American Chamber of Commerce Executives July 30, 2009 Raleigh, North Carolina

HISTORY OF SBA Reconstruction Finance Corporation Great Depression Smaller War Plants Corp. W W II 1951 Small Defense Plants Administration Korean War July 30, 1953 Small Business Administration

HISTORY OF SBA 1954 Direct & Guaranteed Lending 1958 The Investment Company Act 1964 Equal Opportunity Loan Program

The American Recovery and Reinvestment Act of 2009 $787 Billion

Recovery Act Apportionment: $787 billion $25.7 $139.5 $288 $95.2 $147.7 $90.9

The American Recovery and Reinvestment Act of 2009 SBA = $730 million

SBA Business Loan Programs: $375 million for temporary fee reductions or eliminations on SBA loans and increased SBA guaranteed shares, up to 90 percent for certain loans

GUARANTY GUARANTY PERCENTAGES 7(a) Loans up to $150,000 85% 90% Patriot Express $500,000 75%/85% 90% SBAExpress $350,000 50% CommunityExpress $250,000 75%/85% 90%

GUARANTY FEES Term of 12 months or less - 1/4 of 1% Term over 12 months: Loans up to $150,000 2% of guaranteed amount Loans from $150,000 to $700,000 3% of guaranteed amount Loans over $700,000 3.5% of guaranteed amount Additional fee of 0.25% on guaranteed amount in excess of $1 million

SBA Loan Secondary Market: SBA loans to Brokers/Dealers Temporary secondary market for 504 loans

Troubled Asset Relief Program (TARP) U.S. Treasury has committed up to $15 billion to purchase SBA loans in the secondary market.

TALF INITIATIVE Joint Treasury – Federal Reserve program Intended to stimulate secondary market $200 billion for asset-backed securities

TALF INITIATIVE Wall Street Journal, 3/4/09

SBA 504 LOAN PROGRAM Example: $3,750,000 Project % of $ Amount Project Security Bank Loan $1,875,000 50% 1st Lien SBA/CDC Loan $1,500,000 40% 2nd Lien Borrower $ 375,000 10%* Total: $3,750,000 100% Borrower 10% Bank Loan 50% CDC 40%

Certified Development Company Loan Program (504): Reduce/eliminate fees Borrower fee: 1.5% of debenture amount Lender fee: 0.5% of 1st mortgage amount Refinancing of eligible debt

Microloan Program: $30 million for expanding program, enough to finance up to $50 million in new lending and $24 million in technical assistance grants to micro-lenders

America’s Recovery Capital Program: $255 million for a new loan program to help “viable” small businesses meet existing, non-SBA debt payments Loans up to $35,000 SBA pays interest 100% guaranteed

Surety Bond Guaranty Program: $15 million for expanding SBA’s Surety Bond Guarantee program Raise bond limit to $5 million from $2 million

Small Business Investment Companies: Expands leverage capability for Small Business Investment Companies

SBIC SUCCESS STORIES Outback Steakhouse Teledyne Compaq Computers Oracle Sybase America Online Ben & Jerry’s Apple Cray Research Federal Express Intel Staples Winnebago Gymboree

Other Provisions: $25 million for additional staff $20 million for technology systems $10 million for the Office of Inspector General

TAX INCENTIVES Extends Section 179 expensing Allows carry back operating losses from 3 to 5 years Lowers estimated tax payments for those with adjusted gross income under $500k Provides tax credits for hiring disadvantaged people Allows partial exclusion on gains

www.sba.gov (800) U-ASK-SBA