American Recovery and

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• American Recovery and
• Reinvestment Act (ARRA)
• Recovery Act
• Building Partnerships for the 21st Century
• Albuquerque, New Mexico
• John C. Woosley, District Director
• 15 July 2009

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• What is it?
• A plan to grow our economy by
• Jump-starting job creation
• Restarting lending
• Investing in small business

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Attacks Several Problems Small Businesses Face

• Provides financial relief to entrepreneurs and
  lenders
• Provides capital and tools for small businesses
• Helps unlock credit markets for small businesses
• Temporarily eliminates fees on some
  SBA-guaranteed loans

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• Bill Divided Into 9 Components
• Temporary Elimination of Loan Fees
• Temporary 90 Percent Guarantees
• Secondary Market Liquidity for Section 7(a) loans
  
• Secondary Market for First Mortgages associated
  with Section 504 Certified Development Company
  loans

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• Bill Divided Into 9 Components
• Expanded Microloans
• Surety Bond Program Expansion
• SBIC Program Expansion
• ARC Loan Program (Available 6/15/2009)
• Expanded Refinancing Project for Section 504
  loans (Coming Soon)

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SBAs Temporary ARRA Loan Program Changes
At-A-Glance

• SBA 7(a) Guaranteed Loan Program Standard, CLP
  or PLP
• 2 million max
• No Borrower Fee
• up to 90 guarantee
• Small/Rural Lenders Advantage Initiative
• 350,000 max
• No Borrower Fee
• up to 90 guarantee
• Community Express T.A requirement
• 250,000 max
• No Borrower Fee
• up to 90 guarantee with Technical Assistance
• Patriot Express for Vet/Military transition
• 500,000 max
• No Borrower Fee
• up to 90 guarantee for specific borrowers
• Export Express for exporters
• 250,000 max
• No Borrower Fee

• Export Working Capital for exporters
• 2 million max
• No Borrower Fee
• 90 guarantee (NO CHANGE)
• SBA Express
• 350,000 max
• No Borrower Fee
• 50 guarantee (NO CHANGE)
• ARC Loans
• 35,000/borrower
• No Borrower Fee
• No Interest to Borrower
• 100 guarantee
• 504 Loan Program
• Up to 2m routinely, or 4m if manufacturer
• No Borrower Fee
• No 3rd Party Lender Fee
• 504 1st Lien Refinancing

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Temporary Fee Eliminations

• Temporary fee eliminations for borrowers on 7(a)
  loans and for both borrowers and lenders on
  Section 504 loans
• The fee eliminations are retroactive to Feb. 17,
  2009, the day the Recovery Act was signed 

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• Temporary 90 Percent Guarantees
• Guarantees of up to 90 percent on most types of
  7(a) loans to qualified small businesses

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TARP (Secondary Market)

• Up to 15 billion in TARP funds to unfreeze the
  small business lending market
• Treasury will purchase existing and new
  SBA-backed loans made by community banks, credit
  unions and other small lenders
• Eligible
• Guaranteed portion of most 7(a) loans
• 50-75-85-90 guarantees
• 504 first mortgage loans (not guaranteed)

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7(a) Secondary Market Liquidity

• SBA will assist broker-dealers purchasing
  SBA-guaranteed 7(a) loans from lenders
• This program will help restore the secondary
  market for 7(a) loans

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Secondary Market for First Mortgages Associated
with 504 CDC Loans

• New process to bring fresh liquidity to the 504
  first-mortgage market
• SBA will establish a process for private-sector
  entities to apply for federal guarantees on pools
  of first-lien position 504 loans

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Expanded Microloans

• Extra funding for SBA-backed microlenders
• Enough for 50 million in new SBA microloans
• Loans up to 35,000
• Technical assistance, training for every borrower
  
• Entrepreneurs can apply to Microlender
  immediately
• WESST is NM SBA-designated Microlender

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Surety Bond Program Expansion

• Raises maximum contract amount covered by SBA
  surety bond guarantee from 2 million to 5
  million
• Expands up to 10 million under certain contracts
• Helps small businesses better compete for
  contracts
• 2009 NM Resource Guide lists providers (page 28)

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SBIC Program Expansion

• Helps SBICs better leverage capital to invest in
  small businesses
• Maximum SBA funding levels are lesser of up to
  three times the private capital raised or 150
  million
• SBIC can now invest 10 percent of total capital
  in a single small business
• Requires licensee dollar investment of 25 percent
  in smaller businesses
• SBA-Designated Entity not present in NM

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Americas Recovery Capital (ARC) Loan Program

• Banks will be delivery system
• Maximum loan 35,000
• 1 loan/borrower
• 100 guarantee by SBA
• Interest Free to Borrower
• Deferred payments repayment begins 12 months
  after final disbursement-up to six months

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Americas Recovery Capital (ARC) Loan Program

• Qualifying loans/debt eligible to benefit from
  ARC proceeds
• Secured and unsecured conventional loans
  (mortgages, term and ROC)
• Capital leases
• Notes Payable to vendors/suppliers/utilities
• SBA 504-first mortgage loans
• Credit card obligations owed by the businesses
• Loans made with an SBA guaranty after February
  17,2009
• CANNOT cover payments on existing SBA loans
  approved before Feb. 17, 2009

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Americas Recovery Capital (ARC) Loan Program

• Designed for viable small businesses that need
  help making payments on existing, qualifying
  loans for up to 6 months.
• A viable Small Business is one that has been
  profitable in the past, but is just beginning to
  struggle with making loan payments, and can
  reasonably project that it can get back on track
  by with the infusion of ARC loan funds and the
  benefit of deferred payments.

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Americas Recovery Capital (ARC) Loan Program

• Sample Questions Lenders Might Ask to Determine
  Eligibility
• Does your small business have an established
  banking relationship?
• Has your small business been in operation for a
  minimum of 2 yrs?
• Do you have financial statements (B/S, I/S,
  cash flow statement) demonstrating biz had
  positive cash flow in 1 of the past 2 yrs (or as
  long as your business has been operating, if less
  than 2 yrs)? 
• Does your cash flow projection for the next 2 yrs
  indicate sufficient cash flow to meet your
  current and future loan payments?

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Americas Recovery Capital (ARC) Loan Program

• Sample Questions Lenders Might Ask to Determine
  Eligibility
• Re your debts, is your business no more than 60
  days past due on any loan?
• Can be current on all debt obligations and still
  qualify for an ARC Loan
• Is Your Business Suffering An Immediate Financial
  Hardship?  For Example
• Declining Sales Revenues
• Difficulty In Making Loan Payments On Existing
  Debt
• Difficulty In Paying Employees
• Difficulty In Purchasing Materials, Supplies, Or
  Inventory
• Difficulty In Paying Rent And/Or Other Operating
  Expenses

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Expanded Refinancing Project for Section 504 Loans

• SBA works with CDCs to restructure, refinance
  certain existing long-term projects in
  conjunction with expansion
• Loans eligible for refinance must have originally
  financed long-term fixed assets
• If debt refinancing is added to an already
  approved 504 project, it will be processed as an
  amendment to the original loan and not as a new
  loan (IN 5000-1103)

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Important Note

• SBA is working to implement these elements with
  the goal of having the broadest impact on small
  businesses as rapidly and effectively as possible
• Check SBAs ARRA Website for Future Updates
  www.sba.gov/recovery/

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For more information SBA New Mexico District
Office 625 Silver SW, Suite 320 Albuquerque, NM
87102 www.sba.gov/nm 505-248-8225 Toll Free NM
Small Business Hotline [phone], select
Option 2, followed by selection of Option 3.