Financing Small Business - U.S. Small Business Administration NY District (SBA NYDO)

1. Asian Women In Business
Presented by :Man-Li Kuo Lin
Economic Development Specialist
Man-li.lin@sba.gov
212-264-7060

2.  Financing
 Business Education/Training
 Government Contracting Assistance
 Disaster Assistance
 Advocacy
 www.sbaguides.com

3.  FREE Consulting and Low Cost Training
◦ Counselors to America’s Small Business (SCORE)
◦ Small Business Development Centers (SBDC)
◦ Women’s Business Centers (WBC)
◦ Veterans Business Outreach Centers
◦ U.S. Export Assistance Centers
◦ Procurement Technical Assistance Centers
 Online Small Business Training
◦ http://www.sba.gov/tools/sba-learning-center

4.  Start-up Businesses
◦ Business Plan
◦ Financial Projections
◦ Financing Assistance
 Existing Businesses
◦ Managing and Growing a New Business
◦ Developing New Markets
◦ Financing Assistance
◦ Accounting Issues
◦ Human Resources
◦ Product Development
◦ Patent Search
◦ International Trade
◦ And Much More

6.  Disaster Loans for Federal Declared Disaster Areas
◦ Businesses
◦ Homeowners
◦ Renters
◦ Non-Profit organizations
 Loan Amount Limits
 Home Loans - Max $200K
 Personal Property Loans - Max $40K
 Business Loans- Max $2 Million
 Economic Injury Disaster Loans - Max $2 Million
◦ SBA’s Disaster Assistance Customer Service Center
◦ (800) 659-2955, disastercustomerservice@sba.gov

7.  Advocacy is an independent voice for small business within
the federal government and is the watchdog for the
Regulatory Flexibility Act (RFA).
 Advocacy advances the views and concerns of small business
before Congress, the White House, the federal agencies, the
federal courts and state policy makers.
 Giving small employers a voice early in the process is key to
reducing the negative impact of regulations on small
businesses, increasing the level of regulatory compliance, and
passing on cost savings to state economies. Regional
Advocates help identify regulatory concerns of small business
by monitoring the impact of federal and state policies at the
grassroots level.
 Region II: Teri Coaxum @ 212-264-7752

8.  The world’s largest buyer
 More than $500 billion every year
 Government-wide small business contracting
goal:
◦ 23% for small business in general
◦ 5% for Small Disadvantage businesses
◦ 3% for HubZone businesses
◦ 3% for Service Disabled Veterans
◦ 5% for Women Owned Small Businesses

9.  System for Award Management (SAM)
 Self Certifications
◦ Small Business
◦ Veteran Owned
◦ Service Disabled Veteran Owned
◦ Women Owned Business
◦ Small Disadvantaged Business
 SBA Certifications
◦ 8(a) – 9 Year Development Program
◦ HubZone
www.acquisition.gov

10.  8(a) Certification-9 Year Development Program
◦ At least 2 years in business
◦ Socially and Economically Disadvantage
 HubZone
◦ Located in distressed census tract areas
◦ Visit www.sba.gov/hubzone for information
www.sam.gov

11. Do you know the Financing Options Available from the
SBA?
Small Business Loans
Loans for Land &
Buildings
Venture Capital
Investing
Export Assistance
Disaster Assistance

12. GREATER APPROVAL POTENTIAL
 Allows lenders to approve loans to customers
that do not fall within conventional
guidelines, such as:
 New Businesses
 Certain Industries Types
 Lower Debt Service Coverage
 Longer Terms

13.  Only Term Loans & Lines of Credit
 Insufficient cash flow – offer longer term or
accept lower Debt Service Coverage
 Lower personal credit scores or limited credit
history
 Low or deficit net worth, personal or business
 Highly leveraged
 Collateral shortfall
 Declined for policy exception
 Growing business – new location or new
product; use of projections
 New businesses or short time as owner

14.  Acquisition of an existing business
 Longer maturity on term loans
 Lower equity injection
 Easier to qualify than conventional loans
 Streamlined application process
 Proceeds can be used for a variety of needs
 SBA guarantee fees can be financed into the loan
 Bank uses its own process and documentation

15. Three categories:
 “7(a) Small Loans” which consists of any loan of
$350,000 or less (except Express & Export Express).
Loans over $350,000 processed using Standard, CLP,
or PLP procedures (and for 7(a) Small Loans that do
not receive an acceptable credit score).
Loans that are processed using SBA Express or
Export Express

16.  Maximum Loan Size: $350,000
 Guarantee:
◦ 85% for loans up to $150,000
◦ 75% for loans > $150,000
 SBA credit score

17.  Lenders credit memorandum and analysis
must demonstrate the Small Business
Applicant’s ability to repay the loan from the
cash flow of the business

18. REPAYMENT ABILITY
 CASH FLOW ANALYSIS
 HISTORICAL CASH FLOW
 THREE YEARS TAX RETURNS
 FIXED OBLIGATIONS, INCLUDING PROPOSED
LOAN

19. BALANCE SHEET
 USED TO DETERMINE THE FINANCIAL
STRENGTH OF THE BUSINESS
 RATIO ANALYSIS

20.  Existing Debt not reasonable terms
AND/OR
 10% Cash Flow Savings must be
demonstrated on each loan being refinanced,
not the aggregate amounts

21.  Grants NOT available from SBA
 SBA offers loan guarantees to lenders
◦ Partial refund for failed loan
◦ Lender obtains guarantee
Lenders handle all loan transactions
- Application
- Approval
- Disbursement
- Servicing
-Collection

22.  Not everyone needs an SBA Guarantee
 SBA Guaranteed Loan Program provides an
alternative
 If risk is too high – lender comes to SBA
-SBA Guarantee reduces lender risk
-Start-ups
-Insufficient collateral
-Non-standard repayment terms

23.  Non-Profit Organizations
 Religious Organizations
 Charitable Organizations
 Owners who defaulted on federal loan or federally assisted
financing
 Lending Activities
 Newspapers
 Gambling or Speculation
 Real Estate Investment
 Pyramid Sales
 Illegal Activities
 Academic Schools
 Prurient Sexual Material

24.  5 Cs of Credit
◦ Character
 Background, Education, Experience, Credit
◦ Capacity
 Source of Repayment
◦ Collateral
 Assets you own
◦ Capital
 Money you have invested
◦ Conditions
 Your Industry

25.  Eligibility
◦ General Requirements
 Federal Small Business
 Federal standard – NAICS (North American Industry
Classification System)
 Independently owned and operated
 Franchises-www.franchiseregistry.com
◦ Maximum Size Restrictions Examples
 Wholesaling-< 100 Employees
 Retail/Service- Avg Sales $4.5M to $32.5M
 Manufacturing- < 500 Employees
 Construction- $14M to $33.5M

26.  Use of Proceeds
◦ Working capital
◦ Inventory
◦ Lines of credit
◦ Expansion/renovation
◦ Leasehold improvements
◦ Land or buildings
◦ Future/Fixtures/equipment
◦ Refinance debt for compelling reasons

27. 7 (a) Loan Program
Details
•SBA’s Primary Business
Loan Program
•Broad eligibility
requirements
•Wide range financing
options
•Maximum loan amount
increased from $2 million
to $5 million
•85% guarantee on loans
up to $150,000
•75% on loans > $150,000
7(a) Loan Program
Maturities & Interest
Rates
•5-10 years for working
capital, machinery,
equipment
•Up to 25 years for real
estate, construction
•Prime + 2.25% for loans of
7 years or less
•Prime + 2.75% for loans
over 7 years
•Rates can be higher for
smaller loans
7(a) Program
Guarantee Fees
•NO FEE on loans of
$150,000 or less approved
in FY 2014
•Fee charged on guarantied
portion of loan only.
•Maturity:
•1 year or less 0.25%
guaranty fee;
•Over 1 year:
•3% on loans $150,001 to
$700,000
•3.5% on loans $700,001 to
$ 1 million
•3.75% on loans > $1
million
•Ongoing fee of 0.

28.  Selected lenders
 Lender paperwork only
◦ No SBA forms
◦ SBA loan approval within 48 hours
 Loan Amount and Guarantee
◦ Loans up to $350,000
◦ 50% Guaranty
 Loans < $25,000
◦ No SBA collateral required
◦ Bank collateral may be required

29.  Eligibility
◦ Same as 7(a)
 Use of Proceeds
◦ Same as 7(a) Loans
◦ Lines of Credit: 7 year term max
 Maximum Variable Interest Rates
◦ < $50K = Prime+6.5%
◦ > $50K = Prime+4.5%

30.  Eligibility
◦ Same as 7(a) and Additional Requirements
 Veteran
 Service-Disabled Veteran
 Active-Duty military in TAP
 Reservist or National Guard member
 Current spouses of any of the above
 Widowed spouse of a service member or veteran
who died during service

31. Maximum Loan Amount: $350,000
Use of Proceeds
Same as SBA Express
Maturity
Same as SBA Express
NO guaranty fee from 1/1/2014 to 9/30/2014

32.  Long –Term financing program
◦ Land
◦ Building
◦ Capital Equipment
◦ Lease-hold improvements
 Access through Certified Development
Company (CDC)
◦ Business Initiative Corporation of NY
 www.boedc.com
◦ Empire State Certified Development Corp.
 www.nybdc.com

33.  Typical Structure
◦ 50% - Lender
◦ 40% - 504 Program
◦ 10%/15%- Owners’ Equity
◦ Special Circumstances
 Single purpose building +5% Owners’ Equity
 Start-up business +5% Owners’ Equity
 Interest Rates
 504 portion typically close to Prime Rate
 504 portion fixed interest rate
 Favorable Blended Interest Rate
 New Refinance Options
 Eligible up to 50% of the new project costs

34.  90% financing
 Mortgage recording tax savings
 Fixed below market rate on SBA portion
 Up to 20 Year term on real estate
 Lender holds first lien position
 CDC Processes all SBA paperwork

35.  Business Eligibility
◦ For Profit
◦ < 500 Employees
◦ Job creation requirement
◦ Net Worth < $7.5 Million
◦ Net Income After Taxes < $2.5 Million
 Max 504 Loan Amount
◦ $5.5M (40%) for Manufacturing
◦ $5.0M (40%) for All Other Industries
 Longer Repayment Term
◦ 10years - Heavy Machinery/Equipment
◦ 20 Years - Real Estate

36. Energy Efficiency Public Policy Goals
 Designed to increase Energy Independence and Security
 Projects that meeting criteria can qualify without job
creation
◦ Reduction of energy consumption by at least 10%
◦ Increased use of sustainable design:
 Reduce fossil fuels, low impact design
◦ Plant, equipment, and process upgrades of renewable
energy sources
 Micropower, Biofuels
 Can qualify for $5-5.5 Million on 504 portion (40%)
depending on project

37.  1. SBA Loan Application
◦ Application for Business Loan - SBA Form 4
◦ Lenders Application for Guaranty or Participation - SBA Form 4i by your lending institution
 2. Personal Background
◦ Statement of Personal History - SBA Form 912
 3. Personal Financial Statement
◦ Personal Financial Statement - SBA Form 413
 4. Business Financial Statements
◦ A detailed, signed balance sheet
◦ Profit and Loss (P&L) statement.
◦ Statements (current within 90 days of application) and the last three (3) fiscal years
Supplementary Schedules are required on Current Financial Statements.

38.  5. Projected Financial Statements
◦ Detailed one (1) year projection of income and finances (attach a written explanation as to how
you expect to achieve this projection).
 6. Ownership and Affiliations
◦ A list of names and addresses of any subsidiaries and affiliates, including concerns in which the
applicant holds a controlling (but not necessarily a majority) interest and other concerns that may
be affiliated by stock ownership, franchise, proposed merger or otherwise with the applicant.
 7. Business Certificate/License
◦ A Certificate of Doing Business (If a corporation, stamp corporate seal on SBA Form 4 section
12).
 8. Loan Application History
◦ By law, the SBA may not guarantee certain types of loans if your business can obtain funds on
reasonable terms from a bank or other private source. This means you must first seek private
financing.
◦ Your company must be independently owned and operated, not dominant in its field, and must
meet certain standards of size in terms of employees or annual receipts.

39.  9. Business Income Tax Returns
◦ Signed business federal income tax returns for previous three (3) years.
 10. Personal Tax Returns
◦ Signed personal federal income tax returns of principals for previous three (3) years.
 11. Résumés
◦ Personal résumés including the business experience of each principal.
 12. Business Overview and History
◦ Brief history of the business and its problems. Include an explanation of why the SBA loan
is needed and how it will help the business.
 13. Business Lease
◦ Copy of business lease (or note from landlord) giving terms of proposed lease.

40.  14. For purchasing an existing business:
◦ Current balance sheet and P&L statement of business to be purchased.
◦ Previous two (2) years federal income tax returns of the business.
◦ Proposed Bill of Sale including Terms of Sale.
◦ Asking price with schedule of:
 Inventory
 Machinery and equipment
 Furniture and fixtures

41.  Accessed through SBA Microloan Intermediaries
◦ 8 In New York
◦ Intermediaries borrow dollars from SBA and lend
directly to borrowers
◦ Use of Proceeds
 Working Capital
 Machinery and Equipment/Inventory
 Leasehold Improvements
 Can NOT be used for down payment of or to
purchase real estate

42.  Small Dollar Amount Loans
◦ $500 to $50,000
 Eligibility
◦ Same as 7(a)
 Maturity
◦ Short-term, not to exceed 6 years
 Fixed Interest Rates
◦ Negotiable
◦ Loans < $10,000 = Cost of Funds +8.5% (Max)
◦ Loans > $10,000 = Cost of Funds +7.75% (Max)

43. ACCION USA, Inc.; Paul Quintero, CEO
 115 E. 23rd St. 7th Fl., New York, NY 10010
 617-684-0215; info@accionusa.org;
 www.accionusa.org
Angel Fund; Joanne Grazi, Director
 379 Kings Hwy. Brooklyn, NY 11223
 718-787-1400 ext. 15; info@angelfundnetwork.org;
 ww.angelfundnetwork.org
BOC Capital Corp. ; Nancy Carin, Executive Director
 85 South Oxford St.; Brooklyn, NY 11217
 718-624-9115, boccapitalcorp@bocnet.org;
 www.bocnet.org

44. Center for Community Development for New Americans, Inc.;
Yanki Tshering, Executive Director
120 Broadway, Ste. 230; New York, NY 10271
212-898-4112; ytshering@nybcna.org; www.nybcna.org
Community Capital New York
Simone Obermaier, Executive Director Small Business Lending and Support
7 West Cross St., Ste. D; Hawthorne, NY 10532
914-747-8020 ext. 10; sobermaier@ccrhv.org; www.ccrhv.org
Community Development Corp. of Long Island, Inc.
John Bozek VP Small Bus. Lending Officer
2100 Middle Country Rd., Ste. 300; Centereach, NY 11720
631-471-1215; jbozek@cdcli.org; www.cdcli.org

45. Grameen America, Inc., Stephen A. Vogel, CEO
1460 Broadway, 14th Fl.; New York, NY 10036
212-735-4043; info@grameenamerica.org;
www.grameenamerica.org
Renaissance Economic Development Corp, Kevin Kong, Managing Director
1 Pike St.; New York, NY 10002
212-964-6022; info@renaissance-ny.org;
www.renaissance-ny.org

46. •Helps small businesses develop or expand their export
markets.
•Maximum loan amount: increases from $250,0000 to $500,00
•Maturity: 5 to 10 years for working capital, 10 to 15 years for
machinery and equipment and up to 25 years for real estate
•Maximum Interest Rate: Prime + 2.25% for loans of 7 years or
less, Prime + 2.75% for loans over 7 years
Export Express
•Loans are targeted to small businesses that are able to
generate export sales and need additional working capital to
support these sales.
•Maximum loan amount: increases from $2 million to $5
million
•Maturity: EWCP loans are typically issued for one year
•Maximum Interest Rate: Same as Export Express
Export
Working
Capital
Program
•Offers term loans to businesses that plan to start or continue
exporting or that have been adversely affected by competition
from imports.
•Maximum loan amount: increases from $2 million to $5
million
•Maturity: Maturity: 5 to 10 years for working capital, 10 to 15
years for machinery and equipment and up to 25 years for
real estate
•Maximum Interest Rate: Same as Export Express
International
Trade Program

47.  Purpose
◦ Provide Greater Access to Government Contracts
◦ Provide in Incentive to Surety Companies
 Types of Bond Guarantees
◦ Bid
◦ Payment
◦ Performance
◦ Ancillary

48.  Guarantees
◦ SBA can offer 70% -90% on Surety Bonds
 Eligibility
◦ Must be Small Business
◦ Contract Must Require Bonds
◦ Contract cannot Exceed $5Million ($10 Million for
Federal Contracts)
 Guarantee Fees
◦ $7.26 for Every $1,000 of Contract

49.  Venture capital investments are generally
made as cash exchange for shares and an
active role in the invested company
 The New Markets Venture Capital
Companies
 All SBIC Licensees by State

50. • The Small Business Investment Company (SBIC)
Program provides venture capital to small
businesses. Although SBICs are licensed and
regulated by SBA, they are private, profit-seeking
investment companies.
•http://www.sba.gov/content/all-sbic-licensees-state
•Details on each SBIC listed include the following
information:

51. • Preferred Investment Size: The amount the SBIC is
willing to invest or loan.
• Investment Policy: The type of investment the SBIC is
willing to make (for example, loans, equity or debt with
equity features).
• Investment Type: The various stages of financing that the
SBIC is willing to fund (for example, seed, start-up, early
stage, expansion financing, later stage financing, or
managed buyout, leveraged buyout or acquisition).
• Industry Preference: Type of industry or industries the
SBIC is interested in financing. Usually based on the
knowledge and experience of the SBIC's management.

52. • Geographic Preference: The area of the United States
where the SBIC prefers to make financing.
• Regulatory Capital: A Licensee's private paid-in capital
and surplus or private partners' contributed capital
(excluding non-cash contributions), plus unfunded binding
commitments from institutional investors.
• Leverage from SBA: A Licensee's outstanding
debentures, participating securities or preferred stock
guaranteed or purchased by SBA.
• Capital Resources: The sum of a Licensee's regulatory
capital and leverage from SBA.

53. • Dec. 2011, President Obama signed a bill reauthorizing the (SBIR) and
(STTR) programs for another six years.
• SBIR and STTR invest about $2.5 billion a year in America’s most
promising small research and development companies.
• SBIR and STTR operate in three phases, providing support for
research, development, and commercialization.
• Phase I awards: $100,000 for 6 months.
• Phase II awards: $750,000 for 2 years.
http://www.sba.gov/about-sba-services/7050

54. 1. Department of Agriculture
2. Department of Commerce
3. Department of Defense
4. Department of Education
5. Department of Energy
6. Department of Health and Human Services
7. Department of Homeland Security
8. Department of Transportation
9. Environmental Protection Agency
10. National Aeronautics and Space Administration
11. National Science Foundation
SBIR Qualifications:
• American-owned and independently operated
• For-profit
• Principal researcher employed by business
• Company size limited to 500 employees

55. Set-aside percentages are increased to 0.4% for 2014 and 2015, and to
0.45% for 2016 and thereafter.
STTR Phase I awards: $150,000 for 1 year.
STTR Phase II awards: $1,000,000 for 2 years.
SBA’s Responsibilities:
Reviews their progress
Reports annually to Congress on its operation
Aggregates agency solicitation announcement information
http://www.sba.gov/sbir/sttr

56. 1. Department of Defense
2. Department of Energy
3. Department of Health and Human Services
4. National Aeronautics and Space Administration
5. National Science Foundation
The Small Business Qualifications:
• American-owned and independently operated
• For-profit
• Principal researcher need not be employed by small business
• Company size limited to 500 employees
The nonprofit research institution eligibility criteria: (No size limit)
• Located in the US
• Meet one of three definitions
o Nonprofit college or university
o Domestic nonprofit research organization
o Federally funded R&D center (FFRDC)

57. www.sba.gov/ny/ny
SBA on the Internet
Easy-to-find
information to
help small
businesses start,
grow & succeed.
Small Business
Training Network – an
online virtual campus
offering free courses
workshops and
resources.
www.facebook.com/SBAAtlantic
www.twitter.com/SBAatlantic

58. Asian Women In Business
42 Broadway, Suite 1748
New York, New York 10004
Tel: 212.868.1368 - Fax:
877.686.6870
Email: info@awib.org