SBA Loan Programs for
SOCMA members
September 15, 2009
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SBA Loan Program Overview
•The following slides outline the numerous loan programs
that the SBA makes available to assist small businesses
that cannot qualify for credit from traditional sources.
•SBA does not make direct loans to borrowers (except for
disaster assistance loans), but uses a network of SBA
approved lenders.
•Maximum size standard for chemical manufacturing firms
to qualify for SBA financing is 500 to 1,000 employees
(depending on specific type).
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SBA 7(a) Loans
•The SBA 7(a) loan program is designed to provide loans for expansion or renovation;
new construction, purchase of land or buildings; purchase of equipment, fixtures and
leasehold improvements; working capital; seasonal lines of credit and debt refinance
under certain conditions. This loan program has many applications for small
manufacturing businesses.
•$2 million maximum loan amount with $1.5 million maximum guaranty
•75% guaranty up to $1.5M (85% if loan amt. is less than $150,000) – these
guarantees are temporarily extended up to 90% through the Recovery Act.
•Term depends on ability to repay and use of proceeds. Generally 5- 7 years for WC
and up to 10 years for equipment.
•Benefits to borrowers include: improved cash flow due to long term financing and
fixed maturity; no balloons.
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SBA Express
•SBAExpress is a sub-program of SBA’s 7(a) lending. These loans may be used for
revolving lines of credit.
•$350,000maximum loan amount
•50% Guaranty for all loans
•Maximum term is 7 years including pay down period.
•Streamlined application process
•Benefits to borrowers include: faster turnaround; streamlined process; easy to use
line of credit.
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Community Express and Patriot
Express
• Has same simplicity of paperwork as SBA Express but provides a 75
percent or 85 percent guaranty to the lender.
• Eligible small businesses for Community Express are located in a
HUBZone or Community Reinvestment Act area or are requesting
$25,000 or less. Maximum loan amount is $250,000.
• Eligible small businesses for Patriot Express are owned by veterans,
Active Duty military eligible for the Transition Assistance Program,
Reservists or National Guard member; Current spouse of any of the
four groups listed above; or current spouse of any Active Duty
military; or widowed spouse of a service member or veteran who
died of a service-connected disability.
• Maximum loan amount is $500,000.
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CAPLines
•The CAPLines loan program, a special type of 7(a) loan, is designed to finance
seasonal working capital; cost to perform contracts; construction costs,
advances against existing inventory and receivables and consolidation of shortterm debt.
•$2 million maximum loan amount (small asset based limited to $200,000)
•75% guaranty if more than $150,000; 85% if total loan is $150,000 or less.
These guarantees are temporarily extended up to 90% through the Recovery
Act.
•Up to 5 year term
•Benefits to borrowers include: Funds short term working capital; various lines
of credit; allows business to obtain contracts; larger in size to allow growth;
can be used to finance existing assets.
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SBA 504 Loans
•The SBA 504 Certified Development Company program is designed to provide long
term, fixed-rate, subordinate financing for acquisition or renovation of capital
assets, including land, buildings and capital equipment.
•$1.5-$4 million maximum loan amount, depending on type of business.
•Private lender (no SBA guaranty) lends up to 50% secured with a first mortgage;
SBA guaranties (100%) a debenture that finances up to 40% secured with a
subordinate lien on the assets being acquired; borrower typically provides 10%
equity.
•10 or 20 year term on the debenture
•Benefits to borrowers include: long term, fixed rate financing (debenture); low
down payment; full amortization; no balloons.
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Microloans
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Program provides loans from $500 to $35,000
SBA provides funds to nonprofit intermediaries that , in turn,
make loans directly to entrepreneurs.
Proceeds can be used for typical business purposes such as
working capital, machinery and equipment, inventory and
leasehold improvements.
Interest rates are negotiated between borrower and
intermediary.
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Export Working Capital Program
(EWCP)
•EWCP loans assist exporters seeking short-term export working
capital
•$2 million maximum loan amount
•90% guaranty or $1.5 million, whichever is less
•Borrower and lender negotiate interest rate and fees
•Program offers flexible terms, low fees and quick processing time
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International Trade Loan Program
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Program helps small businesses engaged in or preparing
to engage in international trade.
Helps businesses adversely affected by competition from
importers.
$1.5 million maximum loan amount ($1.75 under certain
conditions).
Guaranty fees and interest rates are the same as 7(a)
loans.
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ARC Loan Basics
• New, temporary, 100 percent guaranteed loan program.
• Deferred payment loan.
• Up to $35,000.
• Proceeds used to make P&I payments on qualifying small
business loans.
• Interest free to borrower.
SBA pays interest to lender.
• No fees charged by SBA or lenders.
• ARC loans available until funding runs out or September 30,
2010, whichever occurs first.
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Additional Programs
Surety Bonds – SBA and surety industry provide bonding
assistance to small businesses to guaranty bid, payment and
performance bonds.
Prime Contracts Program – provides assistance to help small
businesses secure government contracts.
8(a) Business Development Program – provides assistance for
small and disadvantaged businesses.
Information on these and other programs is available on the
www.sba.gov web site and through SBA district office network.
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Resources
• SBA Web site www.sba.gov
• SBA District Office Network (68 offices in every state-locations
and contact information on website)
• SCORE – Service Corps of Retired Executives (10,500 members in
800 locations)
• SBDC’s – Small Business Development Centers
• U.S. Export Assistance Centers (major metro areas)
• Women’s Business Centers (WBCs) – nearly 100 educational
centers
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Please contact Bill Allmond at
allmondb@socma.com with any questions,
comments or concerns.
Also, check out www.socmaconnect.com for
more information on SOMCA CONNECT!
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