SBA Guaranty Loan Options for

Small Businesses

W. Lewis BurgerLender Relations Specialist

Georgia District OfficeAtlanta, GA

(404) 331-0100 Ext 304W.Burger@SBA.gov

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 504W.Burger@SBA.gov