See below for summaries of current SBA loan programs.

Business owners -- feel free to contact me to schedule a meeting (no charge) to discuss how using SBA loans may lower your borrowing cost and improve cash flow, and how I can facilitate your loan application process.

SBA loans are more affordable than ever thanks to the American Reinvestment and Recovery Act signed into law in February, 2009.

Fees associated with “504” and “7(a)” loans have been eliminated, but are projected to be restored in October 2009.


SBA Loan Overview

Applicant businesses must be:

• for-profit
• do business in the U.S. or it’s possessions
• have reasonable owner equity to invest
• use alternative financial resources, first including personal assets

Types of businesses eligible for SBA loans: franchises; recreational facilities and clubs; farms; fishing vessels; medical facilities

Types of businesses NOT eligible for SBA loans: real estate investment; speculative activities (commodities); lending activities; pyramid sales plans; gambling activities; charitable, religious or other non-profit activities


1. America’s Recovery Capital Loan Program (ARC)

    Does my company qualify?

• Borrowing company (“borrower”) must be “viable” and have cash flow coverage of at least 1.0
• Borrower must have been profitable or have positive cash flow in one of the last two years
• Borrower must be experiencing immediate financial hardship
• Borrower must forecast that cash flow will improve during the upcoming two years, based on reasonable growth

    How much money can I borrow and how is the loan
     guaranteed?

• Receive up to $35,000 “interest free” ; SBA pays lender prime + 2% on behalf of borrower
• SBA guarantees 100% of the loan
• Personal guarantees are required from 20+% owners

    What can the money by used for?

• Cash can be used to pay principal and interest payments on existing, qualifying loans (unsecured loans, mortgages, credit cards, liens)
• Funds are disbursed up to six months; principal repayment starts 13 months later, with the loan paid off over a period of five years

2. SBA Patriot Express Program

    Does my company qualify?

• Borrowing company (“borrower”) must be U.S. military veterans or reservists who have actively served in the armed forces. Their current spouses or surviving spouses also qualify.
• Borrower is typically a small, for-profit business with either limited collateral or the need for extended terms to strengthen cash flow.
• Primary borrower must have satisfactory management experience and good credit.

    How much money can I borrow and how is the loan
    guaranteed?

• Receive up to $500,000 “interest free”
• SBA guarantees 85% on loans $150,000 and under; 75% on loans over $150,000

    What can the money by used for?

• Owner-occupied real estate, equipment, accounts receivable, inventory, business purchase or start-up, working capital

3. 7(a) Loan Program

    Does my company qualify?

• Borrower must forecast 20+% cash flow improvement due to refinancing and based on reasonable growth

    How much money can I borrow and how is the loan
    guaranteed?

• SBA guarantees 75 % of loan, up to $2 million (SBA maximum exposure $1.5 million)
• SBA guarantees 85% of loan, $150,000 and under
• SBA “Export Working Capital Loan Program” carries a maximum 90% guarantee, up to $1 million
• Borrower applies to lender for financing
• Commercial lenders make the decision on making the loans and will administer the loans
• The Lender makes the loan, not the SBA
• Lender establishes the interest rate and repayment period (interest rate cap defined by SBA)
• Personal guarantees are required from 20+% owners

    What can the money be used for?

• Cash can be used to purchase land or buildings, to cover new construction as well as expansion or conversion of existing facilities
• Purchase equipment, machinery, furniture, fixtures, supplies, materials
• To refinance existing business indebtedness which is not already structured with reasonable terms and conditions
• Short-term working capital needs
• To purchase an existing business

    The money can not be used for:

• Refinancing existing debt where the lender is in a position to sustain a loss and SBA would take over that loss through refinancing
• To effect a partial change of business ownership or a change that will not benefit the business
• To permit the reimbursement of funds owed to any owner
• To repay delinquent state or federal withholding taxes or other funds that should be held in trust or escrow

4. CDC/504 Loan Program (Certified Development Company)

Summary The CDC/504 loan program is a long-term financing tool for economic development within a community. The 504 program provides growing businesses with long-term, fixed rate financing for major fixed assets, such as land and buildings. CDC’s work with the SBA and private-sector lenders to provide financing to small businesses. Typically a 504 project includes a loan secured with a senior lien from a private-sector lender covering up to 50% of the project cost, a loan secured with a junior lien from the CDC (backed by a 100% SBA-guaranteed debenture) covering 40% of the cost and a contribution of at least 10% from the small business being helped.

    Does my company qualify?

• Borrowing company (Borrower) must be a for-profit corporation, partnership or proprietorship
• Borrower net worth must be less than $8.5 million
• Borrower average annual net profit must not exceed $3 million in last two years

    How much money can I borrow and how is the loan
    guaranteed?

• Lender funds 50% of project cost and receives first lien position on 100% of the collateral
• SBA provides up to 40% of project cost, with cap of $1.5 to $2 million from the SBA, up to $4 million for manufacturing companies
• Lender establishes the interest rate and repayment period
• Personal guarantees are required from 20+% owners

    What can the money by used for?

• Can be used to purchase owner-occupied business real estate, fixed assets, equipment
• Cannot be used for working capital, inventory or consolidating/repaying/refinancing debt
• For non-manufacturing borrowers, one job should be created for every $50,000 of SBA financing
• For manufacturing borrowers, one job should be created for every $100,000 of SBA financing

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