SBA MATERIALS - SECTION 1.doc.doc

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SBA MATERIALS - SECTION 1.doc.doc

  1. 1. FAQ SBA LOANS SAN FRANCISCO DISTRICT 455 Market Street 6th Floor λ San Francisco, CA 94105 λ 415/744-6820 λ www.sba.gov/ca/sf San Jose eCenter λ 84 W. Santa Clara Street λ San Jose, CA 95113 λ 408/494-0211 λ www.ecenteronline.org How does the SBA bank guarantee loan program work? SBA enables its participant banks to provide financing that is otherwise not available by guaranteeing approximately 75% - 85% of the loan (the banks also have some of their own money at risk). This helps to offset the risk associated with lending to small businesses. For bank guaranteed loans, the maximum amount is generally $2,000,000. There is no minimum amount; and some banks will make loans as small as $5,000. SBA provides the bank with a written authorization outlining the conditions of the SBA guarantee (e.g., the interest rate, loan maturity, and the collateral). In the event the business fails, SBA pays the bank its pro rata share and SBA also shares in any recoveries obtained from the collateral. The borrower remains liable for the full loan amount. SBA does not currently have funding for direct loans nor does it provide grants or low interest rate loans for business start-ups or expansions. If you are buying real estate or heavy equipment, you may also qualify for a Certified Development Loan (504) loan with as little as 10% down. (See the attached list of SBA San Francisco District Certified Development Company (CDC) Participants.) How do I apply for an SBA loan? Our participating banks have the SBA loan applications and they are responsible for processing, closing, disbursing, and servicing the loan. Your local bank of account is a good place to start. When you contact a bank, make sure to ask for the “SBA Loan Department.” Many of the banks now have on-line application procedures, so you may check their web site before you start. SBA’s involvement is limited to reviewing the loan application submitted by the bank to assure it meets eligibility and credit standards. The following information is generally needed: your business plan supported with pro forma cash flow assumptions and balance sheets, personal financial statements and copies of IRS returns, business financial statements (if already in business), collateral available to secure the loan, and management resumes of those involved in operating the business. Be prepared to discuss your proposal in detail. Once a bank determines they are comfortable with making the loan, they will then forward your loan application and a credit analysis to SBA (our Preferred or Express Lenders have delegated lending authority and this helps to expedite the process). What do I need to qualify for the loan? The business must be “for profit” and meet size and other eligibility standards (including your criminal history and alien status). It is estimated that 97% of all small businesses are eligible for SBA assistance (please check the SBA web site at www.sba.gov for details). SBA requires an equity injection by the applicant. 100% financing is not possible. A reasonable equity injection or down payment is generally 20% and may require up to 35% or more for startups. This is generally in the form of cash, but machinery and equipment or other tangible assets may be substituted. The owners or managers must demonstrate they have the knowledge and experience needed to operate and manage the business successfully. The business must demonstrate it can generate sufficient profits to both repay their loan and provide the owner with reasonable compensation for operating the business.
  2. 2. 2 What if I have a bad credit history? Like all lenders, SBA loans do take into consideration your past credit history. The first thing a bank will do when you apply for a loan is obtain your Credit Report. If you have not already reviewed your report, you should do so before you apply. You can access them on-line at www.annualcreditreport.com. Be prepared to discuss any problems (e.g., late pays, collection accounts, judgments, and bankruptcies). If they can be justified by extenuating circumstances, you may have a chance at obtaining credit. What kind of collateral is required? Repayment ability from the cash flow of the business, not collateral, is the primary consideration in the SBA loan decision (good character, management capability, collateral and owner’s equity contribution are also important). All owners of twenty percent (20%) or more of the business are required to personally guarantee the SBA loan. The SBA does not decline a loan solely due to lack of collateral; however, if collateral is available and a borrower refuses to pledge it, the loan can be declined. The SBA guaranty acts like a substitute for collateral from a bank’s point of view (this is why the SBA loan program was created). What are the terms and interest rates on an SBA loan? SBA does not set the interest rate on the loans, only the maximum rate the bank may charge (they are generally variable rate loans and tied to prime plus 1% - 6½% depending on the size and type of loan). SBA also charges a 1% to 3½% guaranty fee on the loan (it is charged to the bank, but usually passed on to the borrower). The actual rates and terms are negotiated between the lender and the borrower. If there is no break on the interest rate, what is the benefit of the SBA guaranty? SBA’s loan program was designed to provide assistance to businesses that cannot obtain financing at reasonable rates and terms elsewhere. If a borrower can access credit with better terms, it usually means they have established credit or they have plenty of equity in real property. How long do I have to repay the SBA loan? When a bank uses the SBA guaranteed loan program, the borrower benefits by having a longer maturity, which equates to lower monthly payments. The repayment term for SBA loans is generally between five and twenty-five years depending on the life of the assets being financed and the cash needs of the business. Working capital loans (inventory and accounts receivable) should be repaid in five to ten years. What if I am declined for an SBA loan? The best defense is a good offense….so be prepared when you apply for the loan. You must be able to sell your idea and its merits to the banker. By law, a lender must substantiate the reason for any loan they decline. If the lender questions the business plan, ask what can be done to improve it. Then, correct the business plan and resubmit it to the lender. If that lender is unwilling to approve the loan or submit the application to SBA, try another lender. If you would like additional technical assistance advise on how to obtain credit you may also consider one on one counseling from The Service Corp of Retired Executives (SCORE) www.score.org or a local Small Business Development Center (SBDC) http://sbdcnet.utsa.edu/sbdc.htm. These programs are partly funded by SBA. Please visit our web page, which is located at www.sba.gov/ca/sf for additional information about these and other technical assistance resources in the area. You may also take advantage of our training workshops and view our quarterly calendar of events, and electronically register for SBA training at the following sites: San Francisco District www.acteva.com/go/sba; San Jose eCenter at www.ecenteronline.org
  3. 3. 3 SBA San Francisco District Certified Development Company (CDC) Participants Counties Served: Certified Development Company Phone Number Description Arcata Economic Development The CDC Program Del Norte, Humboldt 100 Ericson Court, Suite 100 (707) 822-4616 provides growing Lake, & Mendocino Arcata, CA 95521 businesses with http://www.aedc1.org/ long-term, fixed- Bay Area Employment Development rate financing for Alameda, Contra Costa, Marin, 1801 Oakland Blvd., Suite 100 (925) 504-0504 major fixed assets, Napa, San Francisco, San Mateo, Walnut Creek, CA 94596 such as land and Santa Clara, Solano & Sonoma http://www.baydevco.com/ buildings. CDCs California Coastal Rural DC work with the SBA Santa Clara, Santa Cruz, 221 Main Street, Suite 301 (831) 424-1099 and private-sector Monterey, San Benito, San Luis Salinas, CA 93901 lenders to provide Obispo, Santa Barbara, Ventura http://www.calcoastal.org/ this financing. California Statewide CDC Typically, a 504 State of California 426 “D” Street (800) 348-6258 project includes a Davis, CA 95616 loan secured with a http://www.californiastatewide.org/ senior lien from a State of California Capital Access Group private-sector 150 California Street, Suite 250 (415) 217-7600 lender covering up San Francisco, CA 94111 to 50 percent of the http://www.capitalaccess.com/ project cost, a loan Alameda, Contra Costa, Marin, Los Medanos Fund secured with a Napa, San Francisco, San Mateo, 329 Railroad Avenue (925) 439-1200 junior lien from the Santa Clara, Solano & Sonoma Pittsburg, CA 94565 SBA-guaranteed http://www.504cdc.com/ debenture covering The Mortgage Capital Dev. Corp. up to 40 percent of State of California 611 Front Street (415) 989-8855 the cost, and a San Francisco, CA 94111 contribution of at http://www.tmcdcapital.com/ least 10 percent from the business. SBA San Francisco District Microlender Participants Counties Served: Microlender Phone Number Description Arcata Economic Development Co. Provides loans of Del Norte, Humboldt, Lake, 100 Ericson Court, Suite 100 (707) 822-4616 $35,000 or less to Mendocino, Siskiyou & Trinity Arcata, CA 95521 start-up, newly http://www.arcataedc.com/ established, or Monterey, San Benito, California Coastal Rural Dev. Co. growing San Luis Obispo, 221 Main Street, Suite 301 (831) 424-1099 businesses. SBA Santa Barbara, Santa Cruz and Salinas, CA 93902 loans funds to Ventura http://www.calcoastal.org./ nonprofit San Francisco Micro Loan Program intermediaries, Alameda, Contra Costa, Marin, (Southeast Asian Community Center) (415) 885-2743 which, in turn, Merced, Sacramento, San 875 O’Farrell Street makes loans to Francisco, San Joaquin, San San Francisco, CA 94109 eligible borrowers. Mateo, Santa Clara & Stanislaus http://seacc.us Applications are Alameda, Contra Costa and OBDC Small Business Finance Co. submitted to the Solano 519 17th Street, Suite 700 (510) 763-4297 local intermediary Oakland, CA 94612 and all credit http://www.obdc.com/ decisions are made by the Micro lender SBA Small Business Investment Companies (SBIC’s) This program was created to fill the gap between the availability of venture capital and the needs of small businesses in start-up and growth situations. SBIC’s, licensed and regulated by the SBA, are privately owned and managed investment firms that use their own capital, plus funds borrowed at favorable rates with an SBA guarantee, to make venture capital investments in small businesses. All SBIC’s are profit-motivated businesses. They provide venture capital, long-term loans, debt-equity investments and management assistance to qualifying small businesses. Their incentive is the chance to share in the success of the small business as it grows and prospers. This is not a local program, and information about SBIC financing and the SBIC’s operating in this area can be obtained on-line at www.sba.gov/inv.
  4. 4. 4 SBA San Francisco SCORE Chapters Area Served: Chapter Name Phone Number Description San Francisco SCORE Provides free one- San Francisco, San Mateo, and 455 Market St., 6th Floor (415) 744-6827 on-one counseling Marin Counties San Francisco, CA 94105 by experienced Email: Sfscore@sfscore.com professionals, “How Silicon Valley SCORE to Start a Business Santa Clara County 84 W. Santa Clara St., Suite 100 (408) 288-8479 Seminars,” San Jose, CA 95113 “How to Write a Email: svscore@hotmail.com Business Plan East Bay SCORE Seminars,” and Alameda, Contra Costa & Solano 519 17th St., Suite 240 (510) 273-6611 other business Counties Oakland, CA 94612 services for existing Email: eastbayscore@yahoo.com and startup North Coast Counties California North Coast SCORE businesses. (Sonoma to Oregon and Lake and 777 Sonoma Ave., Suite 115 B (707) 571-8342 Please call for an Napa Counties) Santa Rose, CA 95404 appointment. SBA San Francisco Small Business Development Centers Territory: SBDC Phone Number Description Central Coast SBDC Monterey West of Hwy. 101 and Teresa Thomae, Director (831) 479-6136 A cooperative effort Santa Cruz Counties 6500 Soquel Drive of the private Aptos, CA 95003 sector, the www.businessonline.org educational Contra Costa SBDC community and Contra Costa County Beverly Hamile, Director (925) 646-5377 federal, state and 2425 Bisso Lane, #200 local governments. Concord, CA 94520 Delivers up-to-date www.contracostasbdc.com counseling, training East Bay SBDC and technical Alameda County Raj George, Director (510) 208-0411 assistance in all 475 14th Street, Suite 150 aspects of small Oakland, CA 94612 business www.eastbaysbdc.org management. SBDC services Napa Valley College SBDC include, but are not Napa and Lake Counties Elizabeth Pratt, Director (707) 253-3210 limited to, assisting 1556 First Street, Suite 103 small businesses Napa, CA 94559 with financial, www.napasbdc.org marketing, North Coast SBDC production, Del Norte and Humboldt Counties Judith St. Clair, Director (707) 445-9720 organization, 520 “E” Street engineering and Eureka, CA 95501 technical problems www.northcoastsbdc.org and feasibility Mendocino, Sonoma & Marin Redwood Empire SBDC studies. Counties Lorraine DuVernay, Director (707) 524-1770 Special SBDC 606 Healdsburg Avenue programs and Santa Rosa, CA 95401 economic http://www.santarosa.edu/instruction/jt development wd/sbdc/ activities include San Francisco and Northern San Francisco SBDC international trade San Mateo Counties Al Dixon, Director (415) 908-7501 assistance, 455 Market Street, #600 technical San Francisco, CA 94105 assistance, www.sfsbdc.org procurement Silicon Valey SBDC assistance, North Santa Clara and South Kulbir (Bill) Singh, Director (408) 494-0240 venture capital San Mateo Counties 84 West Santa Clara St., #100 formation and rural San Jose, CA 95113 development. www.siliconvalley-sbdc.org Solano County SBDC Solano County Charles Easton, Director (707) 864-3382 360 Campus Lane, Suite 102 Fairfield, CA 94534 www.solanosbdc.org
  5. 5. 5 Other Loan Related Resources Area Served: Resource Phone Number Description Mayor’s Office of Community Dev. Small Business San Francisco 25 Van Ness Ave. #700 (415) 252-3169 Loans $100,000 and San Francisco, CA 94102 less http://www.ci.sf.ca.us/mocd/ City of Oakland Small Business Oakland 519 17th Street, #600 (510) 763-4297 Loans of $50,000 - Oakland, CA 94612 $100,000 www.oaklandnet.com Daly City Business Center Maximum loan Daly City 355 Gellert Blvd. #230 (650) 757-2060 $25,000 a minimum Daly City, CA 94015 of $5,000 www.ci.daly-city.ca.us Nor-Cal Development Corporation Helps companies that State-wide 5776 Stoneridge Mall Road, #345 (925) 416-6491 do not meet Pleasanton, CA 94588 traditional lending www.norcalfdc.com guidelines Lenders for Comm. Development Non-profit, community Alameda, San Francisco, san 111 West St. John St., Suite 800 (866) 299-8173 institution funded by Mateo, Santa Clara counties San Jose, CA 95113 27 member banks www.L4CD.org Ex-Im Bank Helps finance the Northern California 250 Montgomery St. 14th Floor (415) 705-2285 overseas sales of San Francisco, CA 94104 U.S. goods and www.exim.gov services Pacific Community Ventures Provides resources & Oakland, San Francisco, San Jose 539 Bryant Street, Suite 302 (415) 442-4300 capital to businesses and East Palo Alto. San Francisco, CA 94107 with potential to low- www.pacificcommunityventures.org income communities Napa Economic Development Corp. Non-profit that has a Napa 433 Soscaol Ave. #B131 (707) 253-3212 small business loan Napa, CA 94559 fund to serve for-profit www.nvedc.org businesses California Environmental Provides otherwise State-wide Redevelopment Fund (CERF) (916) 326-5227 unavailable financing 1812 J Street, Suite 21 for contaminated sites Sacramento, CA 95814 California Export Finance Office Enables a small bus. State-wide 1670 S. Amphlett Blvd. (650) 573-4342 to obtain a term loan San Mateo, CA 94402 or line of credit when http://commerce.ca.gov/state/ttca/ttca_ otherwise not homepage.jsp available CEDLI (Calif. Econ. Dev. Lending Int.) Multi-bank dev. corp. State-wide 1333 Broadway, Suite 1060 (510) 267-8990 providing investment Oakland, CA 94612 capital to small www.caratnet.org/cedli.htm businesses USDA Business & Industry Loans Helps create jobs and State-wide 430 G Street, Dept. 4169 (530) 792-5800 stimulate rural areas Davis, CA 95616 by guaranteeing a www.rurdev.usda.gov bank’s loan Silicon Valley Econ. Dev. Corp. Provides loans and Silicon Valley 1155 North First St. (408) 298-8455 technical assistance San Jose, CA 95112 http://www.sved.org Small Business Technical Assistance Providers & Other Resources Area Served: Name Phone Number Description Anew America Community Corp. Women’s business San Francisco Bay Area 1918 University Ave., Suite 3A (510) 540-7785, center Berkeley, CA 94704 X302 www.anewamerica.org San Francisco Asian, Inc. www.asianinc.org Development & growth 1670 Pine Street (415) 928-5910 of disadvantaged small San Francisco, CA 94109 businesses
  6. 6. 6 Bayview Small Bus. Resource Cntr. Training and support Bayview Area (San Francisco) 3801 3rd Street, Suite 240 (415) 647-3728 to emerging & est. San Francisco, CA 94124 entrepreneurs in www.rencenter.org/bay Bayview District El Pajaro Comm. Dev. Corporation Training and technical Watsonville 318 Main Street, Suite 208 (831) 722-1224 asst. to help start or Watsonville, California 95076 grow a business Legal Services for Entrepreneurs Assists low-income Bay Area 131 Steuart St. # 400 (415) 543-9444 individuals who start San Francisco, CA 94105 X217 or enlarge for-profit www.lccr.com businesses Mission Economic Development Assistance for San Francisco (Mission District) 3505 20th St., 2nd Floor (415) 282-3334 minority & women San Francisco, CA 94110 owned businesses www.medasf.org (Loan Packaging) Northern California Supplier Links minority owned Bay Area Development Council (510) 587-0636 businesses with 1999 Harrison St., Suite 655 corporate purchasing Oakland, CA 94612 representatives http://www.ncsdc.org/ Renaissance Entrepreneurship Ctr. Micro-business San Francisco Bay Area 275 Fifth Street, 2nd Floor (415) 348-6237 incubator for low San Francisco, CA 94103 income & minorities www.rencenter.org San Mateo Economic Dev. Asst. Business resource San Mateo 235 East 3rd Ave., Suite 213 (650) 522-7240 guide for downtown San Mateo, CA 94401 storefront development www.cityofsanmateo.org SV Assc. Of Startup Entrepreneurs Contacts in the Silicon Valley (SVASE) PO Box 5646 On-line only investment community South San Francisco, CA 94083 & service providers for www.svase.org successful start-ups Software Development Forum 2000+ members & the Bay Area 111 West Saint John St., Suite 200 (408) 494-8378 premier software & San Jose, CA 95113 Internet org. in the Bay www.sdforum.org Area. Small Business Network Small business San Francisco 2261 Market Street, #228 (415) 281-8412 advocacy, and San Francisco, CA 94114 educational seminars www.sfsbn.org Technology Advisory Prog. (TAP) Management Bay Area San Jose Entrepreneur Center (408) 494-0212 consulting specializing 84 W. Santa Clara St. in improving business San Jose, CA 95113 operations through www.sbdctap.com technology consulting Urban Solutions Technical Assistance, San Francisco 1083 Mission Street, 2nd Floor (415) 553-4433 Loan Packaging and San Francisco, CA 94111 other services. www.urbansolutions.org West Enterprise Center Technical assistance Rural Northern California North State Street, Suite 201 (707) 468-3553 for Micro-enterprises Ukiah, CA 95482 targeting low-income e-mail: westco@pacific.net women & minorities Women’s Initiative Skills training and Bay Area 1390 Market Street, Suite 113 (415) 247-9473 technical assistance San Francisco, CA 94102 x 320 for low-income www.womensinitiative.org individuals & women Working Solutions Links small bus. with Bay Area 611 Front Street (415) 989-2255 applicants from local San Francisco, CA 94111 nonprofit job training & www.tmcworkingsolutions.org/ employment programs SBA’s publication of these resources and information is not an endorsement of the views, opinions, products or services of any of these entities - they are provided for reference purposes only.

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