program, administered by two Area Offices, provides either an 80% or 90% guarantee based on the contractor’s demographic information. The Preferred Surety Bond Program, administered by SBA HQ in Washington, DC, provides a 70% guarantee.

www.sba.gov

U.S. Small Business Administration Your Small Business Resource

Programs and services to help you start, grow and succeed

Steps to Obtaining SBA Bonding

Contact an Agent

An agent is a person who has power-of-attorney to write bonds on behalf of a surety company

Provide the agent with evidence of credit, capacity, character and SBA required forms

www.sba.gov

U.S. Small Business Administration Your Small Business Resource

Programs and services to help you start, grow and succeed

How Can A Contractor Find an Agent?

SBA provides a list of agents appointed through the program at www.sba.gov>Loans & Grants>Bonds>Surety Bonds

Contractors may also contact one of the

following OSG offices for a referral:

www.sba.gov

U.S. Small Business Administration Your Small Business Resource

Programs and services to help you start, grow and succeedSBA Surety Bond Guarantee Area Offices

Denver Area Office

(303) 844-2607

For Contractors Located Generally in the

Northeast, Midwest and Rocky Mountains

Seattle Area Office

(206) 553-0961

For Contractors Located Generally in the

South, Southeast and West Coast

www.sba.gov

U.S. Small Business Administration Your Small Business Resource

Programs and services to help you start, grow and succeed

SBA Resources

• www.sba.gov

• (216) 522-4180 for Cleveland office

• Jim Donato, ext. 215

• SCORE, SBDC & CDC network