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SBA Policy Update SOP and Jobs Act

SBA Policy Update SOP and Jobs Act. Mark Hansel, LRS Cleveland District Office 216.522.4191 January 2011. About the SBA. Federal agency Loan guarantees and contracting Sponsor SCORE and SBDCs District offices across the country. The 7(a) Loan Guaranty. Delivered through lenders

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SBA Policy Update SOP and Jobs Act

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  1. SBA Policy UpdateSOP and Jobs Act Mark Hansel, LRS Cleveland District Office 216.522.4191 January 2011 SBA Cleveland District Office

  2. About the SBA • Federal agency • Loan guarantees and contracting • Sponsor SCORE and SBDCs • District offices across the country SBA Cleveland District Office

  3. The 7(a) Loan Guaranty • Delivered through lenders • Ranges between 50% to 75% • Rates negotiated with lender • Many banks are “PLP” or “Express” • Approved for the SBA SBA Cleveland District Office

  4. Express • Express – term loans and lines • Usually a 50% guaranty • 75%-85% guaranty under Patriot • Up to $1 million until 9/27/11 SBA Cleveland District Office

  5. PLP • “Preferred Lenders Program” • Term loans only • Maximum loan amount of $5 million • Some limits on PLP processing SBA Cleveland District Office

  6. 7(a) Guaranty Fees • Charged to guaranteed portion • Sliding scale: 2%-3%-3.5% • $150K/$700K/>$700K • .25% added >$1 M net • Can be part of loan SBA Cleveland District Office

  7. A Word on 504 • Delivered through “CDCs” • For “fixed assets” only • Owner occupied CRE • M&E may qualify • Usually 40% of the project’s cost SBA Cleveland District Office

  8. Policy Change • “Passive investment” rule relaxed • “Sufficient services” test is gone • Barber shops, hair and nail salons • Specifically mentioned • Self storage and mini-warehouses • Though not specifically mentioned SBA Cleveland District Office

  9. Policy Change • Change of ownership valuation • CPAs and others who are certified • Net of appraisals and over $250 K • Need third party • SBA loan may not exceed valuation SBA Cleveland District Office

  10. Policy Change • Internal change of ownership • When refinancing to omit seller • Refinance rules apply • Reminder: whoever is going must go • Internal or external change SBA Cleveland District Office

  11. Policy Change • 504 Borrower’s contribution • May be borrowed • Can rely on cash flow from business SBA Cleveland District Office

  12. Policy Change • Cash equity documentation • Where the funds came from • Movement into the account • Subsequent use • Settlement sheet or account statements SBA Cleveland District Office

  13. Policy Change • Collateralization • AR/INV no more than 10% for term loans • May be excluded from package SBA Cleveland District Office

  14. Jobs Act • New Alternative Size Standard • $15 M TNW & • $5 M average NPAT last two years • Applies to 7(a) and 504 • 504 to allow refinance – details coming SBA Cleveland District Office

  15. Jobs Act • New loan maximums • Up to $5 million for 7(a) • $5 - $5.5 million for 504 • Permanent changes SBA Cleveland District Office

  16. Jobs Act • Express • Regular Express to $1M (09/27/11) • 50% guaranty • Patriot at $500 K • 75%-85% guaranty • Export Ex at $500 K SBA Cleveland District Office

  17. Jobs Act • Dealer Floor Plan • Maximum of $5 million • Details forthcoming SBA Cleveland District Office

  18. Resources • SBA Cleveland District Office • 216-522-4180 • www.sba.gov • 1-800-U-ASK-SBA • 1-800-827-5722 SBA Cleveland District Office

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