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Financing Value-Added Ag Ventures Gail Gesell

Financing Value-Added Ag Ventures Gail Gesell. Sources of Small Business Financing. Self-funding Expand current business Re-direct to new niche. DogDayz Playhouse and Retreat. Sources of Small Business Financing. R & D Grants Cooperative Agreements. Small Business Innovative Research.

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Financing Value-Added Ag Ventures Gail Gesell

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  1. Financing Value-Added Ag Ventures Gail Gesell

  2. Sources of Small Business Financing • Self-funding • Expand current business • Re-direct to new niche

  3. DogDayz Playhouse and Retreat

  4. Sources of Small Business Financing • R & D • Grants • Cooperative Agreements

  5. Small Business Innovative Research • Department of Agriculture • Department of Commerce • Department of Defense • Department of Education • Department of Energy • Department of Health and Human Services • Department of Transportation • Environmental Protection Agency • National Aeronautics and Space Administration • National Science Foundation

  6. SBIR Qualifications: • American-owned and independently operated • For-profit • Principal researcher employed by business • Company size limited to 500 employees

  7. Three Phases Phase I - startup phase • Up to $100,000 • 6 months • explore technical merit or feasibility of idea/technology Phase II • Up to $750,000 • 2 years Phase III • Phase II innovation moves from the laboratory into the marketplace • No SBIR funds support this phase. The small business must find funding in the private sector or other non-SBIR federal agency funding.

  8. Access to SBIR Money • Pre-Solicitation Announcement (PSA) - single source for the topics and anticipated release and closing dates for each agency's solicitations • US Small Business Administration Office of Technology 409 Third Street, SW Washington, DC 20416 (202) 205-6450

  9. Sources of Small Business Financing • Government contracts

  10. FedBizOpps.gov is the single government point-of-entry (GPE) for Federal government procurement opportunities over $25,000 • Government buyers publicize their business opportunities by posting information directly to FedBizOpps via the Internet • FedBizOpps (FBO) – single portal for commercial vendors seeking Federal markets for their products and services; search, monitor and retrieve opportunities solicited by the entire Federal contracting community

  11. Sources of Small Business Financing • Angel funds • Venture capital

  12. Sources of Small Business Financing • Receivables factoring • Equipment financing

  13. Sources of Small Business Financing • Loan from financial institution • Line of credit • Term loan

  14. SBA Guaranteed Loan Programs • 504 Certified Development Company Loan Program • 7(a) Loan Guarantee Program

  15. Benefits of an SBA Guaranteed Loan • SBA guarantee encourages lenders to loan money • Money available for start-up • No pre-payment penalty for loans under 15 years • Reduced Owner Investment & Collateral Requirements • No balloon payments • Interest rate limits • Longer amortization

  16. Eligibility for SBA Guaranteed Loans Must qualify as “Small” based on NAICS • Manufacturing: 500-1,500 employees • Wholesaling: 100 employees for financial assistance programs(500 employees for contracting assistance programs) • Services: $6 million to $29 million in annual receipts, or 1,500 employees • Retailing: $6 million to $24.5 million in annual receipts • General and heavy construction: $17 million to $28.5 million in annual receipts • Special trade construction: $12 million in annual receipts • Agriculture: From $750,000 to $6 million in annual receipts

  17. Eligibility for SBA Guaranteed Loans • Operated for profit • Open to the general public • Owners must be U.S. citizens or have permanent residence status • Owners must have financial stake in the business

  18. Copper Ridge Alpacas, LLC

  19. 504 Certified Development Company (CDC) Loan Program • Proceeds from 504 may be used for: • Purchasing land • Construction of new facilities • Improvements to existing facilities • Improvements to real estate • Purchase major machinery and equipment • Financing • SBA Debenture (CDC) 40% • Bank 40-50% • Borrower 10-20%

  20. 504 Certified Development Company (CDC) Loan Program • Debenture • Maximum typically $1,500,000 • $ 2 million for projects meeting public policy goals • $4 million for small manufacturers • Create or retain one job for every $50,000 • Fees approximately three (3) percent of the debenture • Interest rate calculated from the current rate for 5-year and 10-year U.S. Treasury issues • Maturities of 10 or 20 years • Collateral - project assets being financed • Personal guaranties required from principals

  21. 504 Certified Development Company (CDC) Loan Program • Owners must be of good character • Size Standards: • Tangible net worth up to $7 million   • Preceding 2 year average net income after taxes up to $2.5 million • Business cannot be engaged in speculation or investment in rental real estate 

  22. 7(a) Loan Guarantee Program • Working Capital • Purchase Equipment/ Furniture/ Fixtures • Acquire Land/Building • Construct New Facilities • Debt Refinancing • Purchase an Existing Business

  23. INELIGIBLE Uses • Purchase partial ownership of a business • Repay owners for their investment in the business • Pay for delinquent taxes • Refinance of delinquent loans • Speculative, lending or investing purposes • Real Estate held for investment, sale or rent • Illegal or gambling activities nor for sexually oriented businesses • Business Pyramids • Political, lobbying or religious activities

  24. 7(a) SBA Guarantee Program • Loans up to $2.0 million • SBA can guarantee up to $1,500,000 • Multiple loans permitted up to $2.0 million total guarantee Percent of Guarantee • 85% guarantee for loan amounts of $150,000 or less • 75% guarantee for loan amounts over $150,000 • SBA guarantee for lenders • Borrowers responsible for 100% loan repayment

  25. 7(a) Guarantee Loan Maturities • Working Capital • 1 to 10 years depending on cash flow needs • Equipment • up to its expected useful life • Building/Land • up to 25 years

  26. Financial Information Required - Established Business - • Current balance sheet & past 3 full years income (profit & loss) • Projection of revenues, expenses & profits for the next 12 months • Cash flow projection for the next 12 months • Written business plan with narrative of major assumptions • Current personal financial statement for each owner, partner, or stockholder • List of collateral • Statement of the amount and intended uses of the loan

  27. Financial Information Required - New Business - • Prepare a detailed estimate of how much capital is needed to start • 12 month projection of revenues, expenses and profits • 12 month projection of cash flow • Written business plan with narrative of major assumptions • List of collateral

  28. SBA Resources • District Office • www.sba.gov/in • Small Business Development Centers • SCORE • Women’s Business Centers

  29. Financing Value-Added Ag Ventures

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