Washington Metropolitan Area District Office

How the SBA Loan Process Works  Borrower applies to Qualified Lender for a Business Loan  Lender approves loan subject to SBA Guaranty  Lender submits guaranty request to SBA

Washington Metropolitan Area District Office Eligibility Issues  Must be for profit  Must be small  Must have an eligible purpose: - no investment - no speculation - no lending - must be a legal activity Eligibility

Washington Metropolitan Area District Office Eligibility Issues  No Multilevel Marketing – Pyramids - Amway - Mary Kay  No more than 30% of Revenues From Gambling  No Pornography

Washington Metropolitan Area District Office Borrower Requirements  Good Character  Management expertise and commitment to succeed  Reasonable personal contribution or business equity  A feasible business plan  Ability to repay the loan

Washington Metropolitan Area District Office Where Are We? From Fiscal Year 2007 to Fiscal Year 2008  7(a) Loan Program  99,606 to 69,434 (-30%)  $14.3Billion to $12.7Billion (-11%)  504 Loan Program  10,669 to 8,883 (-17%)  $6.3Billion to $5.3Billion (-16%)

Washington Metropolitan Area District Office What Caused This? A Perfect Storm:  Tightened credit by lenders  Declining creditworthiness  Reduced demand for loans

Washington Metropolitan Area District Office How Has SBA Responded?  Encouraged lenders to work with borrowers  Acted to improve liquidity in the SBA secondary market  Provided base rate option with LIBOR  Worked with Congress to reduce the tax burden on small business  Provided Grants for Veterans  Offered new online training for small business exporters  Accelerated the launch of the Small Rural Lender Advantage Program

Washington Metropolitan Area District Office Encouraged Lenders to Work With Borrowers SBA contacted every participating lender and strongly encouraged them to:  Work with borrowers on a case-by-case basis  Defer SBA guaranteed loan payments by up to 3 months

Washington Metropolitan Area District Office Acted to Improve Liquidity in the SBA Secondary Market  Worked with Federal Reserve Board to create $200 billion lending facility  Changed the rate structure for secondary market loan pools  Changed base rate to same rate that investors use for their capital purposes

Washington Metropolitan Area District Office Provided Base-Rate Option with LIBOR  SBA added the option of the London Interbank Offered Rate as the base rate for SBA guaranteed loans

Washington Metropolitan Area District Office Provided Grants for Veterans  Provided $450,000 in Veteran Assistance and Services Grants to Small Business Development Centers

Washington Metropolitan Area District Office Offered New Online Training for Small Business Exporters  If you go to you will find a brand new online course for small business exporterswww.sba.gov/training  This is important because more than 97% of all U.S. exporters are small businesses.

Washington Metropolitan Area District Office Accelerated the Launch of the Small Rural Lender Advantage Program  Provides small volume lenders training and assistance in the SBA lending process  Provides these lenders with expedited loan processing within 3-5 days

Washington Metropolitan Area District Office