New Jersey District Office
Two Gateway Center – 15th floor
Newark, NJ 07102
973-645-2434
SBA’s Mission & Loan Programs
U.S. Small Business Administration
www.sba.gov
Your Small Business Resource
Overview of SBA’s Mission
Financial Assistance
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7(a) Guaranty Loans
504 Loans
Microloans
Surety Bonds
Small Business Investment Company (SBIC) Program
Business Counseling & Training
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SCORE – Counselors to America’s Small Business
Small Business Development Centers (SBDC)
Women’s Business Centers (WBC)
US Export Assistance Centers (USEAC)
Small Business Training Network (SBTN)
Opportunities in Government Contracting
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Small Business Set-Asides (federal contracts & subcontracts)
8(a) Business Development Program
HUBZone Contracting Program
U.S. Small Business Administration
www.sba.gov
Your Small Business Resource
SBA’s Mission (cont’d)
Advocacy
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Your voice in government
Principal resource for small business statistics and business trends
Monitors regulatory and policy proposals of more than 20 federal agencies
for impact on small business
Disaster Assistance
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Direct loans from the SBA for:
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Uninsured losses on real estate and property for homeowners and
renters
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Uninsured losses on business real estate and property
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Economic injury for businesses (working capital)
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Economic injury to firms impacted by Military Reservists called to
active duty
U.S. Small Business Administration
www.sba.gov
Your Small Business Resource
7(a) Loan Guaranty Program
Maximum Amount
$2,000,000
SBA Guaranty
75% for loans > $150,000
85% for loans < $150,000
Guaranty is limited to $1,500,000
** On a temporary basis, SBA can guaranty up to 90% on most 7(a) loan applications.
Use of Proceeds
Working capital; inventory acquisition; refinance debt for compelling reasons; lines of credit.
Renovation or construction of new facility; purchase land & buildings; purchase of equipment &
fixtures; leasehold improvements.
Maturity
Based on ability to repay; generally working capital is 5-10 years. Up to 25 years for fixed assets but
not to exceed life of asset.
Interest Rates
Negotiable with lender. If maturity is 7 or more years, maximum rate allowed is 2.75% over prime;
if under 7 years maximum is 2.25% over prime. In NJ, we have 165+ participating lenders.
U.S. Small Business Administration
www.sba.gov
Your Small Business Resource
7(a) Loan Program Enhancements
Benefits to small business owners
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SBA’s traditional loan guaranty ranges between 50% to 85%. Recovery Act funding, with
subsequent extensions, allows SBA to increase our guaranty to 90% (with a maximum of $1.5
million) on most loans.
The 90% guaranty decreases lender risk and increases your ability to obtain a loan.
Note - SBA Express loans remain at a 50% guaranty. The increased guaranty is offered
on a “first come first served” basis through 5/31/10 or earlier if funds are exhausted.
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SBA charges a guaranty fee on approved loans. The fee is paid to SBA by the lender. They
are allowed to charge this cost to the small business borrower, who typically reimburses the
lender from loan proceeds. Recovery Act funding, with subsequent extensions, allows SBA to
eliminate the guaranty fee. Fee elimination is also offered on a “first come first served” basis
through 5/31/10 or earlier if funds are exhausted.
Examples of fee elimination savings :
$150,000 loan = $2,500
$500,000 loan = $11,250
$2,000,000 loan = $53,750
U.S. Small Business Administration
www.sba.gov
Your Small Business Resource
504 Loans & SBA Certified Development Companies
Maximum Amounts
The SBA portion, commonly referred to as the 504 loan, is limited to $1.5 million. If loan meets
SBA’s Public Policy Goals, the maximum amount can be $2.0 million. If loan is made to a firm
engaged in manufacturing, the maximum amount increases to $4.0 million.
SBA Guaranty & Loan Structure
In a typical 504 project, a Certified Development Company (CDC) provides a loan for up to 40% of
the project. This loan is backed by a 100% SBA guaranteed debenture and is secured by a 2 nd lien on
project assets. A private sector lender finances 50% of project, receives a 1st lien on assets and is not
guaranteed by SBA. Their protection is the favorable loan to value ratio of the financed assets. The
small business borrower injects the remaining 10% of costs. Currently, 3 CDCs provide 504 loans in
NJ.
Use of Proceeds
Purchase of fixed assets such as land, buildings or equipment; major improvement, construction &
renovation costs. Qualified debt refinancing is allowable. Funds for working capital are not allowed.
Maturity & Interest Rates
Offered for terms of 10 or 20 years. Current interest rates are approximately 4% to 6% and are
based on market rates for 5 and 10 year Treasury issues plus an increment above the Treasury rate.
U.S. Small Business Administration
www.sba.gov
Your Small Business Resource
504 Loan Program Enhancements
Fees temporarily eliminated
Recovery Act funding, with subsequent extensions, allows SBA to eliminate the
following fees on a “first come first served” basis through 5/31/10 or earlier if funds
are exhausted:
1. The CDC processing fee paid by the small business borrower (1.5% of the
debenture)
2. The participation fee paid by the 1st mortgage lender (.5% of the 1st
mortgage financing)
New debt refinancing rule (permanent change) effective 6/23/09
If project involves expansion of a small business applicant, existing debt that does
not exceed 50% of the cost of the expansion may be refinanced provided that the
proceeds of the debt were used for purposes that would have been eligible for a
traditional 504 loan. Examples – purchase of land or building, construction or
acquiring qualified fixed assets.
Other refinancing requirements are that the debt must have been collateralized by
fixed assets and has been in a current status for the past year. Refinancing must
also bring a substantial benefit to the small business and is defined by the new
installment payment being at least 10% less than the existing payment.
U.S. Small Business Administration
www.sba.gov
Your Small Business Resource
7(m) Microloan Program
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Maximum Amount
$35,000
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SBA Guaranty
Not Applicable
SBA funds program with a 10 year low interest loan to an approved intermediary.
Loan is used to establish a revolving loan fund controlled by the SBA intermediary
who has full authority to approve and service loans made under this program.
SBA also provides intermediary with grant funding to provide technical assistance
to the microloan borrower. There are 5 microloan intermediaries in NJ.
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Use of Proceeds
Working capital; purchase of equipment, furniture & fixtures, inventory
acquisition; may not be used for debt repayment or real estate purchase.
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Maturity
Maximum term is 6 years
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Interest Rates
Negotiable with lender; generally between 8% to 12%
U.S. Small Business Administration
www.sba.gov
Your Small Business Resource
America’s Recovery Capital (ARC) Loan Program
• A temporary loan program established by the 2009 Recovery Act.
• Only available until funding is expended or 9/30/10.
• Up to a $35,000 loan for short-term cash flow needs of existing businesses
impacted by the recession.
• Loans are through SBA’s participating lenders and carry a 100% SBA
guaranty – lender has zero risk.
• Loan proceeds are limited to making up to 6 months of payments on
qualifying business loans.
• ARC loans have no fees and are interest free (SBA pays the interest).
• Principal repayment can extend to 5 years and first payment is deferred for
12 months after last disbursement.
To qualify - Applicant must be a viable, for-profit small business in the
U.S. that is experiencing financial hardship. Financial statements must
show profitable operations in at least 1 of the past 2 years. Be able to
project sufficient cash flow to meet all future loan payments over the next 2
years.
U.S. Small Business Administration
www.sba.gov
Your Small Business Resource
Other Items of Interest
In 2009, funds from the Recovery Act allowed SBA to:
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Expand the microloan program by providing $25 million to support new lending
and $24 million to increase technical assistance grants to microloan intermediaries.
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Increase the level of support under our SBA’s Surety Bond Guarantee program.
Bonding levels have been permanently increased from $2 million to $5 million.
Small businesses requiring bonding for a federal contract are now eligible for
support up to $10 million.
In 2010, at the request of the President, Congress will consider legislation to:
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Extend the fee eliminations and the increased guaranty levels on 7(a) & 504 loans
from 5/31/10 through 12/31/10.
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Increase the maximum amounts of SBA’s lending programs.
-- 7(a) loan program from $2 million to $5 million.
-- 504 loan program from $2 million to $5 million and for manufacturers
from $4 million to $5.5 million.
-- microloan program from $35,000 to $50,000.
U.S. Small Business Administration
www.sba.gov
Your Small Business Resource
Other Items of Interest (cont’d)
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A temporary expansion of working capital loans by increasing the cap on SBA’s
Express loans from $350,000 to $1 million. This will allow small firms to access
much-needed working capital lines of credit that are available through the
Express loan program.
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A temporary expansion to SBA’s 504 loan program to support refinancing for
small business owner-occupied commercial real estate loans that are maturing in
the next few years. This will allow small businesses to lock in stable long-term
financing that are unable to secure new financing and will save jobs by protecting
small businesses from unnecessary foreclosure actions.
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Establish a nationwide $30 billion Small Business Lending Fund that will transfer
federal funds to small community banks to expand lending to the small business
sector.
U.S. Small Business Administration
www.sba.gov
Your Small Business Resource
Small Business Innovation Research (SBIR) Program
Small Business Technology Transfer (STTR) Program
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SBA’s Office of Technology administers the SBIR & STTR programs. Through these programs,
SBA ensures that the nation's small, high-tech, innovative businesses are a significant part of the
federal government's research and development efforts.
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Eleven federal departments participate in the SBIR program and five departments participate in
the STTR program. Combined, they award $2 billion annually to small high-tech businesses.
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The SBIR program is a competitive three-phase award system which provides qualified small
business concerns with opportunities to propose innovative ideas that meet the R & D needs of
the Federal Government. Phase I is the startup phase with awards up to $100,000 for 6 months.
Phase II awards up to $750,000, for as many as 2 years, to expand Phase I results and to evaluate
commercialization potential. Phase III moves the Phase II innovation from the laboratory into the
marketplace. No SBIR funds support this phase and the small business must find funding in the
private sector or other non-SBIR federal agency funding.
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The STTR program is also a competitive three-phase program that reserves a specific percentage
of federal R & D funding for award to small businesses in partnership with non-profit research
institutions to move ideas from the laboratory to the marketplace, to foster high-tech economic
development and to address the technological needs of the Federal Government. The threephase award system mirrors the SBIR program.
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Web link for more info - www.sba.gov/sbir
U.S. Small Business Administration
www.sba.gov
Your Small Business Resource
What is a Small Business ??
SBA establishes small business size standards based upon primary industries and related
economic & industry segment competitive data.
Manufacturing – 500 to 1500 employees
Wholesalers – 100 employees
Service/retail/construction – ranges from $2 to $35.5 million per year in averaged annual
receipts (AAR) over a 3 year period. The common “anchor” standard in this segment is $7.0
million in AAR.
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Examples – special trade contractors @ $14 million; general contractors @ $33.5 million;
supermarkets/convenience stores/gas stations @ $27 million; new car dealers @ $29million;
hospitals @ $34.5million; facilities support services @ $35.5 million.
Small business size standards for SBA’s financial assistance programs.
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7(a) & microloans – the standard for the industry (see above) or the alternative size standard:
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Including affiliates, tangible net worth not in excess of $8.5 million and average net income
after Federal income taxes (excluding any carry-over losses) for the preceding two completed
fiscal years not in excess of $3.0 million.
504 loans – see above alternative size standard for 7(a) loans
Surety bonds – $7.0 million AAR
U.S. Small Business Administration
www.sba.gov
Your Small Business Resource
Additional Information
• Key Contacts
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James Kocsi, District Director, 973-645-3680
William Boone, ADD for Lender Relations, 973-645-2179
Frank Burke, ADD for Marketing & Outreach, 973-645-6049
Richard Zilg, ADD for 8(a) Business Development, 973-645-2531
Donald Swartz, Business Development for southern NJ, 856-415-2283
SBA’s NJ office web page – www.sba.gov/nj
NJ small business resource guide – www.smallbusiness3.com
Info on SBA’s recovery efforts – www.sba.gov/recovery
Small business size standards – www.sba.gov/size
U.S. Small Business Administration
www.sba.gov
Your Small Business Resource