SBA Loan Guarantee ProgramPresented by SBA and DC SCOREMarium Eamen & Karen Williams

washingtondc.score.org www.sba.gov

August 22, 2017

Today’s Presenters

KarenWilliamsDCSCORE

MariumEamenSBA

Today’s Webinar

• Sponsored by DC SCORE and the Metropolitan District of the Small Business Administration

• Question can be submitted online during the session

• A copy of this webinar will be posted on www.washingtondc.score.org

SBA WashingtonMetropolitan Area District

• District of Columbia• Montgomery County, MD

• Prince George’s County, MD• Fairfax County, VA• Loudoun County, VA

• Arlington County, VA• Cities of Alexandria and

Fairfax

Today’s Session Objectives

• Develop an understanding of SBA-guaranteed bank loan products, eligibility, and how to apply

• Find out how to move forward

• Now . . . a little bit about SCORE

SCORE is America’s small business resource

• One-on-one mentoring in person & online

• Workshops, seminars & events in our community

• Business tools & templates at www.score.org

Free & confidential mentoring

• We help small biz grow

• Jelly Belly $160mm rev

• Vera Bradley $288mm rev

• Over 10 million served since 1964

• 370,000 assisted this year

What is SCORE?

We Help Small Businesses

SCORE is a non-profit resource partner of the

United States Small Business Administration

SCORE: An Overview

About SCORE:SCORE was formed in 1964 as a resource partner of the Small Business Administration whose mission is to help aspiring and existing businesses succeed. Since then, we’ve helped over 11 million people in pursuit of their business goals.

over 300 chapters across the nation plus online mentoring and resources

SCORE offers

Small Business…Huge Impact

SCORE offers

Small Business…Huge Impact

over 10,000 volunteer business mentors with expertise in over 62 industries

Last year SCORE helped

Small Business…Huge Impact

Create over 53,000 new businesses

Create over 65,000 new

jobs

Over 38,000 businesses

increase revenue

Of SCORE’s Clients:

Small Business…Huge Impact

56% were women

31% were minorities

12% were veterans

Who Does SCORE Help?

OpeningGrowth

Research & Planning

Pre-Startups

Startups

In Business Firms

• Mentoring: Free face-to-face mentoring in each of its 300+ chapters and also provides online advice through www.score.org

• Workshops: Educational sessions on a myriad of topics for entrepreneurs, ranging from business planning to marketing and financing

• Online Resources: Wide collection of articles, templates, assessments, blogs, and other tools that can be used to learn and implement new strategies

SCORE is here to help you find success as an entrepreneur.

How SCORE Can Help You

Get Started Today

Don’t Wait.Contact us today to § Start or grow your business§ Become a SCORE volunteer

Call or visit us online:§ (202) 619-1000§ www.washingtondc.score.org

WASHINGTOND.C.METROAREADISTRICTOFFICE4093rd StreetS.W.2nd Floor,Washington,D.C.20416(202)205-8800

SBA LOANGUARANTEEPROGRAM

HOWTHESBALOANPROCESSWORKSvSmallBusinessappliesforLoantoBank

vBankApproval- SubjecttoSBAGuaranty

vBanksubmitsGuarantyRequesttoSBA

PURPOSEOFTHESBA

vSBA’spurposeistohelpsmallbusinesseswithareasonablechanceofsucceeding,obtainfinancingonequitableterms.

“SBA will not make a bad loan good, but will make a good loan possible.”

BenefitsToSmallBusinesses

vGivessmallbusinessesaflexiblefinancingalternativewhenfundingisnototherwiseavailableonreasonableterms

vAllowsforlongertermsandlowerpaymentsthantraditionalloans

vEquity/Downpaymentrequirementsmaybemoreflexiblethantraditionalfinancing

WHENASBAGUARANTYMAYBENECESSARY

v StartupBusinesses

v LackofCollateral

v LowerThanNormalDownpayment/Equity

v LongerTerm/LowerPaymentsRequiredtoMeetDebtCoverageRequirements

v RiskierIndustries(Entertainment,High-Tech,Service,Retail)

v UnevenHistoricalRevenuesorProfits

v TighterThanNormalDebtCoverage

v ChangeofOwnership/Management

v LendingLimits

v RelianceonProjections

ELIGIBILITYvOnlySmallBusinessesdefinedbyNAICSvGoodCharactervAbilitytoRepayvFeasibleBusinessPlanvManagementExpertisevAdequateWorkingCapitalvCitizenorLegalResidentvEligibleuseofLoanProceedsvCreditHistory

6C’SOFCREDIT

vCharactervCapacity(cashflow)vCapitalvCollateralvConditionsvCommonsSense

FICOSCORECOMPOSITIONv 35%- Anindividual’shistoryofmakingcreditpaymentson

time

v 30%-Totalamountofdebtbeingcarriedalongwithavailablecredit

v 15%- Ageofindividual’sopencreditline

v 10%- Frequencywithwhichsomeoneappliesforcredit

v 10%- Wildcardfactorssuchasthetypesofcreditlines

ELIGIBLEUSESOFSBALOANPROCEEDS

v RealEstatevAcquirelandand/orbuildingsvConstruction,RenovationorLeaseholdImprovements

v PurchaseofFixedAssets(M&E,F/F)

v Inventory

vWorkingCapital

v DebtRefinancing

v Somefranchises:seewww.franchiseregistry.com

INELIGIBLEUSESOFSBALOANPROCEEDS

v Businessesprincipallyengagedinteaching,instructing,counselingorindoctrinatingreligionorreligiousbeliefsv (Whetherinareligiousorsecularsetting)

v Investmentorientedbusinesses:v Stocks/Realestateinvestments

v Nospeculativebusinessv Businessesengagedin

lending:v Banks,financecompanies,andfactors

v AbusinessorapplicantdefaultedonaFederalloan

v Non-profitbusinessesv (forprofitsubsidiariesareeligible)

v Lifeinsurancecompaniesv Pyramidsalesdistribution

plansv Privateclubsandbusinesses

v Limitmembershipsforreasonsotherthancapacity

v Stocks/Realestateinvestmentsv Passivebusinessesownedby

developersandlandlords

Mustbelegal underFEDERALLAW

GUARANTYFEE

vFY17SBA FEE WAIVER:vLoans< $150,000vSBAExpress<$350,000&VeteranOwnedBusiness

LOANAMOUNT GUARANTYFEE

$150,001 - $700,000 3.0%

$700,001 - $1,000,000 3.5%

$1 million 3.75%

12 months or less 0.25%

SBALOANPROGRAM

7(A)GUARANTYLOANPROGRAM

vMaximumLoanAmount:$5,000,000

vRepaymentTerms:12months- 25years

vAverageGuaranty:75%- 85%v (SBAExpress50%&Exporting90%)

vInterestRates:determinedbythelenderwithanallowablemaximum

7(a)LOANSUB-PROGRAMS

vSBAExpress

vCAPLine

vInternationalTradeLoan

vExportWorkingCapital(EWCP)

vExportExpress

vCommunityAdvantage

vMicroloanProgram

SBAEXPRESSLOANvVETERANS ADVANTAGE

v SBAGuarantyFeeforVeteranownedbusinesseswaived

vUpto$350,000vTerm&RevolvingvExpeditedSBAApprovalvLenderusestheirownapplicationprocessvReducedSBAGuarantyof50%

CAPLinev ContractCAPLine

v Fundsallcontractcostsascontractiscompletedv Nolongerrequiresassignmentofcontractinallcases

v SeasonalCAPLinev Financeseasonalincreasesinaccountsreceivableandinventory

v Builder’sCAPLinev Fundsconstructionorsubstantialrenovationofresidentialorcommercialbuildingsfor

resale

vWorkingCapitalCAPLinev Fundshorttermworkingcapitalneedv Upto10yearmaturityv Governedbyaborrowingbasecertificateormustbefullycollateralizedona1:1

collateralratiov Advancesallowedupto80%ofA/Rand50%ofInventory

INTERNATIONALTRADE/EXPORTEXPRESS/EWCP

v VarietyofloanprogramstosupportUSExportingeffortsbasedontheneedsofthebusiness

v 90%Guarantyand$5,000,000maxloanamount

v ExportExpress:upto$500,000v Maybeusedtoenhanceafirmsexportdevelopmentv Inoperationatleast12months

v ExportWorkingCapital(EXCP)v Short-termworkingcapitalneedsofexportersv 90%guaranty

v InternationalTrade:• HelpsUSbusinessestoenter&expandinto

internationalmarkets

COMMUNITYADVANTAGEvProvidedbyMission-FocusedLenders

v CDFI,CDC,Micro-Lenders

vLoansupto$250,000

vOffertechnicalassistance&economicdevelopmentsupporttounderservedareas

vQualifyingcriterionsameas7(a)

MICROLOANPROGRAM:$500- $50,000

v Purpose:Toassistsmallbusinessesinneedofsmallamountsoffinancialassistance

v Technicalassistanceisusuallyacomponentoftheapplication

v OfferedthroughNon-ProfitCommunityGroupswholenddirectlytoborrowers• $500to$50,000

v LoanUses:• Workingcapital,equipment,inventory,fixtures,andleaseholds• Notforrealestateordebtrefinancing

504LOANPROGRAMv Purpose:FixedAssetsOnly- Noworkingcapitalordebt

refinancingv ApplydirectlythroughparticipatingCDCv Borrowerbringstotable- atleast10%ofprojectcost- upto

20%injectionmayberequiredv CDC- maximumof40%ofprojectcost- fromsaleofSBA

guaranteedDebentures- secondmortgageonassetsbeingacquired

v Private-sectorlender- 50%ofprojectcost- firstmortgageonassetsbeingacquired

vMaximumSBAparticipationis$5,000,000• $5,000,000forManufacturers&EnergyEfficientProjects

vMinimum SBAparticipationis$50,000vMaturityforDebentureis10or20yearsvMustcreateorretainonejobforevery$65,000guaranteed

($100,000formanufacturers)ormeetSBApublicpolicygoals

CERTIFIEDDEVELOPMENTCOMPANIES

v BusinessFinanceGroup(FormerlyVirginiaAssetFinancingCo)(703)352-0504Services:WashingtonDC,Maryland,andVirginia

v ChesapeakeBusinessFinanceCorporation(202)625-4373Services:WashingtonDC,Maryland,andVirginia

v PrinceGeorge’sFinancialServicesCorporation(301)883-6900Services:PrinceGeorge’sandMontgomeryCountiesinMaryland

v RappahannockEconomicDevelopmentCorporation(REDCO)(540)373-2897Services:Virginia

OTHERSBAFINANCINGPROGRAMS

vDisasterLoanProgram

v(SBIC)SmallBusinessInvestmentCompanies

vSuretyBonding

THANKYOU!!!

Ifyouhavefurtherquestions,pleasecontact

LiboSuenLenderRelationsSpecialist

VeteransOfficer/InternationalTradeOfficer202.205.6252desklibo.suen@sba.gov

MariumEamenLenderRelationsSpecialistSBDCProgramOfficerTel:202-205-6117marium.eamen@sba.gov

NEXT STEPS

Questions?

• Assistance in the SBA Loan Guarantee Program available from SBA and at the DC SCORE office

• Contact SCORE:

– Request a mentor at www.washingtondc.score.org

– Call (202) 619-1000 and request an appointment with a SCORE mentor

• Prepare for a long, but fruitful journey

Summary

• Question for DC SCORE can be sent to karen.williams@scorevolunteer.org

• Question for SBA can be sent to Marium.Eamen@sba.gov

• A copy of this webinar will be posted on www.washingtondc.score.org

Contact SCORE:washingtondc.score.org

(202) 619-1000