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SBA Guaranty Loan Options for Small Businesses · PDF fileapplicant and lender may consider an...

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  • SBA Guaranty Loan Options for

    Small Businesses

  • W. Lewis BurgerLender Relations Specialist

    Georgia District OfficeAtlanta, GA

    (404) 331-0100 Ext [email protected]

  • SBA Loan Guaranties-Understanding How It Works

    SBA does not provide

    Direct business loans(except in a natural disaster)

  • Applicant applies for commercial loan at bank first approach your current banker

    If loan doesnt fit standard underwriting guidelines & needs credit enhancement, applicant and lender may consider an SBA guaranty

    Lender submits application to SBA After SBA guaranty approved, lender closes

    and disburses funds SBA (US tax payer - co-signs) guaranties

    range from 50-85%

    SBA Loan GuarantyProcess

  • SBA Eligibility Requirements

    For profit

    May not exceed SBA size standards (Generally less than 500 employees and $15M in Gross Sales)

    Businesses must:

  • SBA Requirements (Cont)

    Cash/Equity injection required: generally 20-30%

    Personal guaranties required for all with 20% + ownership

    Collateral is required expect to pledge your home.

  • SBA Requirements (Cont)

    Ineligible Businesses: Non-profits Businesses engaged in lending activities Speculative or investment type businesses Businesses engaged in gambling Illegal businesses Businesses providing sexual material Businesses promoting religion

  • Use of Proceeds

    Expand & renovate facilities Purchase machinery & equipment, construct

    leasehold improvements Finance receivables & working capital Refinance existing debt (with compelling reason) Finance seasonal lines of credit Construct or purchase of commercial buildings

    (Owner Occupied: 51%+ occupied by your business) Hospitality/RV Park OK Mobile Home Park/Apartments not OK

  • Loan Terms

    Flexible maturities: Up to 10 years for working capital Up to 10 years for equipment Up to 25 years for fixed assets:

    Real estate Capital Equipment (based on economic life of equipment)

    Interest rates: Prime plus (depends on program)

  • Fees

    Guarantee Fee

    Up front of 0% to 3.75% and

    ongoing of 0% to 0.519%And a

    Packaging Feeper SBA Guidelines

  • SBA Guaranty Loan Programs

    7(a) loan guarantees Basic (Up to $5M) Industry Specific/Subset

    CAPLines (Capital Lines of Credit) Export Working Capital Program (EWCP) International Trade term loans

    Expedited (Express) Programs 504 fixed asset financing Micro-loan program

  • SBA Guarantee Loan Programs

    Specifics of 7as

    See Quick Reference to

    SBA Loan Guaranty Program Matrixupdated October 2014

  • 504 Fixed Assets Financing

    Sometimes referred to the Real Estate Loan, but is use for non-rolling equipment too

    Long term - 10 & 20 year terms

    Provided by Certified Development Companies (CDC) see page 11 of GA Small Business Guide

    Owner Occupancy: 51% of existing structure or 66% for new construction

  • To Qualify for a 504 Loan

    Eligible and Ineligible: Same as 7a

  • A Typical 504 Project

    A lender (bank) provides 50% first position lien at 50% Loan to Value

    CDC (504 loan) provides up to 40% second position lien

    At least 10% down payment by applicant

  • Micro-Loans

    Micro Lenders more likely to do start ups Up to $50,000 (maybe more) to small businesses Used for

    Machinery, equipment & fixtures Leasehold (Tenant) Improvements - TI Inventory Working capital

    Business management assistance is available and maybe mandatory

    For list of Micro Lenders, see page 29 of the Georgia Small Business Resource on our site

  • Business Plan Including: Purpose of loan Business Managerial History (resume) Business and Personal Financial Statements

    - Accounts receivable and payable Copy of Lease Owner investment - cash and/or other hard assets Projections of income, expenses & cash flow

    Visit with SCORE and/or Small Business Development Centers (SBDC) for assistance before going to bank

    What to take with you to the bank

  • SBA Websitesba.govsba.gov/ga for Georgia-specific informationsba.gov/financing for SBA loan programssba.gov/for-lenders for SBA lending partners

    Additional Information

  • www.sba.gov/ga

    Georgia OfficeResource Guide

    Click here

  • Page 29 for Mirco Lenders

  • Questions & Answers

    Q & A

    W. Lewis BurgerLender Relations Specialist

    Georgia District OfficeAtlanta, GA

    (404) 331-0100 Ext [email protected]