u.s. small business administration - newtown edc · tanisha velasquez, lrs/ao sba connecticut...
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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
Frank Alvarado
Senior Area Manager
(203) 335-0427
Bridgeport SBA Office: