SBA programs
- 1. SBA Programs Presented by: Michael Elkin Assistant District Director Entrepreneurial Development U.S. Small Business Administration San Francisco District Office 455 Market Street, 6th Floor San Francisco, CA 94105 (415)744-6820
- 2. Bank Financing with SBA’s Guarantee SBA is not a direct lender SBA partners with banks and lenders SBA guarantees bank loans (50%-85%) Bank’s risk is offset by the SBA guaranty Applicants apply directly to the bank/lender Bank decides when to use the SBA Bank gets paid if business fails Business remains liable for the debt
- 3. Regular 7(a) Guaranty Loan Terms SBA does not set actual terms, but does set parameters – Terms are negotiated between bank & borrower Maximum Loan Amount: $2,000,000 Maximum SBA Guaranty 75% to 85% of the loan, up to $1.5 million maximum Term (maturity) based on use of proceeds Generally 7-10 years for non-real estate
- 4. Regular 7(a) Guaranty Loan Terms (continued) SBA Guaranty fee: 2% to 3½% of SBA-Guaranteed amount For $100,000 loan, fee = $1,700 For $500,000 loan, fee = $11,250 Guaranty fee may be financed as part of loan Interest Rate Usually variable rate loan Generally Prime plus up to 2.75% Rate can be higher for loans under $50k or for SBA Express Loans
- 5. SBA Guaranty Loan Eligible Use of Proceeds All Legitimate Business Purposes Inventory Machinery & Equipment Working Capital Real Estate (owner-occupied only) Debt repayment (business debts only) Business Acquisitions Franchises (must be an eligible franchisor)
- 6. SBA Loan – Eligibility Issues Must be a for-profit business Must qualify as a small business concern Must be an eligible type of business Must meet personal financial resources test Must be at least 51% owned by U.S. Citizens or Legal Permanent Residents Cannot be on probation or parole
- 7. Benefits of the SBA Loan Reduces lender’s risk , making it more likely to approve a small business loan application Provides a longer loan term , or maturity All SBA loans are fully amortizing, i.e., no balloon payment
- 8. What Do I Need to Qualify? Five C’s of Credit C apacity to Repay C apital C apable Management C haracter & Credit C ollateral
- 9. How to Apply for an SBA Loan, continued Gather your business & personal financial information Personal financial statement Personal income tax returns for the last 3 years Business financial statements & tax returns for 3 years if already in business Decide on a Lender – factors to consider: Your experience with the lender Type of lender – National, regional, community bank
- 10. SBA Guaranty Loan Process SBA 1. 2. 4. $$ Business Owner Lender/Banker Business Owner applies to Lender Lender contacts SBA if lender requests SBA guaranty If approved, SBA guarantees lender’s loan Lender then can disburse loan to Business Owner 3.
- 11. SBA Express Loan Loan amounts up to $350,000 Offered by participating SBA Express lenders Variable interest rate – Up to 6.5% over prime for loans of $50,000 or less; up to 4.5% over prime for loans over $50,000 Loan term of 7 to 10 years May be used as a line of credit with a term up to 7 years No collateral required for loans up to $25,000
- 12. SBA Patriot Express Loan For Veterans & spouses and military community Fast turnaround for approvals Lowest interest rates, 2.25% - 4.75% over prime Maximum loan amount - $500,000 Use of Proceeds same as for 7(a) Apply through specially approved lenders
- 13. Other SBA Loan Programs SBA 504 Loan Only for Purchase/Improvement of long-term fixed assets such as real estate Apply through a lender, or an SBA-approved Certified Development Company (CDC)
- 14. SBA Microloan Program Loans up to $35,000 (average $10,500) Made by “Microloan Intermediaries” funded by SBA Fixed interest rate – ranges from 8 to 11% Maximum loan term is 6 years, fully amortized Training and technical assistance is provided to the borrower Apply to the SBA Microloan Intermediary that serves your county
- 15. SBA Microloan Intermediaries OBDC Small Business Finance www.obdc.com , 510-763-4297 Alameda, Contra Costa, Solano counties Southeast Asian Community Center 415-885-2743 Alameda, Contra Costa, Marin, Merced, Sacramento, San Francisco, San Joaquin, San Mateo, Santa Clara & Stanislaus counties
- 16. SBA RESOURCES Service Corp of Retired Executives Small Business Development Centers
- 17. SBA RESOURCES Women Business Centers AnewAmerica Community Corp. Bayview Business Resource Center Renaissance Entrepreneurship Center Women’s Initiative for Self Employment C.E.O. Women
- 18. SBA Websites SBA Home Page: www.sba.gov SBA Loan Programs: www.sba.gov/financing SBA San Francisco District Office: www.sba.gov/ca/sf