Louisville Small Business Development Center SBA Loans & Grants

What is it? 1.Primarily a guarantor of loans made by financial institutions 2.Direct loans in the event of a declared disaster 3.Provides free resources and counseling from SBA Resource Partners 1.Small Business Development Center (SBDC) 2.SCORE 3.Women’s Business Center (WBC)

What Do Banks Look For? The 5 C’s of Credit 1)Character 2)Capacity (Financial) 3)Conditions 4)Collateral 5)Cash Flow Formal Business Plan

Eligibility For-Profit business located in U.S. Must be a “Small” business per definition Applicant’s net worth less than $15M Applicant’s net income less than $5M in preceding 2 years U.S. Citizen, Lawful Permanent Residents, Non- Immigrant (documented) aliens Good character, personal credit,

SBA Guaranty Requirements Personal Guarantees Ownership 20% or more = Unlimited Full Ownership >20% = May be limited or full Guaranty of Spouse = Must guarantee if own 5% or more and both spouse ownership is 20% or more

Ineligible Loan Types / Uses  Limited Membership Private Clubs  Purchase Partial Ownership  Repay Owner Investment  Pay Delinquent Taxes  Loan Packagers/Lenders  Passive Income  Speculative Venture  Illegal Activities  Religious Activites  Gambling Businesses  Sexually Oriented Business

Franchises Check Not Listed on Franchise Registry? Submit copy of Franchise Agreement SBA Legal Counsel approval

Key Points SBA Guaranty is for Lender You are liable for 100% of the loan Equity injection required – no 100% financing Lenders are certifying that credit is NOT available elsewhere on REASONABLE TERMS Commercial Real Estate must be 51% owner occupied – 60% for new construction

7(a) Loan Guaranty Program Most used SBA program Used for: Startups Purchase existing businesses Expand/renovate facilities Finance working capital/recievables Constructon Refinancing (certain conditions) Max Amount = $5M

SBA Express Max Loan Amount = $350K Allowable interest Higher Eligibility and Uses same as 7(a) Veterans Advantage 51% Vet ownership Max Loan Amount = $500K Can be used by current spouse or widowed spouse

504 Loan Program 10% Equity Extended term Uses Purchase new facilities Renovate and expand existing facilities Purchase equipment Not For Working Capital Inventory Refi debt Investment Real Estate

SBA Small Business Grants

Louisville Small Business Development Center David Oetken