SMALL BUSINESS ADMINISTRATION FINANCIAL ASSISTANCE PROGRAMS

SMALL BUSINESS ADMINISTRATION FINANCIAL ASSISTANCE PROGRAMS Neida Heusinkvelt (816) 426-4906

SBA FINANCIAL ASSISTANCE PROGRAMS • 7(a) Loan Guaranty Program- 75-85% Guarantees • Made by private lenders – not a direct loan program • Maximum loan amount can be up to $5,000,000 • 7(a) program requirements: • Good credit history • demonstrated record for success • good character • sufficient funds to operate the business at a profit • collateral the loan as fully as possible

SBA 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, can be fixed or variable. However most interest rates for 7a business deals are variable rates, tied to prime rate. • Typically cannot exceed base rate plus 2.75% except with SBAExpress loans which can go higher

SBA FINANCIAL ASSISTANCE PROGRAMS 7(a) Program Guaranty Fees: MaturitySBA PortionGuaranty Fee 1 Yr or less Any $$ 0.25% Over 1 yr $127,500 or less 2.0% (lender keeps 25% of fee) Over 1 yr More than $127,500 3.0-3.75%

SBA FINANCIAL ASSISTANCE PROGRAMS • 7(a) SBAExpress - Up to $350,000 and under - with 50% guaranty • - Under Small Business Jobs Act of 2010 SBA temporarily has increased the maximum loan SBX amount to $1,000,000 thru September 28, 2011 • lender uses its own documentation • can be used for a variety of purposes, including funding working capital lines of credit • In past decade between 35-65% of SBA lending has been done thru this SBAExpress program! • (Community Express pilot version expired 4/30/ 2011.)

SBA FINANCIAL ASSISTANCE PROGRAMS • 7(a) Patriot Express - Up to $500,000 and under • 75% - 85% guaranty • Started June 28, 2007 & extended to December 31, 2012 • Same processing path as Regular SBAExpress • 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

SBA FINANCIAL ASSISTANCE PROGRAMS – Modified in 2011 • 7(a) Lender Advantage – • Up to $350,000 and under • 75% - 85% guaranty • Started as a pilot program in the Midwest in May 2008 • Key Features • Designed for small SBA loan volume lenders (rural banks and small community lenders) • Streamlined loan application • Simplified loan eligibility questionnaire • Expedited SBA target processing time - 5 days • New Pilot versions of Small Loan Advantage and Community Advantage Programs were added February 17, 2011

SBA FINANCIAL ASSISTANCE PROGRAMS • Also, Two Types of Asset Based Loans Are Available: • Standard Asset Based • Small Asset Based • 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

Dealer Floor Plan Pilot Initiative – Revised • Loan size: $500,000 minimum - $5 million maximum • Maximum of 75% guaranty • Loan guaranty product for revolving LOCs that target retail dealers of new and used titleable inventory (automobiles, boats, RVs, motorcycles, mobile homes, etc). • Minimum loan maturity of 1 year and maximum of 5 years • Collateral must be a first lien on all titleable inventory acquired with proceeds for this loan. • Participating Lender must have existing floor plan financing policies and procedures to meet SBA approval. • Will remain available until September 30, 2013. It is a pilot 7(a) loan guaranty program – using same pool of funds as other 7(a) loans.

SBA FINANCIAL ASSISTANCE PROGRAMS • Export Working Capital Loan 90% Guaranty • Pre-Export and Post-Export Transactions can be Financed • Paid back from proceeds of the export sales • Maximum Loan size is $5.0 Million • International Trade Loan– Up to a 90% Guaranty • Used for producing goods or services within the U.S. to export elsewhere • Can help firms adversely affected by import competition • Maximum Loan Size is $5.0 Million

SBA FINANCIAL ASSISTANCE PROGRAMS • 504 Fixed Asset Loan • Long-Term financing for fixed assets like buildings & equipment (not vehicles). • Up to $5.0 million in SBA-backed debentures – more for public policy goals like women-owned and veteran-owned businesses and manufacturers. • Loan must generally create or retain one job for every $65,000 of debenture proceeds provided by the SBA. • Available throughout KS and MO from CDCs • Typical Expansion project is 50%/40%/10%

Temporary 504 Jobs Act Debt Refinance Program • Jobs Act Program started February 28 and ends September 27, 2012. • Specific pool of SBA debenture dollars set aside by Congress. • No minimum – max is $5 Million. • Uses the existing Certified Development Companies (CDC) processing procedure of the 504 loan program. • Existing business loan must be ballooning. • Existing loan incurred not less than 2 years ago must have been current for the past year with no payment being deferred or past due for more than 30 days. • Proceeds are to be used to refinance qualified debt with no money going to expansion or purchases. • Independent appraisal of the FMV of the project assets and any additional assets offered as additional collateral must be provided and dated within 6 months of the application. • 85% of the refinance must have been originally eligible 504 purposes. • Structure is 50%/40%/10%.

SBA FINANCIAL ASSISTANCE PROGRAMS • MICROLOAN - $35,000 or less • Not presently available thru SBA in the KC area but may be available locally from other state and economic development organizations. • SURETY BOND GUARANTEES– provides surety guarantees for the benefit of service businesses who have contracts that require surety bonding. This program is processed regionally in Denver CO • ARC Loan Program expired on September 30, 2010. This was a temporary program initiated by the Recovery Act of 2009.

Where do I send a Potential Customer for Free or Low Cost Technical Assistance? • www.sba.gov – new and improved…. • www.kcsourcelink.com – Kansas City area • KS SBDC Network – locations in Topeka, Emporia, Fort Hays, Garden City, Overland Park, Pittsburg, Lawrence, and Wichita • MO SBTDC Network –locations in Columbia, Warrensburg, Chillicothe, Joplin, Maryville, Kansas City, Springfield, St. Joseph • WBC– Lenexa KS • PAC- Kansas City MO, BIC – Kansas City MO • SCORE – chapters in most major cities

Kansas City District SBA Activity

Top 6 Benefits to a bank that participates with SBA Loans • Creates a documented niche reputation as “small business friendly” lender as compared to its peers. • Can provide an additional source of fee income. • The guaranteed portion of the loan is saleable on an active secondary market which can provide liquidity. • The guaranteed portion of SBA loans has a lower risk-based capital requirement. • Can provide support for loans with less than optimal collateral coverage. • SBA Certified Development Company (504) loans can provide fixed asset financing for up to 90% of the project cost.

SMALL BUSINESS ADMINISTRATION FINANCIAL ASSISTANCE PROGRAMS