SMALL BUSINESS ADMINISTRATION FINANCIAL ASSISTANCE PROGRAMS

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SMALL BUSINESS ADMINISTRATION FINANCIAL
ASSISTANCE PROGRAMS
Kansas City District Office 816-426-4900
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Financial Assistance Programs

• SBA primarily works through 3 different LOAN
  PROGRAMS to provide access to capital for small
  businesses
• 7(a) Loan Guarantees
• 504 Fixed Asset Program
• Microloans in selected areas
• SBA does NOT have grants available to start or
  expand businesses.
• SBA loans are only made to for-profit businesses
• Credit decision by lender is made on a
  case-by-case basis.

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Financial Assistance Programs

• The 7(a) loan guaranty program works with a
  lender of your choice to potentially finance
  business transactions of the start-up of new
  businesses, the expansion of existing businesses
  or facilitate the buy-sell of existing
  businesses. The SBA loan programs are only
  available for business purposes.

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Financial Assistance Programs

• The participating lender may consider using SBA
  guarantee program for small business clients with
  these sub-programs
• Standard 7(a) Loan Program
• Special Purpose 7(a) Loans Capline, EWCP, IT
• SBAExpress (SX)
• Community Express (CX)
• Patriot Express (PX)
• Not all lenders are designated to work with all
  of these loan programs. Please click on this
  link
• http//www.sba.gov/localresources/district/mo/kans
  as/Financing/index.html
• for the current listing of special designation
  lenders that operate in the Kansas City District
  Office area.

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Financial Assistance Programs

• Standard and Special Purpose 7(a) Loan Guaranty
  Program
• Made by commercial lenders not a direct loan
  program
• SBA guaranties 75- 85 of the loan amount
• No minimum loan amount however maximum loan
  amount can be up to 2,000,000
• All 7(a) program requirements
• Good credit history
• demonstrated record for success (for an existing
  business)
• good character
• sufficient funds to operate the business at a
  profit
• collateralize the loan as fully as possible

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Financial Assistance Programs

• Flexible Maturities
• Up to 10 Years for working capital
• Up to 25 years for fixed assets
• real estate, construction, equipment
• Interest Rates
• Negotiated between borrower and lender
• Typically cannot exceed prime rate plus 2.75,
  except
• Loans of 50,000 and less may be higher
• SBAExpress loans may also be higher

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Financial Assistance Programs
7(a) Program Guaranty Fees

• SBA charges the guaranty fee to all participating
  lenders and lenders will generally pass on the
  fee directly to the SBA borrower.

http//www.sba.gov/services/financialassistance/ba
sics/sbarole/SERV_7A_FEES.html for any fee
changes
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Financial Assistance Programs
Special Purpose Programs

• Also, Two Types of Asset Based Loans Are
  Available
• Standard Asset Based
• Small Asset Based
• (All Capline Loans are part of the 7(a) Loan
  Guaranty Program)

• CAPLINES Loans
• Used to meet short-term and cyclical working
  capital needs
• Can be a one project type deal or can be on a
  revolving basis
• Three Types Seasonal, Contract, Small Builder

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Financial Assistance Programs
Special Purpose Programs

• Export Working Capital Loan Loans under the
  7(a) Program with up to a 90 Guaranty
• Pre-Export and Post-Export Transactions
• Paid back from proceeds of the export sales
• No Import loan proceeds available
• International Trade Loan
• Used for producing goods or services within the
  U.S. to export elsewhere
• Can help firms adversely affected by import
  competition

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Financial Assistance Programs

• 7(a) SBAExpress Loans Up to 350,000
• 50 guaranty to lender
• Streamlined-Lender uses its own documentation
• can be used for a variety of purposes, including
  funding working capital lines of credit
• Most commonly used for existing business
  expansion
• Over 65 of SBA lending is now done thru this
  SBAExpress program!

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Financial Assistance Programs

• 7(a) Community Express Loans Up to 250,000
• 75-85 guaranty to lender
• Streamlined-Lender uses its own documentation
• can be used for a variety of purposes, including
  funding working capital lines of credit
• Lender pays for technical assistance to a
  pre-approved technical assistance provider for
  the SBA borrower to improve business operation
• Limited local use by lending community

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Financial Assistance Programs

• 7(a) Patriot Express Loans up to 500,000
• with 75 - 85 guaranty
• Newest version of SBA Lending
• Started June 28, 2007
• Streamlined Pilot program extends to December 31,
  2010
• Created to Serve Special Customers
• Honorably-discharged Veterans
• Service-Disabled Veterans
• Service Members Leaving Active Duty eligible for
  Transitional Assistance Program (TAP)
• Reservists and 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-connect
  disability

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Financial Assistance Programs

• 504 Fixed Asset Loan
• Long-Term financing for fixed assets like
  buildings equipment (not rolling stock).
• Up to 1.5 million in SBA-backed debentures
  more for public policy goals and manufacturers
• Loan must generally create or retain one job for
  every 50,000 of debenture proceeds provided by
  the SBA.
• Available throughout Kansas and Missouri from
  CDCs in specific areas (link http//www.sba.gov/
  localresources/district/mo/kansas/financing/index.
  html)

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Financial Assistance Programs

• MICROLOAN - 35,000 or less
• Pool of Funds available thru microloan
  intermediary
• RMI (Jefferson City) - statewide in MO
  573-635-0136
• Go Connection KC metro area plus the Kansas
  Counties of Douglas Shawnee, 816-235-6146

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Financial Assistance Programs

• SURETY BOND GUARANTEES
• Not a Business Loan Program
• SBA guarantees bid, payment and performance bonds
  for construction, service, and supply contracts
  up to 2,000,000 on behalf of small businesses.
• Guarantee proves incentives for surety companies
  to bond small business that would otherwise be
  unable to obtain bonding.
• Web address http//www.sba.gov/OSG

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HOW DOES AN APPLICANT APPROACH A LENDER ABOUT
SBA LOANS?

• Make advance appointment with commercial officer
  that handles business loans.
• Be prepared with a written business plan. It
  should include identification of total cost of
  project with a breakout of what are expected
  to be borrowed and what are expected to be
  injected by business owner!

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WHAT SHOULD AN APPLICANT EXPECT FROM A LENDER?

• A commitment from the lender to review the
  business plan by a specified date or an up-front
  explanation of why that lender does not want to
  do that type of loan.
• Expect the lender to ask for applicants
  personal credit information so they can authorize
  a credit report and possibly a business credit
  report.

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TIPS FOR FINANCIAL PREPARATION

• FIRST be prepared- Do have business plan
  completed before seeking a business loan!
• Understand the loan process and consider how your
  application will be compared to industry peers.
• You need to establish time frame for decision
  making that is realistic and decide if lender can
  meet those needs.

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NEGOTIATION ITEMS LENDER DISCLOSURE

• Interest rate
• Term of loan
• Who will personally guarantee loan
• What fees will be charged
• Time frame range in expecting an answer YES or
  NO and time frame to expect on disbursement of
  funds
• Other services lender can provide

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WHY DOES A LENDER SAY YES?

• Likes balance of credit factors strengths
  outweigh weaknesses
• Lenders institution has favorable experience
  with that industry
• Your business loan application credit risk fits
  in with lenders target portfolio
• Lending officer is willing and able to be your
  advocate in loan committee

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WHY DOES A LENDER SAY NO?

• Weaknesses of individual deal outweigh strengths
  in areas such as
• Sales volume is optimistic or expenses are
  underestimated or industry in turmoil
• Management has no direct experience
• Lender risk too high in loan amount compared to
  applicants injection Debt/Equity
• Credit or character history is marginal or poor
• Collateral offered doesnt offset other risks
• Lenders institution has unfavorable experience
  with that industry

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TECHNICAL ASSISTANCELOCAL ADVICE ON FINANCING

• See other training modules.
• www.sba.gov
• SCORE Counselors to Americas Small Business
• Small Business Development Center (SBDC)
• Womens Business Center (WBC)
• Procurement Assistance Center (PAC)
• Business Information Center (BIC)
• www.kcsourcelink.com

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• Please take a few minutes to complete the
  training evaluation form.
• Thank you.

SBA Evaluation