Small Business Administration (SBA) Financing Options

A guide by Blitt Capital Consulting

Selling your ideaSBA financing is designed to provide small businesses with access to credit structures and terms that may be more flexible than conventional lending options. Blitt Capital helps business customers match their financing needs with the appropriate SBA lending program.

Start a conversation with a Blitt consultant makes sense for your current and future business objectives.

More than 95 thousands loans were approved in 2016

THAT’S MORE THAN

$33 TRILLIONS

COMBINED

Source: SBA Lending Report

It is said Queen Elizabeth is just worth

as much! I mean, she is Queen of Canada and

Australia.

But this is Texas and California lol.

Common Use of Proceeds

1. Business acquisition, expansion or start-ups2. Commercial real estate purchase, expansion, renovations or

leasehold improvements3. Equipment and inventory purchases4. Franchise financing5. Working capital and refinancing existing debt (restrictions apply)6. Exportations of Goods/Raw Materials

Need to KnowSBA does not provide For-Profit companies with:

● Grants● Low Interest Rates Loans● Minority or Women-owned small business

Loans● 100% financing● Direct Business Loans

This is where it gets interesting!

There are 6 mainstream loans by the SBA.

Source: sba.gov

Tip

They are government funded loans programs, designed to Help Your Business Grow and Succeed.

SBA Loan Programs

SBA 7a LoansSBA 504 LoansSBA MicroLoansSBA Export ExpressSBA Veterans Advantage

SBA 7(a) Loans

● Both Growing and Well established businesses

● Loans up to $5 million and long-term financing.

General Use:- commercial real estate or renovations- business acquisitions, expansions- start-ups; equipment or inventory; - franchise purchase; working capital; - debt refinancing (restrictions apply).

BenefitsNo SBA guaranty fee – on loans less than $150,000Broad eligibility – wide variety of business purposes More flexible – often with longer repayment terms and lower down payments than conventional bank loansNo prepayment fees – for loan terms less than 15 years

Tip

Ask below $150,000 to be repaid before 15 years, will lower your payments and fees.

7(a) Express Loans

SBA Veteran Advantage Up to $350,000

No Fees, Expedited Review/Approval (75-85% approval guarantee)

SBA ExpressUp to $350,000

Prime + 4.5-6.5%

36-hour response from SBA (50% approval guarantee)

SBA Loan AdvantageUp to $350,000

Typical 7(a) with Expedited Credit Scoring (75-85% approval guarantee)

Also called Expedited Loans

CAPLines Working Capital Program.

For short-term & cyclical working capital needsUp to $5.0 millionProceeds go to inventory & receivables

Types of CAPLines:

● Seasonal Line● Contract Line● Builders Line● Working Capital

SBA 504 LoansLoans up to $5 million in SBA-backed job creation goal; $5.5 million for manufacturers. Long-term, fixed-rate financing (10-20 years).

General Use: Property, Building, and Large Fixed Assets

*A third party lender (bank/credit union) provides 50% of financing*504 loan through a CDC provides up to 40% of financing backed 100% by SBA debenture sold to institutional investors*At least 10% of financing provided by applicant (additional 5% for single or limited use building & additional 5% for startup business)

SBA provides direct loan through Non-profit

intermediary and Micro-Lenders.

Technical assistance available

Loans up to $50,000 on medium length term

(up to 6 years)

Used for —Machinery, equipment & fixturesLeasehold improvementsInventoryWorking capital

SBA MicroLoans

SBA financing features:

● Longer repayment terms which means lower monthly payments

● Down payments as low as 10%● No prepayment fee on terms less than 15 years

(excluding SBA 504)● No SBA guaranty fee on SBA loans less than $150,000● No balloon payments on SBA 7(a) loans

SBA Guaranty programIt assists businesses in qualifying for loans.

While SBA itself does not make loans, it does guarantee loans made to small businesses by private and commercial lending institutions. It is designed for startups and existing small businesses. The major types are:

- Express Programs. Export Loan Programs.- CDC/504 Loan Program. Special Purpose Loans Program. - Disaster Assistance Loan Program.- Microloan Program.

See a full description on SBA website

Tip

7(a) Loan Program is SBA’s primary and most flexible loan program, with financing guaranteed for a variety of general business purposes.

How to apply through this guaranty program? We’ve Got you!

Process.● Applicant applies for commercial loan at bank● If declined, applicant may ask SBA participating

lender to consider an SBA 7(a) guaranteed loan.● Lender submits SBA guaranty application to SBA.● After SBA guaranty approved, lender disburses

funds to applicant.

Process Timeline.

Stressed+Wokout Waiting Time

Commercial Loan Application at Bank If denied, apply through a

SBA participating lender.

SBA submission by LenderThey are covered by the SBA

for SBA7(a) guaranteed loan

SBA Guaranty ApprovalSBA guaranties usually

range from 50-90%.

Funds Disbursement to ApplicantA matter of days before the

funds are available to you.

How Blitt consultants can help you with this process?

We take care of the Push-ups!

Process Timeline.

Warm-Up Waiting Time

Contract Blitt Capital consultants Develop killer proposals for guaranteed financing

SBA submission by LenderThey are covered by the SBA for SBA7(a) guaranteed loan

SBA Guaranty Approval

SBA guaranties usually range

from 50-90%.

Funds Disbursement to ApplicantA matter of days before the funds are available to you.

Blitt recommends Commercial BankIncrease chances for first application for funding by selecting known easier banks.

Apply through a SBA participating lenderAdapt request for SBA lower repayment policies

We know who

gets funding!

(and how !)

● Be independently owned and operated for-profit

● Not dominant in its field of operation or industry

● May not exceed SBA size standards (based on average annual receipts for past 3 fiscal years or average number of employees over last 12 months)

SBA financing Eligibility

Requirements:

The Basics

Repayment ability: Historical or projected cash flow & debt service coverageCollateral: Secondary source of repaymentCredit: Personal/business credit experienceEquity injection: Cash injection 20-30% in a normal economy, seller carry-back (on standby)

SBA financing Eligibility Requirements:

Management and industry risk: Related industry experience,

education, ownership and management experience.

Partners involvement: Personal guaranties required of all owners of 20% or more of business

Leverage: Tangible net worth, retained

earnings & capitalization

• Non-profits• Lending Businesses• Speculative or investment-type businesses• Gambling Businesses• Illegal businesses• Businesses providing prurient sexual material• Businesses promoting religion Tip

A number of other financing options are available to these businesses including Grants, 100% financing, etc..

ARE NOT ELIGIBLE

FOR THE SBA GUARANTEE PROGRAM

Loan Terms

Flexible maturities:– Up to 10 years for working capital– Up to 10 years for equipment– Up to 25 years for fixed assets (Estate, Equipment)Interest rates:Base rates: NY prime, 30-day LIBOR + 3% or SBA peg rate (3.375%)Can be NegotiatedUnder 7 year term cannot exceed Base rate+2.25%Over 7 year term cannot exceed Base rate+2.75%Higher for SBA Express program or smaller loans

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