This document summarizes an SBA presentation about SBA programs and international trade. It discusses that the SBA provides capital access through loan guarantee programs like the 7(a) loan for working capital and the 504 loan for real estate/equipment. It also discusses SBA counseling resources like SBDCs, SCORE, and WBCs. Finally, it encourages exporting and provides exporting resources from the SBA.

1. SBA Programs/International Trade
Presented by Natalie Orta, SBA and
Mark Morales, Vice President SBA Division,
HomeStreet Bank
www.sba.gov www.homestreet.com
Presentation for
Beauty Industry West
March 17, 2015

2. • A department in a bank?
• A type of loan?
• The Small Business Association?
• A chamber of commerce?
• Part of the Department of Commerce?
What is the SBA?

3. Actually…
• The U.S. Small Business Administration
is an independent federal agency.
• Established by Congress in 1953

4. About the LA District Office
• Serves Los Angeles, Ventura, and Santa
Barbara counties
• One of 80 SBA district offices

5. Our Five-Pronged Mission
• Access to Capital
• Counseling and Training
• Government Contracting
• Disaster Recovery Assistance
• Small Business Advocacy

6. Capital
• SBA does not make direct loans
• We guarantee the loans
• The bank is your first stop
• Banker wants to know 3 things

7. Access to Capital –
SBA Loan Programs
• 7(a) Loan - Our “flagship” and most
flexible loan program
• 504 Loan - Our “Real Estate and
Fixed Equipment” program
• Microloans - For those “small-but-
crucial” loans

8. Access to Capital –
7(a) Loan Program
• Designed to help start or expand
businesses
• Available through SBA lenders
• Loans up to $5 million

9. Access to Capital –
7(a) Loans May Be Used To
• Expand, renovate facilities
• Buy machinery, equipment,
fixtures, furniture, buildings and
land for business use
• Augment working capital
• Refinance existing business debt
• Buy inventory
• Construct/Purchase commercial
buildings

10. Access to Capital –
7(a) Loan Terms
• 7-10 years for working capital,
machinery, equipment, and
business acquisition
• Up to 25 years for fixed assets such
as real estate, new construction,
heavy machinery, and large
equipment

11. Access to Capital –
7(a) Loan Interest Rates
• Negotiated between borrower and
lender
• Cannot exceed prime rate (WSJ)
plus 2.75%*
*May be higher on smaller loans

12. Access to Capital –
7(a) Loan Collateral
• Personal guaranties from principals
with 20% or more ownership
• SBA requires loans to be fully
secured
• Liens on personal assets may be
required
• Loans are not declined for
insufficient collateral alone

13. Use of 7(a) Loan Proceeds
•Purchase of land, buildings or expansion
or conversion of existing facilities
•Purchase of equipment, machinery,
furniture, fixtures, supplies, or materials
•Long-term working capital,
•Short-term working capital needs

14. Use of 7(a) Loan Proceeds
•Financing against existing inventory and
receivables.
•Refinancing of existing business
indebtedness
•Purchase of an existing business

15. Access to Capital –
7(a) Loan Eligibility
• Business must be for profit
• Must not exceed size standards
• Must not engage in lending, real-
estate development, investments,
gambling, or speculation
• Nonprofits, houses of worship,
pyramid sales, passive investing, or
businesses of a sexual nature are
not eligible

16. Access to Capital –
7(a) Loan Documentation
• Purpose of loan
• 3 years Tax returns (personal and
business)
• Signed person financial statements
• Personal resumes
• Projections of income, expenses
and cash flow

17. Access to Capital –
7(a) Loan Documentation
For new businesses:
• Projected opening-day balance
sheet
• Proof of cash injection
• Feasible Business plan

18. Access to Capital –
7(a) Loan Requirements
Borrowers must have:
• Good character
• Management expertise
• Reasonable personal contribution
or business equity
• Feasible business plan
• Collateral if available
• Ability to repay loan from cash flow

19. Access to Capital –
504 Loan Program
• Long-term, fixed rate financing
• 10% down, 40% SBA portion (up to $5
million), lender 50%
• Must create or retain one job for
every $75,000 of financing
• Must be at least 51% owner occupied
• Can be used for real estate or fixed
assets such as heavy machinery and
equipment

20. 504 Loan Use of Proceeds
•Purchase of land, including existing
buildings
•Purchase of improvements:grading,
street improvements, utilities, parking
lots and landscaping
•Construction of new facilities or
modernizing, renovating or converting exist
facilities
•Purchase of long-term machinery and
equipment

21. Unacceptable Uses of 504
Loan Proceeds
A 504 loan cannot be used for:
•Working capital or inventory
•Consolidating, repaying or refinancing
debt
•Speculation or investment in rental
real estate

22. Access to Capital –
CAP Lines Program
Working Capital CAPlines
Revolving lines of credit to finance
short-term working capital needs
Contract CAPlines
Contract financing to finance all costs
associated with specific eligible
contracts. May be revolving.

23. Access to Capital –
CAP Lines Program
Seasonal CAPlines
Finance seasonal working capital
needs. May be revolving.
Builders Line
Financing to construct or rehabilitate
residential or commercial property

24. Access to Capital –
Microloan Program
• Direct loans through intermediaries
• Loans of up to $50,000
• Less paperwork, faster turnaround
• Up to six years to repay
• Business management assistance
available
• Interest rate subject to negotiation

25. Access to Capital –
Microloan Program
• California Coastal Rural Dev. Corp.
(805) 962-9251
• PACE
(213) 989-3275
• Pacific Cost Regional SBDC
(213) 739-2999
• Valley Economic Development Center
(818) 907-9977

26. International Trade
• Important Facts to consider:
96% of Consumers live outside the U.S.
2/3 of the world’s purchasing power –
outside of the U.S.
Great power in the term “Made in the
U.S.A.”

27. Why Export?
• Strong foreign demand
• world economy growing > 4%
• world trade growing > 6%
• Advancements in e-Commerce and logistics =
lower costs of doing business overseas.
• Free trade agreements in Australia, Chile,
Singapore, Jordan, Israel, Canada, Mexico,
and Central America

28. The Exporter’s Advantage
Exporters are:
• Better prepared to respond to foreign
competition and global market trends.
• Able to weather downturns in the
domestic economy.
• More competitive and less likely to go
out of business.
• Able to extend the sales potential of
existing products and maintain
productive capacity by stabilizing
seasonal markets.

29. Prepare for Exporting
Take an Export Readiness Self-
Assessment
Take advantage of Training and
Counseling
Create your Export Business Plan
Conduct Market Research
Find Buyers
Look into Export Financing Options

30. Exporting Resources
• CITD
• Six Steps to Begin Exporting
• Export.gov
• www.sba.gov

31. What About Grants?
• SBA does NOT provide grants for
starting and expanding a business
• A good source for information on
how to find and apply for federal
grants is www.grants.gov

32. Counseling
SBA has 3 funded resource partners:
• Small Business Development Centers
(SBDC) 8 Service Centers in LA Region
• SCORE – Counselors to America’s
Small Business
3 Chapters within service territory
• Women’s Business Centers (WBC)
4 Service Centers in service area

33. Business Counseling and Training
• Serve Los Angeles, Ventura, and
Santa Barbara counties.
• Free business advising
• No-cost and low-cost training and
workshops
• Online consultations available
• Short and long-term client-counselor
relationships

34. Business Counseling and Training
Proven business consultants provide:
• One-on-one consulting services
• Customized advice for each client’s
situation
• Confidential consultations
• Financing and loan packaging assistance
• Reviews of business financials
• Interactive workshops and seminars

35. Business Counseling and Training
Advisors help with:
• Legal issues re: corporate structures
• Advice regarding leases and contracts
• Assistance securing intellectual property
• Business planning, including: research,
preparation, development, and review
• Marketing and business development, target
markets, strategy, and implementation

36. Business Counseling and Training
Advisors can even assist with:
• Financial statement development and analysis
• Cash flow management
• Contract proposals, preparation, negotiation,
and management
• International trade (Import/Export)
• Some centers have attorneys, CPA’s and other
specialists on staff

37. Business Counseling and Training
Small Business Development Center
(SBDC)
• Centers hosted by higher learning
institutions and economic development
organizations
• All Areas: (866)588-SBDC (7232)
• www.smallbizla.org

38. Business Counseling and Training
SCORE
• Counseling is held at sites throughout
the community
Los Angeles: (818)552-3206
Santa Barbara: (805)563-0084
Ventura: (805)204-6022
• www.score.org

39. Business Counseling and Training
Women’s Business Centers (WBC)
Focus on women but provide services
to all, regardless of gender
Los Angeles: (213)473-1605
Los Angeles: (213)353-9400
Van Nuys: (818)907-9922
Santa Barbara: (805)965-6073
sba.gov/content/womens-business-centers

40. ANY QUESTIONS?
Natalie Orta
818.552.3291
natalie.orta@sba.gov
Mark Morales
310-766-0399
mark.morales@homestreet.com

41. Thank you!!!!