Lender Review Teleconference Training

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Going Green with SBA
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Presentation Objectives

• Introduce SBA Programs 15 min. DVD
• Summarize SBAs Environmental Policies
• Highlight the
• Energy Conservation Loan Program
• Pollution Control Loan Program
• Q A after the presentation.
• Please mute your phones.

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Cathy Lease

• Lender Relations Specialist
• Arizona District Office
• 19 years with SBA
• Phone [phone]
• Email cathleen.lease_at_sba.gov

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Small Business Administration

• Created in 1953 to promote small business in our
  domestic economy.
• Serves as primary advocate for small business in
  the federal government.
• Engaged in procurement, capital formation,
  disaster assistance, and small business
  counseling.

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• SBAs Environmental Programs

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SBA Environmental Policy

• SBA has a strong lender compliance requirement
  that states
• SBA requires an investigation and assessment of
  the environmental risk on all primary collateral
  offered as security for any SBA loan in order
  that the risks of environmental contamination can
  be assessed and addressed before the loan is
  approved. Further, SBA shall comply with the
  National Environmental Policy Act and any
  appropriate EPA regulations to insure our loan
  making takes into consideration the environmental
  consequences which may significantly affect the
  quality of the human environment including an
  analysis of the environmental impact and if
  adverse effects cannot be avoided then develop
  alternatives prior to loan approval.
• Source SOP 90-77, PN 5000-685, EPA All
  Appropriate Inquiry Rule, and the Environmental
  Policy Act, 42 U.S.C. 4321

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Typical Small Business Access Capital

• Based on latest SBA research, self-funding is the
  most typical approach followed by
• Asking friends or family for money.
• Cashing in retirement assets or savings.
• Asking customers for advance deposits or pre-pay.
• Using Credit Cards.
• Private investors or Angels
• Borrowing money from a bank.

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Environmental Capital Access

• Specialized lenders or sources.
• Many rely on internal financing.
• Targeted non-profit or government financing
  programs.
• Grants from other agencies or governments.
• Tax incentives from regulatory agencies as
  offsets.

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Environmental Capital Access

• VERY FEW OF THESE SOURCES WORK FOR MOST SMALL
  BUSINESSES

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Finding Environmental Capital

• For any business to grow, access to capital is
  critical even for unplanned reasons such as
  pollution control or energy conservation.
• For small business owners, it can be so demanding
  that it takes on its own life.
• The search can be very frustrating and time
  intensive.
• Few lenders interested because of the risk,
  profit model and expensive upfront costs.
• However, most turn to loans to finance energy
  conservation.

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Borrowing Money

• SBA issues loan guarantees to financial
  institutions, usually banks, to guaranty loans
  made to small businesses. This allows a lender
  to offer a loan the borrower can afford.
• Are we successful?
• Try about 1.2 billion a year in Arizona.
• In 2007, we estimate that over 180 million went
  towards energy conservation, pollution control or
  related uses such as plant modernization or
  retrofitting.

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Why SBA?

• SBA allow lenders to provide financing to small
  businesses when funding is otherwise unavailable
  on reasonable terms including where environmental
  risk may be an issue.

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Typical 100,000 LoanBASIS Prime (7.0) 2 ¾
10 Year Term Purpose Energy Conservation

• SBA 7(a) Loan Commercial Loan
• First year payments (PI) 15,692.40
  24,000.00
• Initial fees and costs 2,500.00 (1)
  1,500.00 (2)
• Renewal fees _at_ maturity 0
  2,152.29 (3)
• 1st Year Cost to Borrower 18,192.40
  28,502.29
• Renewal balance 0
  86,819.63
• Roll Over Cost w/Balance 18,192.40
  115,321.92
• SBA fee 2,000 plus 500 in closing costs
• Commercial loan fee of 1,500
• Renewal fee of 1 ½ (1,302.29) plus closing
  fees of 850
• Assessed July 2005 Based on moderate to high
  environmental risk and five lenders reporting.

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SBA Financial Assistance

• Loans
• SBA offers loans up to 2 million with an 75
  guarantee.
• Equity Investment
• Venture capital funding by SBA-licensed small
  business investment companies
• Surety Bonds
• Guaranties of bid, performance and payment bonds

Sound Presentation