Slides from Public Resources for Business Development event for Minnesota Cup and CleanTech Open...

Agricultural Utilization Research Institute

Leading Agricultural Innovation From Idea to Reality

Kate ParisAugust 2010

AURI’s Mission• To foster long-term economic benefit through

increased business and employment opportunities with:– Research and development of innovative new uses or

value improvements for Minnesota agricultural commodities and products,

– Implementation of basic and applied research to support innovation, technology and growth of the agricultural industry; and

– The development of renewable energy and biobased opportunities from Minnesota agricultural commodities and coproducts.

AURI Focus Areas

• Renewable Energy• Food Processing• Bio-Based Products• Coproduct or

Waste Product Utilization

Renewable Energy• Opportunity

– Liquid Biofuels– Biogas– Biomass Utilization

• AURI Services– Densification– Pellet formulation– Gas analysis

• Examples– Northern Excellence Growers– Alternative Energy Solutions

Food Processing• Opportunity

– Food product development– Functional Foods– Local Foods

• AURI Services– Recipe Formulation– Nutritional Labels– Shelf Life Testing– Food Safety

• Example– French Meadow Bakery

Minneapolis

Bio-Based Products

• Opportunity – replace petroleum and other

ingredients with ag-based or other natural products

– Industrial, personal care, consumer products

• AURI Services– Product formulation– Analytical testing

• Example– Suntava

Coproduct Utilization

• Opportunity – A “second harvest”– Offers revenue stream or cost

savings– Increased efficiency greater

• AURI Services– Densification– Pellet formulation– Analytical testing

• Examples– Compost-A-Mat– Swheat Scoop

Services Offered By AURI

• Direct Client Services– Technical and market feasibility, analytical testing

of processes and products, etc.– Driven by Individual Clients

• Broad Impact Initiatives– Identify emerging opportunities with potential to

impact large number of producers, public information

– Driven by Industry Stakeholders

• Targeted Network Development

AURI Facilities

• Meat Lab, Marshall• Fats & Oils Lab,

Marshall• Product Development

Kitchen, Crookston• Microbiology Lab,

Crookston• Coproducts Lab,

Waseca

When to Call AURI

• Working on Renewable Energy, Food, Biobased, or Coproduct product or process development

• Proof of Concept, Proof of Application, Feasibility Stages

• Working with an agricultural product• Looking for information

What To Expect• Work with a Project Development

Director to identify need, explore resources, and see how AURI can help.

• Technical Assistance or Product Development Services Programs

• Getting connected to a variety of resources that will help your business achieve its goals

Who To Contact

• Website www.auri.org • Crookston Office (218) 281-7600• Marshall Office (507) 537-7440• Waseca Office (507) 835-8990

• Kate Paris– kparis@auri.org – 651-331-0936

Agricultural Utilization Research Institute

www.auri.org

Rural Business-Cooperative Service

1. Business & Industry Loan Guarantees2. Rural Business Enterprise Program 3. Rural Business Opportunity Program 4. Intermediary Relending Program5. Rural Economic Development Loans & Grants 6. Value-Added Producer Grants 7. Rural Cooperative Development Grants8. Small, Social Disadvantaged Producer Grants9. Rural Energy for America Program10. Rural Microenterprise Assistance Program

15

A rural area is other than an urban area of 50,000 or more in population and its adjacent urbanized areas, as determined by the latest federal decennial census. Rural area determinations can be made by accessing the following website: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

Rural Areas

16

• Loan Limits

• Percent of Guarantee

• Equity

• Guarantee Fees

Business & Industry (B&I)

17

Ineligible Purposes:

• Housing

• Most agricultural production

• Golf courses

• Lines of credit

• Charitable, fraternal or church organizations

Business & Industry (B&I)

18

The Sweet Spot:

• $500,000 to $7,500,000 loan

• > 10% tangible balance sheet equity per GAAP

• Expansion (RE, M&E); working capital; limited refinance

• Owner has successful track record

• Realistic projections and assumptions

• Time enough to do it right

Business & Industry (B&I)

Intermediary Relending Program (IRP)

Program Purpose:

To finance business facilities and community development projects in rural areas; for innovative projects; for land, building construction or repair, equipment; for working capital, interest, feasibility studies, professional services.

Intermediaries:

Private nonprofit corporations, any state or local government, Indian group, or cooperative. Intermediary Relending Program money is lent to them, which in turn is re-lent by them to ultimate recipients. The ultimate recipient must not be able to obtain credit elsewhere.

Intermediary Relending Program (IRP)

Intermediaries:

• 1% Interest for a term of up to 30 years.

•Defer principal for 3 years.

• Initial loan limited to $2MM, Subsequent loans limited to $1MM and total debt limited to $15MM.

Ultimate Recipients:

• Interest rate and term established by Intermediary in work plan (Usually 4 - 6% interest with terms of 3 to 10 years depending on loan purpose).

•Maximum loan of $250,000 or 75% of the project cost whichever is less.

Intermediary Relending Program (IRP)

• Microenterprise Development Organization (MDO)• Microentrepreneur

Rural Microentrepreneur Assistance Program (RMAP)

• Loan – up to $500,000; $50,000 to business• Grant – up to 25% of loans or for technical assistance only,

up to $130,000

Rural Microentrepreneur Assistance Program (RMAP)

• Agricultural Producer

• Rural Small Business - meets SBA definition of small business (typically 500 or fewer employees and $20 million or less in total annual receipts). Most non-profits, such as schools, are ineligible. Tribal electric utilities are eligible.

Rural Energy for America Program(REAP)

25

26

Ineligible Purposes:

• Non-profits, such as schools

• Residential Use

• Vehicles and farm tillage

• Research and Development

Rural Energy for America Program(REAP)

• Maximum guaranteed loan: $25,000,000

• Grants cannot exceed 25% of eligible project costs, or:

$500,000 ($2,500 minimum) -- renewable energy

$250,000 ($1,500 minimum) -- energy efficiency

Rural Energy for America Program(REAP)

Further Information

• General information: www.rurdev.usda.gov/rbs/busp/bpdir.htm

• Program regulations: rdinit.usda.gov/regs/regs_toc.html

• Minnesota web site: www.rurdev.usda.gov/mn

• E-forms: http://rdinit.usda.gov/regs/regs_toc.html

SBIR/STTR BasicsBecky Aistrup

SBIR/STTR Program DirectorMinnesota Science & Technology Authority

www.PositivelyMinnesota.com/SciTech becky.aistrup@state.mn.us

(651) 259-7634

North Central Cleantech Open Public Resources Seminar,

August 16, 2010

Program Descriptions• SBIR (Small Business Innovation Research):

• 2.5% set-aside of extramural research budget for small businesses to participate in federal R&D

• STTR (Small Business Technology Transfer): • 0.3% set-aside program to facilitate cooperative

R&D between small businesses and non-profit research institutions

• Both offer potential for commercialization

Three Phase Program• Phase I

– Proof-of-concept/feasibility study– SBIR = Up to $150,000 for 6 month project – STTR = $100,000 for 12 months

• Phase II– Full Research/R&D effort– SBIR = Up to $1 Million for 2 year project– STTR = $750,000 for 2 years

• Phase III– Commercialization phase– Requires the use of non-SBIR/STTR funds

Program Objectives

• Stimulate technological innovation• Strengthen/increase the role of small

business in meeting Federal R&D needs• Increase private sector commercialization of

SBIR R&D• Foster participation by socially and

economically disadvantaged and women-owned small businesses

Comparing SBIR & STTR Programs

SBIR STTRFirm eligibility U.S., for-profit, <500 employees including affiliates

Collaboration w/research institution

May subcontract Must collaborate with university/nonprofit research institution

PI (Principal Investigator)

Must be >50% time employed by firm

May be employed by firm or research institution

Work breakdown Firm 2/3 or more of work in Phase IFirm 1/2 or more of work in Phase II

Firm must perform 40% or more of work and research institution >30% of work (Phase I and Phase II)

Applies at the time of award and for the duration of the project

Participating Agencies

$2.5 Billion in FY09

Agency * SBIR funding STTR fundingDoD $1.23 Billion $141 Million

HHS (NIH, CDC, FDA) $600 Million $72 Million

Energy (DOE) $138 Million $17 Million

NASA $113.4 Million $13.6 Million

NSF $97 Million $13 Million

Homeland Security (DHS) $20.5 Million NA

Agriculture (USDA) $18.3 Million NA

Education $9.9 Million NA

Transportation $8 Million NA

Commerce $8 Million NA

EPA $5 Million NA * Grants Contracts Both Grants & Contracts

Agency Differences

• Many differences among agencies:– Funding levels– Topic areas– Number and timing of solicitations– Proposal preparation instructions– Submission process– Type of award– Review process– Odds of receiving funding– Commercialization assistance

Read solicitations carefully!

Grants vs. Contracts• SBIR/STTR programs that award GRANTS:

– Rarely the Final Customer– Will not buy your product/process/software or your

intellectual property– They do want to see you commercialize your

research

• Programs that award CONTRACTS:– Will specify agency needs and request solutions– Will likely be a Final Customer

Phase I Process

• Agencies describe R&D topics in solicitations.

• Firms prepare proposals. Unsolicited proposals are not accepted.

• Agencies evaluate on technical merit, firm’s qualifications, commercial potential & societal impact.

• Agencies make Phase I awards.

Solicitation Topics

Proposal Submission

Evaluation

Phase I Award

~6-

9 m

onth

s

Phase II Process

1. Only Phase I winners may apply2. Phase II applicants at DOD (and select others) must

be invited to submit Phase II.3. Submission timing/deadlines vary –talk to your

funding agency– 4 to 18 month gap between Phase II submission & award

~5 years from Phase I through Phase III Commercialization

Your Odds of Winning

• Phase I SBIR Proposal: About 1 in 8/9• Phase I STTR Proposal: About 1 in 5• Phase II Proposal: About 40%-70%

– varies by agency

• ½ of Phase I proposals go to companies who never won before.

Typical Award Winner Profile

• Proposed solution meets agency need• Submitted 2+ proposals before winning• Understands current state-of-the-art and can

relate it to their innovation• Adequately communicates path to market• Adequate qualifications & experience for

research & commercialization• Adequate support staff and equipment

Ask before you decide to participate:

• Does winning enhance your corporate goals?

• Do you possess the required technical competence?

• Can you gain access to necessary resources?• What agencies should you consider?• What agency need/opportunity must you

address?

Getting Started: Register for Electronic Submission

1. Obtain a DUNS number FIRSTDun & Bradstreet: 1-866-705-5711 or

http://fedgov.dnb.com/webform/displayHomePage.do

2. Register in Central Contractor Registry CCR site: http://www.ccr.gov

Keep a copy of all usernames/passwords!

3. Register your organization on Grants.gov

Guide & Checklist

Tutorial

Getting Started: Register for Electronic Submission

Assistance with grants.govhttp://www.grants.gov/applicants/resources.jsp

Find a Topichttp://www.grants.gov/applicants/find_grant_opportunities.jsp

Register for Opportunity Notifications

Multiple browsing & searching options

Getting Started: Find a Topichttp://www.pnl.gov/edo/opportunities/sbir.stm

Cross-agency alerting service

Getting Started: Find a Topichttp://www.zyn.com/sbir/

Find Your Local Resourceshttp://www.sbir.gov/

Why You Should Participate

• No pay-back requirement! • No equity lost!• Visibility and credibility• IP rights maintained by the small business

– Data rights extend to 4 years after project completion, 5 yrs. for DoD

• Seed money for high risk R&D projects that may attract strategic partners or future investment

More Reasons to Participate

• Small and isolated companies compete on equal footing

• Opportunity to establish a sole-source position with federal government

• Fosters partnerships• No penalty for failure, other than time

invested

Useful Links

• http://www.sbir.gov/ (Official SBIR portal)• http://www.zyn.com/sbir/ (SBIR Gateway)• http://www.pnl.gov/edo/opportunities/sbir.stm

(SBIR Alert)• http://www.ccr.gov (CCR site)• http://www.grants.gov (Grants.gov site)• http://center.ncet2.org/ (NCET2 courses and

resources site)

Thanks to colleague Kris Johansen for slide content:

Kris JohansenOffice of Intellectual Property and Technology Transfer

Iowa State University Research Foundation, Inc.kajohans@iastate.edu

515.294.3208

Contact information:

Becky Aistrup

MN SBIR/STTR Program Director

651.259.7634

becky.aistrup@state.mn.us

Small Business Administration

www.sba.gov

To help small businesses succeed

Our Mission

Loan Programs

SBA Makes Guaranteed Loans

Maximum rates: 2 ¼ % to 2 ¾ % above prime

Maximum Loan: $2,000,000

Guarantees: 75% to 85%

Fees: 2% to 3.5%

Loan Programs

Programs Eligibility

-The business must be defined as small (defined by either gross revenue or number of employees)

-A business must be operated as a “for profit”

-Business must be found in good character

-Repayment ability

Using The Programs

•SBA programs-•7(a)

•SBA Express•Community Express

•Patriot Express•Export Express

•Rural Lender Advantage•504’s

•Caplines •Microloans

•Surety Bonds

Using The Programs

2009 Recovery Act

ARC loans

Dealer Floor Plan Loans

*These loans expire at the end of September

Resources

•SCORE

•Women’s Business Center

•Small Business Development Center (SBDC)

Government Contracting

•Businesses that want to sell goods to the federal government

•To sell to the Federal Government then they need to register with the government

(CCR)

Minority based groups

One or more individuals that can demonstrate that they are socially or

economically disadvantaged.

8(a) Program7(j) Program

Mentor Protégé

Government Contracting

Small Business Exporting

Exporting Working Capital (EWCL)

-Short term Financing for small exporters

-Maturity

-May be used for Pre- and Post- shipment

-One page application

•International Trade Loan

-Long and Short term Financing

-Loan usages for businesses that are:

-Preparing or engaging in international trade

-Adversely affected by import competition

Small Business Exporting

Advocacy

•To protect, strengthen and effectively represent the nation's small businesses within the federal government's legislative and rule-making processes.

•To reduce the burdens that federal policies impose on small firms.

Thank you!

Any Questions…

There’s been no better time for an SBA Loan

Jeff Kemink

District President – Business Banking

Minneapolis, MN

2010

© 2009 Wells Fargo Bank, N.A. All rights reserved. For public use.

Why there’s never been a better time for an SBA Loan

More companies than ever are eligible

Tangible net worth <$8.5MM

Net profits <$3MM in each of last two years

Transaction costs are at an all time low

Interest rates are at all time lows

67© 2009 Wells Fargo Bank, N.A. All rights reserved. For public use.

Advantages to SBA Loans

Lower down payment

Up to 90% financing

For Purchase of Owner Occupied Real Estate

Up to 85% financing

For Business Acquisition Transaction

Up to 90% financing on Partner Buy Out

68© 2009 Wells Fargo Bank, N.A. All rights reserved. For public use.

Advantages to SBA Loans

Longer amortization

Up to 25 year term

on owner occupied commercial real estate

Up to 10 Year Term

For Business Acquisitions, equipment purchase

or working capital

Means lower monthly payments

69© 2009 Wells Fargo Bank, N.A. All rights reserved. For public use.

Types of Loans

Acquisition of owner-occupied real estate

Financing available on projects up to $9MM

7(a) is up to $2MM Can include other expenses including

moving expenses, improvements

Refinance of existing CRE loans

Up to $2MM

Must cut payments by 10% or more

70© 2009 Wells Fargo Bank, N.A. All rights reserved. For public use.

Types of Loans

Business acquisition

Individual or corporate buyers

Partner or Management Buy-Outs

Loans up to $1.75MM

Start Ups Requires 30% equity

Business plan with projections and assumptions

71© 2009 Wells Fargo Bank, N.A. All rights reserved. For public use.

Five Helpful Hints to Get Started

On Obtaining an SBA Loan

1. Get Your Financial House In Order

2. Realistically Define Your Goals

3. Recognize Your Strengths And Weaknesses

4. Start Early

5. Work With An Experienced Lender

72© 2009 Wells Fargo Bank, N.A. All rights reserved. For public use.

#1: Get Your Financial House in Order

A. Obtain a copy of your personal credit report. Check for any inaccuracies or mistakes. Make certain that all accounts are current and there are

no outstanding judgments or liens. If there is any derogatory information, be proactive and

prepare to explain the problems and why the problem is not likely to occur again.

73© 2009 Wells Fargo Bank, N.A. All rights reserved. For public use.

#1: Get Your Financial House in Order

B. Gather personal and/or business records For the past three years, including:

Tax returns, financial statements with schedules and attachments, and interim YTD financial statements.

Any other financial documents that might help a lender.

Neatly photocopy all of the documents and prepare them for your presentation.

74© 2009 Wells Fargo Bank, N.A. All rights reserved. For public use.

#2: Realistically Define Your Goals

Evaluate your needs and purpose for financing Determine the specific use of the borrowed funds Prepare projected cash flows to determine

your estimated future revenues from the project Have a specific loan amount in mind

Never ask to borrow as much money as possible. Be realistic about your contribution

You will be required to finance a portion of the project costs. Be prepared to have guarantors and possible collateral

75© 2009 Wells Fargo Bank, N.A. All rights reserved. For public use.

#3: Recognize Your Strengths And Weaknesses

Address your strengths and challenges Be realistic & honest

Most common weaknesses lenders find are: Inability to demonstrate repayment ability Insufficient collateral Lack of management experience Insufficient cash injection Poor personal credit

Address weaknesses with a noteworthy

and compensating strength.

76© 2009 Wells Fargo Bank, N.A. All rights reserved. For public use.

#4: Start Early

Be realistic about the timeframe The more you do to prepare, the smoother the process

Understand the process for your request Small lines of credit or loans (under $100,000)

May be credit scored approvals Commercial transactions (loans over $100,000)

Requires complete underwriting process

Again, be prepared and reap the benefits

77© 2009 Wells Fargo Bank, N.A. All rights reserved. For public use.

#5: Work With An Experienced Lender

Starts with banker/lender knowledge Bankers and lenders should know their products and

process, the credit parameters, and eligibility issues

Check your institution Just because your deposit is there does not mean you

have to get a loan from the institution

If you’re getting an SBA loan Are they a top-ranked SBA lender?

Are they a Preferred Lender? Authority to make credit decisions on behalf of the SBA,

which means a quicker process

78© 2009 Wells Fargo Bank, N.A. All rights reserved. For public use.

Why Wells Fargo SBA Lending

#1 SBA 7(a) lender in the nation, based on $

#1 SBA 7(a) lender in Minnesota For the last 10 years running!!

Preferred SBA Lender

Experienced lenders and underwriters

It’s a marathon not a sprint

We don’t sell our loans

79© 2009 Wells Fargo Bank, N.A. All rights reserved. For public use.

How to get started

Just pick up the phone or email:

Meghan Hormann

Wells Fargo SBA Lending

Tel: 612-667-5031

Cell: 507-993-5590

80© 2009 Wells Fargo Bank, N.A. All rights reserved. For public use.