u.s. small business administration - newtown edc · tanisha velasquez, lrs/ao sba connecticut...

U.S. Small Business Administration Programs & Services

Frank Alvarado, Sr. Area Manager

Tanisha Velasquez, LRS/AO

SBA Connecticut District Office

The SBA Mission

Economic Development

Maintenance of a Strong Small Business Foundation for our Nation’s Economy

SBA History

1932 - Reconstruction Finance Corporation created to stimulate the economy by loaning

money to businesses.

1953 - U. S. Small Business Administration created to provide financial, technical, and

management assistance to small businesses.

What do all of these Businesses Have in Common?

SBA Services

Access to Capital

Education and Training

Government Contracting

Disaster Recovery

online training library of industry specific articles e-classes

www.sba.gov/ Email access to volunteers throughout the nation with over 600 skill sets

www.score.org

Online Access

•15,000 Strong

•Over 389 Locations Nationwide

•Can’t find a chapter? Call 860 240 4700

•http://www.score.org/

SCORE: Counselors To America

•Paid Professional Business Advisors

•NEW Host

•Relationship with Connecticut State University

• (860) 486-4792

•http://ctsbdc.org/

Small Business Dev.

Center

•Full Business Training Curriculum

• Individual Counseling

•Entrepreneurial Center – U. of Hartford

•Women’s Business Center – Stamford

•Women’s Business Center –Waterbury

Women’s Business Centers

SBA Partners

Capital Access

CAPITAL

ACCESS

The 7(a) Loan Guarantee Program 7 (a) Loan Program

Details

•SBA’s Primary Business Loan Program

•Broad eligibility requirements

•Wide range financing options

•Maximum loan amount $5 million

•85% guarantee on loans up to $150,000

•75% on loans > $150,000

7(a) Loan Program Maturities & Interest

Rates

•5-10 years for working capital, machinery, equipment

•Up to 25 years for real estate, construction

•Prime* + 2.25% for loans of 7 years or less

•Prime* + 2.75% for loans over 7 years

•Rates can be higher for smaller loans

7(a) Program Guarantee Fees

• NO FEES on loans up to $150,000

•3% on loans $150,001 - $700,000

•3.5% on loans $700,001 - $ 1 million

•3.75% on loans > $1 million

• .025% Portion > $1 Million

This week Month ago Year ago

WSJ Prime Rate* 3.25 3.25 3.25

Express & Advantage Loan Initiatives Express Loans - Streamlined

applications for 7(a) loans up to

$350,000 – Term loans and Lines of

Credit!

Guarantees:

•85% on loans up to $150,000

•75% on loans $150,001 >

Community Advantage Program

•Loans up to $250,000 to Under

Served Markets

Veteran’s Initiative

•NO FEES for loans to Veterans up

to $350,000

Expanding

opportunities for

entrepreneurs

and small

business owners

in underserved

communities

504 Loan Program

Program Details • Maximum Loan Amount: $5 million

• 1.5% origination fees

• Maximum guaranty: 100% SBA’s portion

• Uses: Long-Term; Fixed Assets

• Maturity: Generally 10 - 20 years

• Maximum Interest: Fixed rate established

when debenture backing sold

Bank 50%

CDC/SBA 40%

Business Owner

10%

Model 504 Financing Structure

15% for special-use property (hotel, gas station, etc.)

15% for start-up business

20% if both special-use & start-up

Connecticut CDC’s

Community Investment Corporation

Housatonic Industrial Development Corporation

New England Certified Development Corporation

Greater New York Development Company

Ocean State Business Development Authority

Eligible and Ineligible Proceeds

Eligible Uses of 504 Loan Proceeds

• Land

• Land improvements

• Purchase building

• Building improvements

• Construction of new building

• Purchase equipment

• Some related professional fees

• Interim financing costs

• Contingencies

Ineligible Use of 504 Loan Proceeds

• Organizational costs

• Counseling

• Finders fees; brokers fees

• Origination fee on 1st mortgage loan

• Rolling stock

• Equipment with less than 10 years useful life

• Franchise fees

• Moving costs

Other Proceed Requirements

• Acquisition or new construction or improvement of owner-occupied real estate

• 51% occupancy for existing building

• 60% occupancy for new construction

• Machinery & Equipment

• i.e., fixed assets with a useful life of 10 or more years

Microloans

• Maximum loan amount: $50,000

• No Loan Fees Applied

• Maturity: shortest term possible (6 years or less)

• Maximum Interest Rate: Negotiable with intermediary

General Details

• Purchase machinery, equipment, fixtures, working capital, leasehold improvements, increased receivables

Uses

SBA Intermediaries A/K/A Micro Lenders

• http://www.hedco-ghbdc.com

HEDCO – Hartford

15 Lewis Street Hartford, CT 06103

• http://www.cedf.com CEDF – Meriden

965 East Main Street, Meriden, CT 06450

• http://www.ctcic.org

CIC – Hamden

2315 Whitney Ave, Suite 2B Hamden, CT 06518

What a Lender Looks for When Reviewing a Loan Request

Good Character

• borrower’s background, credit history, references

Management Expertise and Commitment

• borrower’s experience and desire to succeed

Reasonable Personal Contribution

• borrower’s stake in the business

Feasible Business Plan

• does it make sense and is it sufficiently thorough

Collateral

• does it provide sufficient protection to the lender

Repayment

• Will the loan repay from earnings of the business *

Purpose of loan (must be used for business)

Business plan (or business history)

3 years of financial statements (actual or projected)

• Balance Sheet

• Profit and Loss Statement

• Cash flow statement (at least one year)

Business and personal tax returns

Schedule of current debts (if any)

Owner equity in the business (if any)

Signed personal financial statements

Personal résumé of each principal

Everything else Lender asks for *

Loan Application Documentation Includes:

Collateral - What is it - What is Required?

• Anything of value that you can pledge

– Liens on personal assets usually required

– Liens on business assets always required

– Personal guaranties always required

– Life insurance on borrowers sometimes required

Reasons for Loan Declines Applicant is not properly prepared

• No business plan,

• no current financials, etc.

Poor credit - no credit

•History of late payments / charge-offs / collection accounts / tax liens / low credit scores

Lack of experience in the business, no

partners, no experienced employees

under contract

Little personal investment into the

business

Under capitalization / negative net worth

No earnings history / questionable loan

repayment

Lack of commitment on part of borrower *

Inside Banking

Banks want to make you a loan

• Banks only make money by making loans

• Banks must make money to survive

Risk, collateral, and credit

Banks only want two things from you

• repayment of the loan as agreed

• your deposits and your future business

Why it’s critical that you are

prepared

Things You Need to Know -

www.sba.gov/ct

Easy-to-find information to help small businesses start, grow & succeed.

Small Business Training Network – an online virtual campus offering free courses workshops and resources.

SBA on the Internet

http://twitter.com/SBA_NewEngland

http://www.facebook.com/SBANewEngland

Thank You for Your Time

Questions?

Connecticut District Office:

Tanisha Velasquez,

Lender Relations Specialist/AO

(860)-240-4671

Tanisha.Velasquez@sba.gov

Frank Alvarado

Senior Area Manager

(203) 335-0427

Frank.Alvarado@sba.gov

Bridgeport SBA Office: