The SBA provides financial assistance to small businesses through guaranteed loans and surety bonds. It guarantees loans made by lending institutions to allow access to financing that may not otherwise be available. The 7(a) loan program is the SBA's primary program, guaranteeing loans up to $5 million that can be used for various business purposes. The SBA also offers microloans up to $50,000 through nonprofit intermediaries and larger loans through the CDC program. Applicants must meet SBA size standards and be creditworthy but may lack collateral or experience.

1. Loan Programs Maria P. Hughes San Diego District Office

2. How Does SBA Help? Management Assistance Financial Assistance Government Contracting Disaster Relief Advocacy

3. SBA Financial Assistance Guaranteed Loans SBA Lending Partners No Direct Lending In FY 2010 SD District Office guaranteed 606 loans worth $228.5 million No grants

4. SBA Business Loan Programs 7(a) General Business Loan Program CAPLines (Lines of Credit) SBA Community Express Export Working Capital Program International Trade Certified Development Company (CDC) Program 7(m) Microloan Program

5. 7(a) Guaranty Loan Program Maximum loan is $5 million Guaranty up to $3.75 million Guaranty Percentages: 85% for loans <=$150.0 k 75% for loans > $150.0 k May vary with other programs

6. Use of Loan Proceeds Any reasonable business purpose Purchase machinery & equipment Working capital Leasehold improvements Receivables & inventory Refinance existing debt Acquisition/Construction of real estate Business acquisitions

7. Flexible Terms Maturities Based on use of proceeds & ability to repay Up to 10 years for working capital 7 to 10 years for machinery & equipment 25 years for real estate – maximum maturity Weighted average for multiple purposes

8. Flexible Terms Interest Rates Negotiated between bank and borrower Based on WSJ Prime + Spread Fixed or Variable Rate SBA guidelines based on loan maturity & amount < 7 years: Maximum Rate = Prime + 2.25% >= 7 years: Maximum Rate = Prime + 2.75% Rates slightly higher for loans of $50.0 k or less

9. Guaranty Fees Based on guaranteed portion of loan $150.0 k or less then fee = 2% of guaranteed portion >$150.0 k & <= $700.0 k then fee = 3% of guaranteed portion >$700.0 k then fee = 3.5% of guaranteed portion Maturities of < 12 months fee is .25% of 1.0% Fee may be financed with loan proceeds

10. Fees Associated With SBA Loan Guaranty Fee Packaging Fees Financed with loan proceeds Limited Prepayment Penalties Loan maturity >= 15 years Prepayment $ exceeds 25% of outstanding balance Occurs within 3 years of disbursement

11. Eligibility Small by SBA Size Standards Operated as a for-profit Business located in U.S. Unable to secure reasonable financing through other means Some businesses ineligible

12. General Size Standards Standards vary by industry Industry classification based on NAICS Based on average Annual Gross Receipts or number of employees Manufacturing – 500 employees Wholesaling – 100 employees Services, Retailing, Construction - $6.5 million to $31.5 million Agriculture - $.75 million

13. CDC (504) Loan Program Administered by Certified Development Company (CDC) Fixed asset financing Commercial Real Estate Capital Equipment Assists with business expansion Promotes economic development Job creation Increases local tax revenues

14. CDC (504) Loan Program Maximum debenture up to $5.0 million Total project size may be larger Proceeds may not be used to finance: working capital Inventory Refinance debt

15. Micro Loan Program SBA loans funds to non-profit intermediary Intermediary makes small loans to businesses Loan amounts up to $50.0 k Maturities up to 6 years Business receives technical assistance through Intermediary

16. Micro Loan Program Intermediary CDC Small Business Finance 2448 Historic Decatur Road, Suite 200 San Diego, CA 92106 Susan Lamping, Program Administrator T (619) 291-3594 www.cdcloans.com

17. SBA’s Credit Criteria Cashflow Commitment Character Credit Collateral

18. Application Process Apply for loan through SBA Participating Lender Lender submits application for SBA review and guaranty After SBA approval, loan closes and lender disburses funds

19. Why an SBA Guaranteed Loan? Longer terms – Eases cashflow Competitive Rates No balloon payments No points Assists borrowers with shortfalls in equity and/or collateral Lender’s risk reduced in transaction

20. www.sba.gov

21. San Diego District Office U. S. Small Business Administration 550 West C Street, Suite 550 San Diego, CA, 92101 T (619) 557-7250 Email: sandiego@sba.gov