U.S. Small Business Administration
The Three C’s of the SBA
 Created in 1953 by President Dwight D.
Eisenhower
 Provide the Public with:
• Mentoring
• Government Procurement
• Access to
(3 C’s)
(Counseling)
(Contracting)
(Capital)
 Small Business Resource Guide
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 Veterans are 45% more likely to be selfemployed.
 $2.4 million, or 9 percent of all U. S. small
businesses are veteran owned.
 Veteran-owned small businesses generate
owner $1 trillion in sales.
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 Rivera Consulting, Inc.
• Information Technology Solutions
 Worldwide Filters, LLC
• Wholesale Filters and Supplies
 Behavior Services & Therapy
• Improvement in Quality of Life for Individuals
with development disabilities.
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 Biomet, Inc.
• Medical Device Industry
 Vera Bradley
• Fashion Accessories
 Warm Glow Candles
• Candles
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 NIKE
 Staples
 Apple
 Federal Express
 Ben & Jerry’s Ice Cream
 Outback Steakhouse
 Hewett Packard
 Panera Bread
 Callaway Golf
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
Counseling
• Small Business Development Center (SBDC)
• SCORE
• Women’s Business Center (WBC)
• Veterans Business Outreach Program
 Contracting
• Partners In Contracting Corporation
• SBA Economic Development Specialists
• SBA Procurement Center Representatives
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 Capital
• Banks
• Credit Unions
• Certified Development Companies (CDC)
• Microlenders
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 SBA partners with financial institutions
 SBA’s role is primarily a guarantor of business
loans made by financial institutions
 Disaster Loans - The SBA only offers direct
loans in the event of a declared disaster order
(separate division)
 No direct grants from SBA for starting or
expanding a business
www.grants.gov
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 Who is eligible for SBA loans?
 What criteria does the SBA evaluate?
 Where do you go to get an SBA loan?
 Why use the SBA loan programs?
 How do you get started?
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
Size of Business
 Type of Business
 Borrower Qualifications & Character
 Use of Proceeds
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 For-Profit business located in the U.S.
 Must qualify as “Small” per New Size Standard
•
Tangible Net Worth of Applicant
Not more than $15,000,000
And
•
Average Net Income of Applicant
Not more than $5,000,000 for the 2 full
fiscal years before the date of application
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 U.S. Citizen, Lawful Permanent Residents, or
Non-immigrant (documented) aliens
 Good Character
• Criminal Record
• Personal Credit
 Previous Federal Loan Payment History
 Personal Resource Test
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 Limited Membership




Private Clubs
Purchase Partial
Ownership
Repay Owners for their
Investment
Pay Delinquent
Taxes/Refinance Loan
Loan
Packagers/Lenders








Passive Income
Speculative Ventures
Pyramid Structures
Illegal Activities
Political Activities
Religious Activities
Gambling Activities
Sexually-oriented
Business
** Franchises = varies **
April 2010 | 14
 Ability to repay the loan on time from the projected
operating cash flow
 Feasible business plan
 Management expertise and commitment necessary
for success
 Sufficient funds to operate the business on a sound
financial basis
 Adequate equity invested in the business (no 100%
financing)
 Sufficient collateral including personal guarantees
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 SBA guaranteed loans are made by business
lenders at financial institutions
 No direct loans from the SBA
 Lenders have the forms necessary
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 Cannot qualify for conventional financing
on reasonable terms
 Longer Maturities
• Lowers Monthly Payment
• Improves Cash Flow
 No Balloon payments on 7(a) loans
 No Prepayment Penalties on 7(a) loans
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504
Certified Development Company (CDC)
Loan Program
and
7(a) Loan Program
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 Long-term, Fixed-asset Financing to:
• Purchase Land and Existing Building
• Purchase Land for New Construction
• Building Renovation or Expansion
• Purchase Major* Machinery / Equipment
• Refinances are limited
 Occupancy Requirements:
•
•
51% of existing building
60% of new construction (80% long term)
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7(a) Loan Guaranty Program
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 Most used SBA Loan Program
 Wide range of financing needs
• Funding for start-up businesses
• Purchase existing business
• Expand/renovate facilities
• Finance working capital/receivables
• Construction
• Refinancing*
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‣SBA Express
‣Veterans
Advantage
‣Caplines
‣ Export Loans
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 Veterans
 Service-disabled veterans
 Soon to be discharged active-duty service members
eligible for the military’s Transition Assistance Program
 Current Reservists and National Guard members
 Current Spouse of any of the above
 Widowed spouse of:
• a service member who died while in service, or
• a veteran who died of a service-connected disability
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 For members of the military community*
(51% owned & controlled)
 Maximum Loan Amount:
$350,000
 Delegated Processing: Lender Underwriting
Lender Closing Docs
 Collateral is not required up to $25,000
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Approved Loan Amount
• $350,000 or less
= 0.00% of Guaranteed Amt
• $350,001 to $700,000 = 3.00% of Guaranteed Amt
• $700,001 to $1,000,000 = 3.50% of Guaranteed Amt
• Over $1,000,000
= 3.75% of Guaranteed Amt
on portion over $1Million
• Short-term: Maturity 12 Months or Less =
0.25%
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 Borrower equity injection is required
(100% financing is not available)
 All Borrowers must give Personal Guaranty
 Personal assets required to cover shortfall
 Loan is with the Lender not the SBA
 SBA Guaranty is for the Lender
 Borrower still liable for 100% of the loan
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 Veterans Business Outreach Center
 Veterans Online Business Registry
 Service Disabled Owned Small Business
 Indiana’s Veteran Business Enterprise
Program
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 Indiana – David Puls
 David.Puls@sba.gov or Eric.Armacost@sba.gov
 Illinois – Robert Paoni
 Robert.Paoni@sba.gov
 Kentucky – Tommie Causey
 Tommie.Causey@sba.gov
 Ohio – Joe Lauterdale - Cincinnati
 Joe.Lauterdale@sba.gov
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U.S. Small Business Administration
Indiana District Office
Presented by
Eric Armacost
Lending Relations Specialist
(317) 226-7272 ext. 120
Eric.Armacost@sba.gov
www.sba.gov/in
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Our Resources. Your Success.

The S.W. ISBDC provides no-cost confidential business
advising for businesses in the areas of:

Business Planning
Access to Capital
Market Research
Budgeting/Accounting
Loan Packaging Assistance




To have a positive and measurable impact on the
formation, growth, and sustainability of small
businesses in Indiana, and to develop a strong
entrepreneurial community.
S.W. ISBDC Office
Client Portfolio Overview
Status

23% established business > one year

21% in business < one year

56% “pre-venture”

56% Start-up assistance

16% Accounting/budgeting

10% Financing/Capital

6% Management/planning

5% Buy/sell a business

4% Market research
Lucas Oil Products
The first store by Lucas in the nation
Investment exceeded $2.7 mil
Hired x# of employees
Expanding to 2nd store in fall 2012
ECS Solutions
Patented new technology
Increased company’s bottom line with new markets and new
Revenues
2008-2012
77 – Purchased or started new business
781 – Jobs Created
$3.1 million – Change in Sales
$15.8 million – Cap Investment
Other: identified new products, services and
new markets, secured training dollars, etc.
 Call 812.425.7232
 Go to the ISBDC.org website and complete
the business survey
Our Resources. Your Success.
LEDOs
Accounting
& Law
Banks
ISBDC
WorkOne
Chambers
Universities
SBDC Summary
New business creation
 Local investment
 Business expansion
 Job Creation
 Encourage entrepreneurship
 Regional engagement

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Export Working
Capital Program
(EWCP)
International
Trade
Export
Express
Maximum
Loan Amount
$5,000,000
$5,000,000
$500,000
Maximum
Guaranty
Percentage
90%
90%
90% for loans
$350,000 or less
75% for loans
Greater Than
$350,000
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504
Certified Development Company (CDC)
Loan Program
and
7(a) Loan Program
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 Long-term, Fixed-asset Financing to:
• Purchase Land and Existing Building
• Purchase Land for New Construction
• Building Renovation or Expansion
• Purchase Major* Machinery / Equipment
 Financing Structure:
•
SBA (CDC):
up to 40% of total project costs
• Lender:
50% of total project costs
•
10%* of total project costs
Borrower:
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 Project Size
•
Maximum:
Unlimited
 100% SBA Guaranteed Debenture (CDC)
•
Minimum:
• Maximum:
$25,000
$5.0 Million
Standard
$5.0 Million
Public Policy Goal
$5.5 Million
Small Manufacturer
or Energy Savings
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 Lender
•
•
•
1st Lien Position with only 50% Loan-to-Value
90% financing increases potential opportunities
CRA credit
 Borrower
•
•
Lower down payment preserves capital
Fixed Rate with full amortization
 Community
•
Creates or retains jobs
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 Maximum Loan Amount:
$5.00 Million
 Maximum Guaranty Amount: $3.75 Million
 Maximum Guaranty Percentage:
• 85% up to $150,000
• 75% over $150,000
 Multiple loans permitted up to $3.75 Million
Guaranty Maximum
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 Real Estate
• Up to 25 years
 Equipment
•
Up to 10 years or expected useful life
 Working Capital
•
Generally 7 years, but may be extended to 10
years depending on cash flow
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$100,000, 10 year term
 Fixed Rate Option:
• Base Rate:
5.47% + 2.75% = 8.22%
 Variable Rate Option:
• Prime:
3.25% + 2.75% = 6.00%
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 7(a) Program = 827 Loans @ $265,834,000
 504 Program = 143 Loans @ $189,050,000
 Combined 7(a) and 504 Statistics
• 12,740 Jobs Created or Retained
• 270 Loans to Start-Ups
• 103 Veteran-Owned
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Step 1: Create / Update your Business Plan
 Free Counseling Available from SBA Resource
Partners
• SCORE
• Small Business Development Center (SBDC)
• Women's Business Center (WBC)
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Step 2: Visit a Lender
 Lists are available from the SBA
• Approved Lenders and Most Active Lenders
 Lender makes initial credit decision
• May or may not need SBA Guaranty
• Lender has right to say ‘no’
 Lender chooses appropriate SBA Loan Program
• SBA decision to lender in 0-15 business days
 Be Prepared
• Treat meeting like a job interview
• Having supporting financial documentation
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 Business Plan
 History/description of business
 Management experience/resumes
 Cash flow projections
 Last 3 years of income statements and
balance sheets with interims to date
 Last 3 years of filed business tax returns
and personal tax returns
 Aging of receivables; inventory listings
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 Quotes/purchase contracts for items to be
purchased with loan proceeds
 Listing with terms of other business debts
 Franchise agreements
 Leases
 Details of criminal history: type of offense,
dates, etc. (if any)
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 $500 Billion Spent Annually
 23% Goals For Small Business ($115B)
 DNS # Data Universal Numbering System
 Register with System for Award
Management SAM.gov
 Register at Vetbiz.gov
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+ MARGIN
Maturity
Maturity
< 7 years
> = 7 years
LOAN AMOUNT
BASE RATE*
Over $50,000
Fixed or Variable
+ 2.25%
+ 2.75%
$25,000 to $50,000
Fixed or Variable
+ 3.25%
+ 3.75%
$25,000 or less
Fixed or Variable
+ 4.25%
+ 4.75%
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