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Simplifying Small Loan Originations With Credit Score-Driven
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Credit Builders Alliance ("CBA"), a not-for-profit organization,
makes this information available for informational purposes only.
This information is not intended as legal, financial, or other
advice, and you and your clients should consult qualified advisors
before making any decisions. CBA does not represent that any of the
information will produce results.
All About the SBA Microloan Program
CBA Members-only Webinar March 15, 2018
© 2018 Credit Builders Alliance, Inc. Some rights reserved
1. Audio is streamed through your computer. 2. This webinar is
being recorded. 3. Questions? Type them into the CHAT box
during the webinar!
www.cbatraininginstitute.org
Members-only Webinars
To register: bit.ly/CBA_FTCwebinar
To register: bit.ly/CBATFC_toolset
Meet the Experts
(OEO)
Office of Economic Opportunity The Symbiotic Lending Products for
Mission Lending
8
•Loan Guaranty – up to $250K – Mission-Driven Lenders
Community
Advantage (CA)
•Direct Loans – up to $200K – Non-profit Lenders Intermediary
Lending Pilot Program (ILPP)
•Direct Loans – up to $50K – Non-profit Lenders •Technical
Assistance GrantsMicroloan Program
•Grants up to $250K •Technical Assistance •Capacity Building
•Research and Development
PRIME Grant Program
How the Microloan Program Works
SBA • SBA Lends $ to Intermediary Lender • SBA Provides grants $ to
Intermediary Lender to help
offset cost of providing Training and Technical Assistance
(TA)
Intermediary Lender
microbusinesses
How the Microloan Program Works SBA Loans to Intermediary
Lenders
•$750,000 (1st loan) •$2,500,000 (subsequent loans) •$5,000,000
(Maximum Program Debt Outstanding)
Max. Borrowing
•10 Years from Date of NoteMaturity
•5 year T-Bill Rate less 2% for average microloan size under
$10,000; otherwise less 1.25%Interest Rate
•Intermediary’s Microloan Revolving Fund, Loan Loss Reserve Fund,
and Microloan NotesCollateral
•15% of Loan Disbursements must be matched with non-borrowed,
non-Federal fundsMatching Funds
•To make direct, short term, fixed rate loans of $50,000 or less
Use of Proceeds
11
How the Microloan Program Works Loans from Intermediary to
Microbusiness
•Up to $50,000Loan Amount
•Up to 6 years (72 months)Maturity
•Fixed rate, up to: •Cost of Funds + 8.50% (if microloan is $10,000
or less) •Cost of Funds + 7.75% (if microloan is above
$10,000)
Interest Rate
•To make loans for supplies, furniture, fixtures, materials,
equipment, or working capitalUse of Proceeds
•Required at Intermediary’s discretion – flexibility in structuring
loanCollateral
•Decisions made by Intermediary - not SBA •According to
Intermediary’s policies and proceduresUnderwriting/Servicing
12
How the Microloan Program Works Technical Assistance Grants
SBA provides Grant funding to Intermediary Lenders who in turn
provide free business training and Technical Assistance to their
microbusiness clients.
Intermediary provides ongoing training and technical assistance to
microbusinesses (minimum 75% for post-loan TA)
Grant dollars help defray the cost of providing training and
technical assistance to micro borrowers and potential micro
borrowers.
Grant Amount up to 25% of Intermediary’s outstanding debt to
SBA.
25% matching funds required
Training opportunities One-on-one consulting/Counseling Reviewing
business plans and cash flow projections Business
assessment/evaluation: planning, sales and
marketing, organization structure, management skills, accounting,
budgeting
Accounting system training; improve recordkeeping Regular site
visitations Identifying and targeting new markets Identifying
strategies for business growth Preparing for a bank loan Analyzing
business financials
14
Ladder of Opportunity SBA Program Tiers
- Maximum Loan Size $50,000. - Network of Non-Profit Intermediaries
who offer Small Business
Technical Assistance and training. - Many Non-Profits specialize in
Startups.
- Maximum Loan Size $250,000. - Many Community Advantage Lenders
offer Technical Assistance.
- Maximum loan size $5 Million. - Available through participating
lenders. - Longer loan maturity terms available
• Ten years for working capital, inventory, and equipment
Community Advantage Program Parameters
• 5% cash reserve on unguaranteed portion of loanLLRF
requirement
• 60% of the number of CA loans must be in underserved
marketsMarkets served
• Highly encouraged but not a requirement for the program
Management and technical assistance
17
• 90% guaranty for International Trade loans • 85% guaranty for
loans of $150,000 or less • 75% guaranty for loans greater than
$150,000
Percent of Guaranty
• Maximum of 10 years for working capital • Maximum of 10 years or
useful life for equipment • Maximum of 25 years for real
estate
Maturity
• 0.25% for maturities ≤ 12 months (guaranteed portion) • For
maturities > 12 months
• 2.0% for CA loan ≤ $150,000 (guaranteed portion, lender can
retain ¼ fee)
• 3.0% for CA loan > $150,000 (guaranteed portion, full fee paid
to SBA)
• 0.55% on-going guaranty fee paid by lender
Guaranty Fees
Symbiotic Relationship
How does becoming an SBA Microlender prepare you to become a
Community Advantage lender?
How does becoming a Community Advantage lender help you as a
microlender?
What other products can you use?
18
Community Advantage Program
WHO ARE APPROVED CA LENDERS? At the end of FY 2017 125 Approved CA
Lenders
60 SBA Microlenders
50 SBA CDCs
84 Treasury-certified CDFIs
Many CA lenders have more than one designation – for instance 12
lenders are approved as a CDC, CDFI and Microlender
From program Inception (Feb 2011)
3,788 CA Loans approved for $ 489 million
Average loan size $129,108
2 0
Top 10 OEO Lenders (w/ minimum 10% participation in complementary
program) # Approved $Approved
LiftFund, Inc. 272 $10,399,624
PeopleFund 147 $10,767,100
Women's Wisconsin Business Initiative Corporation 82
$4,953,950
Mountain Bizcapital, Inc. 79 $3,778,758
Union County Economic Development Corporation 78 $1,768,862
Main Street Launch 70 $9,453,407
Valley Economic Development Center 57 $3,839,329
Community Investment Corporation 38 $2,590,000
Community Advantage TOP 10 Loan Volume - FY 2017
Lender Name CA Loans # CA Loans $ 1 CDC Small Business Finance
Corporation 127 $19,808,260 2 PeopleFund 91 $9,504,600 3 Main
Street Launch 61 $9,373,300 4 LiftFund, Inc. 57 $7,340,100 5 Empire
State Certified Development Corporation 42 $6,438,500 6 Business
Development Finance Corporation 40 $5,137,700 6 ACCION New Mexico
40 $3,730,700 7 Carolina Small Business Development Fund 37
$4,396,500 7 Growth Capital Corporation 37 $2,584,700 8 Regional
Business Assistance Corp. 35 $3,673,000 9 Wisconsin Women's
Business Initiative Corporation 34 $3,738,500 10 Valley Economic
Development Corp. 24 $2,949,500
SBA Microloan Program Application Process
WHAT DOES SBA LOOK AT IN A NEW APPLICATION?
Eligibility Non-Profit
At lease 1 Year In-house Technical Assistance Experience
Qualification Personnel – Relevant Micro-lending Experience
Lending – Experience
23
WHAT’S REQUIRED IN THE APPLICATION? 1 - cover sheet.xls 2 - SBA
1081.pdf 3 - Lending History Chart.xls 4 - Cost of Lending
Calculation.xls 5 - Item 10 Chart.xls 6 – Cert. of Contracts
sba1711.pdf 7 – Disclosure of Lobbying Activities sflllin.pdf 8 –
Debarment sba1623.pdf 9 – Resolution of the Board of Directors
sba160.pdf 10 –Security Agreement SBA1059.pdf 11 - Microloan SOP 52
00 A (FINAL).pdf
Application Process (Cont’d.) - Cover Sheet 1 Applicant's signed
statement giving SBA permission to obtain additional information
regarding applicant's relationship
with creditors, other federal agencies, or other entities as
necessary to evaluate this application.
2 A copy of applicant’s IRS tax exempt certificate, Conflict of
Interest Policy, and a Certificate of Good Standing from the
Secretary of State.
3 A complete copy of the applicant’s Mission Statement, Articles of
Incorporation, and Bylaws, as amended. 4 An organizational chart
with explanation. 5 A list of corporate officers and directors with
a resume and Form 1081 for each individual listed. 6 A list of
personnel instrumental to the microlending operation (current and
proposed) with a resume and a Form 1081
for each individual listed. 7 Copies of the Applicant’s year end
audited financial statements for the last three years. If
application is submitted
after July 1 of any given year, also submit Year to Date balance
sheets. Also, include a separate schedule of non-federal sources of
funding, and funds received, for the period covered by the
financial statements.
8 Completed charts, suggested formats attached, regarding client
demographics, lending activities, technical assistance (TA)
activities, and delivery costs. Also include a set of loan policies
and procedures.
9 A map of the current area of operation. 10 A description of the
applicant’s current service area detailing the following:
a. identification of urban, rural, and/or distressed areas (see
definition) within the service area. b. characteristics of the
area’s small business community with analysis of micro-level
financial and technical assistance needs. c. charts, suggested
formats attached, regarding economic, unemployment, and poverty
characteristics.
11 A 6-10 page narrative detailing microlending and TA programming
provided to date and planned uses of the subject funds for changes
or expansion of the applicant's current activities. Include
information regarding:
a. any planned geographic expansion (provide expanded maps and
appropriate charts) b. a description of current microenterprise
activities and any lending and TA expansion/enhancement plans
subject
to approval of this application. c. current and planned integration
of internal TA programming with other community resources.
12 Signed forms (provided) as follows: a. Certification for
Contracts, Grants, Loans and Cooperative Agreements (SBA Temp Form
1711) b. Disclosure of Lobbying Activities (SF LLL) c.
Certification Regarding Debarment, Suspension, and other
Responsibility Matters - Primary Covered
Transactions (SBA Temp Form 1623) d. Compensation Agreement (SBA
Form 159) e. Resolution of the Board of Directors (SBA Form 160) f.
Security Agreement
24
APPLICATION RULES
1. Read the Microloan Program SOP 2. Give clear description of
current lending and TA programs 3. Follow the directions / Cover
Sheet carefully 4. Only deliver a complete application 5. Use the
Lending History and TA History templates provided
25
26
Hear from ECDI, a CBA Member
Inna Kinney Founder/CEO
Questions?
Thank you!
Slide Number 3
Slide Number 4
Slide Number 5
Slide Number 6
Meet the Experts
Office of Economic OpportunityThe Symbiotic Lending Products for
Mission Lending
Office of Economic Opportunity (OEO) Overview
How the Microloan Program Works
How the Microloan Program WorksSBA Loans to Intermediary
Lenders
How the Microloan Program WorksLoans from Intermediary to
Microbusiness
How the Microloan Program WorksTechnical Assistance Grants
Examples of Mentoring and Technical Assistance
Slide Number 15
Symbiotic Relationship
Community Advantage TOP 10Loan Volume - FY 2017
SBA Microloan Program Application Process
SBA Microloan Program Application Process (Cont’d.)
Application Process (Cont’d.) - Cover Sheet
APPLICATION RULES
Hear from ECDI, a CBA Member