Presented by the Tennessee District Office of the SBA

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Presented by the Tennessee District Office of the
SBA
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Why SBA Loans are Important to Small Business

• SBA loan guarantees give bankers an added
  incentive to make small business loans
• SBA loans can provide longer terms for borrowers
• SBA loan guaranties allow banks to provide funds
  when bank policy prohibits a loan

Financial Assistance
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SBA Borrower Requirements

• Good character
• Management expertise and commitment to succeed
• Reasonable personal contribution or business
  equity
• Feasible business plan
• Sufficient collateral
• Ability to repay loan from projected operating
  cash flow

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Eligibility Requirements

• Business must
• Be operated for profit
• Not exceed size standards
• Not be engaged in lending, real-estate
  development, investments or speculation
• Not be engaged in promotion of a specific
  religion
• Not restrict patronage
• Not engage in prurient sexual materials or
  services
• Not be a gambling enterprise

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SBA Serves a Wide Variety of Capital Needs
2.0 mil 7(a) Loans
1.5 mil 504 Loans
500K Patriot Express
Growth in Business Changes in Capital Need
350 k SBA Express Small/ Rural
Lender Advantage
250 k Community Express
35 k Microloans
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MICROLOANS
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MicroLoans 7(m) MicroLoan Program

• Direct loans through nonprofit intermediaries
• Loans of up to 35,000
• Fast turnaround
• Up to six years to repay
• Used for
• Machinery, equipment, fixtures
• Leasehold improvements
• Inventory
• Working capital
• Technical and management assistance available

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• COMMUNITY EXPRESS

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CommunityExpress Eligibility

• For small businesses whose principal office is
  located in a HUBZone or Community Reinvestment
  Act (CRA) designated area http//map.sba.gov/hubzo
  ne/init.asp http//www.ffiec.gov/Geocode/default.a
  spx
• For loans of 25,000 or less regardless of where
  the businesss principal office is located

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CommunityExpress Eligibility

• For Headquarters-approved district office
  initiative to support local community/economic
  development

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CommunityExpress

• Underwriter uses own forms -- not SBAs
• Use banks lending policies -- not SBAs
• Loans or revolving lines of credit to 250,000
• Standard guaranty of 90 until 12/31/09 or funds
  are depleted
• Interest rates 2.25 to 4.75
• Technical assistance is required

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SBA EXPRESS
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SBAExpress

• Underwriter uses own forms -- not SBAs
• Use banks lending policies -- not SBAs
• Loans or revolving lines of credit to 350,000
• SBA guaranty is 50
• Interest rate maximums apply

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SBA Small/Rural Lender Advantage EXPRESS
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SBA Small/Rural Lender Advantage

• One page application
• Loans or revolving lines of credit to 350,000
• Standard SBA guaranty of 90 until 12/31/09 or
  funds are depleted
• Interest contingent on amount borrowed and
  repayment term

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PATRIOT EXPRESS
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PatriotExpress Loan Initiative

• For the military community
• Loans up to 500,000
• SBA guaranty of 90 until 12/31/09 or funds are
  depleted
• Interest rate-prime plus 2.25 to 4.75

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504
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A Typical 504 Project

• Up to 1.5 million in SBA-backed debentures
• A private sector loan covering up to 50
• A loan from the CDC covering up to 40and
• At least 10 equity from the small business
• Participating lender has first lien on assets

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7(a) Loan Guaranty
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Basic 7(a) Loan Guaranty Program

• You apply for a loan guaranty with an SBA
  participating lender for loans 2,000,000 and
  under
• In some instances, lender submits application for
  SBA review and approval prior to disbursement of
  funds
• Other banks have full autonomy

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Terms

• Flexible maturities
• Generally 7 to 10 years for working capital
• Generally up to 25 years for fixed assets
• Real estate
• Construction
• Equipment (Not to exceed useful life of
  equipment)
• Interest rates
• Negotiated between borrower and lender
• Typically cannot exceed prime rate plus 2.75

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SBA One-Time Borrower FeesWaived until 12/31/09
or funds are depleted

• Maturity Total Loan Amount Guaranty Fee
• Year or Less Any amount up to 1
  million 0.25
• Over 1 Year 150,000 or less 2.0
• Over 1 Year Over 150,001 to 700,000 3.0
• Over 1 Year Over 700,001 3.5
• Fees apply only to guaranteed portion of loan

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Fee Calculation Example of Waived Fees

• Total Loan x Guaranty Max.
  Guaranty Total Fee
• 150,000 x 85
  127,500 2,550
• 700,000 x 75 525,000
  15,750
• 1,000,000 x 75
  750,000 26,250

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Questions?
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U. S. Small Business AdministrationJacqueline
Merritt615/736-7465jacqueline.merritt_at_sba.gov