U.S. Small Business AdministrationYour Small Business Resource Programs and services to help you start, grow and succeed Overview of SBA Loan/Bonding Programs HubZone Industry Day June 19, 2012

U.S. Small Business AdministrationYour Small Business Resource Programs and services to help you start, grow and succeed SBA’s Mission SBA was established to help small businesses get started, grow, and prosper! Services Include: –Federal Government Contracting Assistance –Counseling and Technical Assistance SCORE Small Business Development Center (SBDC) –Financial Assistance

U.S. Small Business AdministrationYour Small Business Resource Programs and services to help you start, grow and succeed How SBA Assists with financing SBA does not make direct loans or offer grants. All SBA loans are loans by financial institutions guaranteed by Agency. The SBA, in effect, acts as a co-signer for the small business. The first step is to get a financial institution involved

U.S. Small Business AdministrationYour Small Business Resource Programs and services to help you start, grow and succeed SBA Cleveland District Office Primary reasons banks utilize SBA as a lending partner? Insufficient collateral to satisfy lender Need longer term than offered by conventional lender Start-up business or industry deemed higher risk

U.S. Small Business AdministrationYour Small Business Resource Programs and services to help you start, grow and succeed Benefits of SBA Lending Programs Extended Repayment term –Based on use of proceeds (max. 25 years) –Fully amortizing loans Better Pricing/Market rate of interest Lower Down Payments Flexible Repayment Options Reduces lender’s risk, making it easier for bank to extend required financing

U.S. Small Business AdministrationYour Small Business Resource Programs and services to help you start, grow and succeed SBA Loan Programs Regular 7(a) Loan Program (75-85% SBA guaranteed) SBAExpress (50% SBA guaranteed) /CAPLine 504 Loan Program Microloan Program Export Working Capital/International Trade/Export Express Loan Programs Patriot Express

U.S. Small Business AdministrationYour Small Business Resource Programs and services to help you start, grow and succeed SBA Loan Parameters Use of Proceeds –Most general business purposes (acquire equipment, build or acquire building, leasehold improvements, working capital, acquire a business, some debt refinance) –SBAExpress/CAPLine loans can be used as revolving line of credit Maximum Loan Size: –Regular 7(a) Loan Program - $5 million –SBAExpress - $350,000 –Export & Patriot Express - $500,000

U.S. Small Business AdministrationYour Small Business Resource Programs and services to help you start, grow and succeed Cleveland District Office Fiscal Year Comparison Total Loans – FY 2011 E.K.

U.S. Small Business AdministrationYour Small Business Resource Programs and services to help you start, grow and succeed SBA Lending Volume Total Loans (#) FY ‘11 = 1,434 Total Loans ($) FY ‘10 = $363,595,000 Avg. Loan Size:$253,553 Cuyahoga County Loans (#) FY ‘11 = 387 Cuyahoga County Loans ($) FY ‘11 = $108,736,700 Total loan volume FY ‘11 (#) up 37% Total loan volume FY ‘11 ($) up 66%

U.S. Small Business AdministrationYour Small Business Resource Programs and services to help you start, grow and succeed How do you apply for these loans? Borrowers apply for loans directly through lending institutions (participating banks, credit unions, CDCs) Lender may choose to: Make loan w/o SBA guaranty Make loan subject to SBA guaranty Decline to make the loan

U.S. Small Business AdministrationYour Small Business Resource Programs and services to help you start, grow and succeed “Opening the Door to Bonding” U.S. Small Business Administration Surety Bond Guarantee Program

U.S. Small Business AdministrationYour Small Business Resource Programs and services to help you start, grow and succeed How Can SBA Help Small Contractors Obtain Bonding?  SBA guarantees bonds written by any surety approved to participate in the program and listed in U.S. Treasury Circular 570  SBA provides a 70%, 80% or 90% guarantee through two separate programs The Prior Approval Program, administered by two Area Offices, provides either an 80% or 90% guarantee based on the contractor’s demographic information. The Preferred Surety Bond Program, administered by SBA HQ in Washington, DC, provides a 70% guarantee.

U.S. Small Business AdministrationYour Small Business Resource Programs and services to help you start, grow and succeed Steps to Obtaining SBA Bonding  Contact an Agent An agent is a person who has power- of-attorney to write bonds on behalf of a surety company  Provide the agent with evidence of credit, capacity, character and SBA required forms

U.S. Small Business AdministrationYour Small Business Resource Programs and services to help you start, grow and succeed How Can A Contractor Find an Agent?  SBA provides a list of agents appointed through the program at Loans & Grants>Bonds>Surety Bonds  Contractors may also contact one of the following OSG offices for a referral:

U.S. Small Business AdministrationYour Small Business Resource Programs and services to help you start, grow and succeed SBA Surety Bond Guarantee Area Offices Denver Area Office (303) For Contractors Located Generally in the Northeast, Midwest and Rocky Mountains Seattle Area Office (206) For Contractors Located Generally in the South, Southeast and West Coast

U.S. Small Business AdministrationYour Small Business Resource Programs and services to help you start, grow and succeed SBA Resources (216) for Cleveland office Jim Donato, ext. 215 SCORE, SBDC & CDC network