SMALL BUSINESS ADMINISTRATION FINANCIAL ASSISTANCE PROGRAMS Neida M. Heusinkvelt (816) 426-4906

SMALL BUSINESS SMALL BUSINESS ADMINISTRATION FINANCIAL ADMINISTRATION FINANCIAL

ASSISTANCE PROGRAMSASSISTANCE PROGRAMS

Neida M. Heusinkvelt

(816) 426-4906

SBA FINANCIAL ASSISTANCE SBA FINANCIAL ASSISTANCE PROGRAMSPROGRAMS

7(a) Loan Guaranty Program7(a) Loan Guaranty Program - 75-85% - 75-85% Guarantees Guarantees • Made by private lendersMade by private lenders• SBA guarantees up to 85% of the loan amountSBA guarantees up to 85% of the loan amount• Maximum loan amount can be up to $2,000,000Maximum loan amount can be up to $2,000,000

7(a) program requirements7(a) program requirements::• Good credit historyGood credit history• demonstrated record for successdemonstrated record for success• good charactergood character• sufficient funds to operate the business at a profitsufficient funds to operate the business at a profit• collateral the loan as fully as possiblecollateral the loan as fully as possible


Flexible MaturitiesFlexible Maturities::• Up to 10 Years for working capitalUp to 10 Years for working capital• Up to 25 years for fixed assets Up to 25 years for fixed assets

– real estate, construction, equipmentreal estate, construction, equipment

Interest RatesInterest Rates::

• Negotiated between borrower and lenderNegotiated between borrower and lender• Typically cannot exceed prime rate plus Typically cannot exceed prime rate plus

2.75% except with SBAExpress loans 2.75% except with SBAExpress loans which can go higherwhich can go higher


1 Yr or less Any $$ 0.25%1 Yr or less Any $$ 0.25%

Over 1 yr $127,500 or less 1.0%Over 1 yr $127,500 or less 1.0%(lender keeps 25% of fee)(lender keeps 25% of fee)

Over 1 yr More than $127,500 2.5-3.5%Over 1 yr More than $127,500 2.5-3.5%

7(a) Program Guaranty Fees7(a) Program Guaranty Fees::

MaturityMaturity SBA PortionSBA Portion Guaranty FeeGuaranty Fee


7(a) 7(a) SBAExpressSBAExpress - Up to $350,000 - Up to $350,000 and underand under• with 50% guaranty - this program is with 50% guaranty - this program is

expandingexpanding• lender uses its own documentationlender uses its own documentation• can be used for a variety of can be used for a variety of

purposes, including purposes, including funding funding working capital lines of creditworking capital lines of credit

• Over 65% of SBA lending is now done Over 65% of SBA lending is now done thru this SBAExpress programthru this SBAExpress program!!

Smartway Financing Smartway Financing InitiativeInitiative

EPA/SBA have partnered to promote to the trucking industry an Upgrade Kit. Its technology will save fuel and money, while reducing pollution.

Kit includes:• Idle-reduction technology such as auxiliary

power units, generator sets, battery HVAC or direct fired heater units

• Low rolling resistance tires,• And tractor and trailer areodynamics

Smartway Financing Initiative

Eligibility targets small & medium sized trucking companies (>$23.5 Million)

Not a grant program – loan must be repaid with interest to lender.

Loan amounts range from $5,000 to $25,000. Interest rates are prime plus 4-6%. Loan terms range 3 – 10 years. Lenders may change a processing fee.


Can finance entire Upgrade kit or individual components only.

Uses existing SBAExpress program with 50% guaranty to lender.

Lender has option to not require collateral.

Business owners must personally guaranty the loan.

Lender will most likely use credit scoring for approval or decline decision-making.


For more info on Smartway Financing or for a list of participating lenders to go:

www.epa.gov/otaq/smartway/index.htm.


CAPLINES Loans • Used to meet short-

term and cyclical working capital needs

• Can be a one project type deal or can be on a revolving basis

• Three Types: Seasonal, Contract, Small Builder

Also, Two Types of Asset Based Loans Are Available:

• Standard Asset Based

• Small Asset Based


Export Working Capital Loan 90%Guaranty

• Pre-Export and Post-Export Transactions can be Financed

• Paid back from proceeds of the export sales

International Trade Loan• Used for producing goods or services

within the U.S. to export elsewhere • Can help firms adversely affected by

import competition


504 Fixed Asset Loan504 Fixed Asset Loan • Long-Term financing for major fixed assets Long-Term financing for major fixed assets

(not rolling stock).(not rolling stock).• Up to $1.3 million in SBA-backed debenturesUp to $1.3 million in SBA-backed debentures• Loan must create or retain one job for every Loan must create or retain one job for every

$35,000 of debenture proceeds provided by $35,000 of debenture proceeds provided by the SBA.the SBA.

• Available throughout Kansas and Missouri Available throughout Kansas and Missouri from CDCs in specific areasfrom CDCs in specific areas

• Typical Expansion project is 50%/40%/10%Typical Expansion project is 50%/40%/10%


MICROLOANMICROLOAN - $35,000 or less - $35,000 or less• Pool of Funds available thru microloan Pool of Funds available thru microloan

intermediaryintermediary– RMI in out state MORMI in out state MO

- Go Connection – KC metro Area plus - Go Connection – KC metro Area plus the Kansas Counties of Douglas & Shawneethe Kansas Counties of Douglas & Shawnee

Other states have microlenders available!Other states have microlenders available!

SURETY BOND GUARANTEESSURETY BOND GUARANTEES - processed in - processed in Denver CODenver CO

LOGICAL BUSINESS ADVICE LOGICAL BUSINESS ADVICE

Get an explanation on various sources of financing• Traditional and non-traditional

Get a realistic understanding of the strengths and weaknesses of the deal

Don’t be afraid to “shop” for a lender that fits your needs

Make credit requests both for the short-term and long-term benefit

HOW DOES AN APPLICANT APPROACH A LENDER ABOUT

SBA LOANS? Make advance appointment with Make advance appointment with

commercial officer that handles commercial officer that handles business loans.business loans.

Be prepared with a written Be prepared with a written business plan that includes total business plan that includes total cost of project with a breakout of cost of project with a breakout of what $$ are expected to be what $$ are expected to be borrowed and what $$ are borrowed and what $$ are expected to be injected by business expected to be injected by business owner!owner!

WHAT SHOULD AN APPLICANT EXPECT FROM A

LENDER?

A commitment from the lender to A commitment from the lender to review the business plan by a review the business plan by a specified date specified date oror an up-front an up-front explanation of why that lender does explanation of why that lender does not want to do that type of loan. not want to do that type of loan.

Expect the lender to ask for Expect the lender to ask for applicant’s SSN information so they applicant’s SSN information so they can authorize a credit report .can authorize a credit report .

NEGOTIATION ITEMS & LENDER DISCLOSURE

Interest rateInterest rate Term of loanTerm of loan Who will personally guaranty loanWho will personally guaranty loan What fees will be chargedWhat fees will be charged Time frame range in expecting an Time frame range in expecting an

answer “YES or NO” and time frame answer “YES or NO” and time frame to expect on disbursement of fundsto expect on disbursement of funds

Other services lender can provide Other services lender can provide

WHY DOES A LENDER SAY “YES”?

Likes balance of credit factors – strengths outweigh weaknesses

Lender’s institution has favorable experience with that industry

Your credit risk fits in with lender’s target portfolio

Lending officer is willing and able to be your advocate in loan committee

WHY DOES A LENDER SAY “NO”?

Weaknesses of individual deal outweigh strengths in areas such as:• Sales volume is optimistic or expenses

are underestimated or industry in turmoil• Management has no direct experience • Lender risk too high in loan amount

compared to applicant’s injection – D/E• Credit or character history is marginal or

poor• Collateral offered doesn’t offset other

risks Lender’s institution has unfavorable

experience with that industry

TIPS FOR FINANCIAL TIPS FOR FINANCIAL PREPARATIONPREPARATION

FIRST be prepared-• Asking for $$ before plan is in place is

likely to create poor first impression with lender - you only get one chance to make a good first impression!

Understand the loan process and consider how their application will be compared to their peers!

You need to establish time frame for decision making that is realistic and decide if lender can meet those needs..

Documents

SMALL BUSINESS ADMINISTRATION FINANCIAL ASSISTANCE PROGRAMS Neida M. Heusinkvelt (816) 426-4906