SBA Cleveland District Office SBA Lending Update Burton D. Morgan Series Hudson Public Library Mark Hansel, Cleveland SBA

Entrepreneurship & SBA The three “Cs” Credit, counseling and contracting Start-ups, purchases, franchises Venture capital Tech transfer SBA Cleveland District Office

About SBA Guaranty loans for banks and CDCs Over 60K and over $30B for FY’11 1,400 and $360M for Cleveland District Two loan programs: 7(a) and 504 About 90% of volume under 7(a) SBA Cleveland District Office

SBA Loan Limits $5 M for 7(a) $350 K for Express $500 K for Patriot Express $5-$5.5 M for 504 SBA Cleveland District Office

Types of 7(a) Loans Regular SBA approves Preferred (PLP) and Express Bank approves with nod from SBA About 80% of volume for ‘11 SBA Cleveland District Office

Loan Uses Working capital Equipment Real estate and leaseholds Refinance Buy-outs

SBA Cleveland District Office Eligible Businesses For profit Based in US Active, not passive Some types not eligible Like gambling or banking

SBA Cleveland District Office Eligible Owners Good character Satisfactory credit US or LPR status

SBA Cleveland District Office Eligible Transactions Arm’s length No partial buy-outs No payment to an “associate” No “passive” investments

Eligible Transactions Can refinance debt Can buy used equipment Can do eligible franchises Can do change of ownerships SBA Cleveland District Office

Franchises Franchise registry Clear or “repaired” May not be on registry But still eligible SBA Cleveland District Office

SBA Usual Limits 7 years usually for working capital 10 years or more for equipment 25 years for real estate No balloons on SBA notes

SBA Cleveland District Office SBA Interest Rates Base rates of Prime or LIBOR+3 Usually 2.25 or 2.75 over base rates Fixed or floating Fixed rate price choice on Colson site May be higher under Express

Collateral Issues “Principals” must guaranty Joint PFS’s required Personal assets may be required May be short on collateral SBA Cleveland District Office

Collateral Issues Defer to bank on Express Bank’s usual policy Some CRE requires Phase I Assignments of life insurance SBA Cleveland District Office

Guaranty Fees Based on guaranteed amount 2% to $150K 3% over $150K to $700K 3.5% over $700K.25% surcharge over $1M

Fees in General No “origination” fees Banks may charge “packaging” fee “Extraordinary servicing” fee Permitted for DFP and CAPLines SBA Cleveland District Office

Revised CAPLines Full guaranty up to $5 M Easier for bank to manage Different programs (1) Working Cap(2) Seasonal (3) Contract(4) Builders SBA Cleveland District Office

504 and Refinance Regular 504: Bank, CDC and Borrower 504 Refinance New revisions Up to 90% of appraised value SBA Cleveland District Office

Floor Planning Cars, boats, etc. Line of credit $500K to $5M SBA Cleveland District Office

More Information Cleveland District Office SBA Cleveland District Office