U.S. Small Business Administration The Three C’s of the SBA

 Created in 1953 by President Dwight D. Eisenhower  Provide the Public with: (3 C’s) Mentoring (Counseling) Government Procurement (Contracting) Access to (Capital)  Small Business Resource Guide 2

 Veterans are 45% more likely to be self- employed.  $2.4 million, or 9 percent of all U. S. small businesses are veteran owned.  Veteran-owned small businesses generate owner $1 trillion in sales. 3

 Rivera Consulting, Inc. Information Technology Solutions  Worldwide Filters, LLC Wholesale Filters and Supplies  Behavior Services & Therapy Improvement in Quality of Life for Individuals with development disabilities. 4

 Biomet, Inc. Medical Device Industry  Vera Bradley Fashion Accessories  Warm Glow Candles Candles 5

 NIKE  Staples  Apple  Federal Express  Ben & Jerry’s Ice Cream  Outback Steakhouse  Hewett Packard  Panera Bread  Callaway Golf 6

 Counseling Small Business Development Center (SBDC) SCORE Women’s Business Center (WBC) Veterans Business Outreach Program  Contracting Partners In Contracting Corporation SBA Economic Development Specialists SBA Procurement Center Representatives 7

 Capital Banks Credit Unions Certified Development Companies (CDC) Microlenders 8

 SBA partners with financial institutions  SBA’s role is primarily a guarantor of business loans made by financial institutions  Disaster Loans - The SBA only offers direct loans in the event of a declared disaster order (separate division)  No direct grants from SBA for starting or expanding a business 9

10  Who is eligible for SBA loans?  What criteria does the SBA evaluate?  Where do you go to get an SBA loan?  Why use the SBA loan programs?  How do you get started?

 Size of Business  Type of Business  Borrower Qualifications & Character  Use of Proceeds 11

 For-Profit business located in the U.S.  Must qualify as “Small” per New Size Standard Tangible Net Worth of Applicant Not more than $15,000,000 And Average Net Income of Applicant Not more than $5,000,000 for the 2 full fiscal years before the date of application 12

13  U.S. Citizen, Lawful Permanent Residents, or Non-immigrant (documented) aliens  Good Character Criminal Record Personal Credit  Previous Federal Loan Payment History  Personal Resource Test

April 2010 | 14  Limited Membership Private Clubs  Purchase Partial Ownership  Repay Owners for their Investment  Pay Delinquent Taxes/Refinance Loan  Loan Packagers/Lenders  Passive Income  Speculative Ventures  Pyramid Structures  Illegal Activities  Political Activities  Religious Activities  Gambling Activities  Sexually-oriented Business ** Franchises = varies **

15  Ability to repay the loan on time from the projected operating cash flow  Feasible business plan  Management expertise and commitment necessary for success  Sufficient funds to operate the business on a sound financial basis  Adequate equity invested in the business (no 100% financing)  Sufficient collateral including personal guarantees

16  SBA guaranteed loans are made by business lenders at financial institutions  No direct loans from the SBA  Lenders have the forms necessary

17  Cannot qualify for conventional financing on reasonable terms  Longer Maturities Lowers Monthly Payment Improves Cash Flow  No Balloon payments on 7(a) loans  No Prepayment Penalties on 7(a) loans

504 Certified Development Company (CDC) Loan Program and 7(a) Loan Program 18

 Long-term, Fixed-asset Financing to: Purchase Land and Existing Building Purchase Land for New Construction Building Renovation or Expansion Purchase Major* Machinery / Equipment Refinances are limited  Occupancy Requirements: 51% of existing building 60% of new construction (80% long term) 19

7(a) Loan Guaranty Program 20

 Most used SBA Loan Program  Wide range of financing needs Funding for start-up businesses Purchase existing business Expand/renovate facilities Finance working capital/receivables Construction Refinancing* 21

22 ‣ SBA Express ‣ Veterans Advantage ‣ Caplines ‣ Export Loans

 Veterans  Service-disabled veterans  Soon to be discharged active-duty service members eligible for the military’s Transition Assistance Program  Current Reservists and National Guard members  Current Spouse of any of the above  Widowed spouse of: a service member who died while in service, or a veteran who died of a service-connected disability 23

 For members of the military community* (51% owned & controlled)  Maximum Loan Amount:$350,000  Delegated Processing:Lender Underwriting Lender Closing Docs  Collateral is not required up to $25,000 24

Approved Loan Amount $350,000 or less = 0.00% of Guaranteed Amt $350,001 to $700,000 = 3.00% of Guaranteed Amt $700,001 to $1,000,000 = 3.50% of Guaranteed Amt Over $1,000,000 = 3.75% of Guaranteed Amt on portion over $1Million Short-term: Maturity 12 Months or Less = 0.25% 25

26  Borrower equity injection is required (100% financing is not available)  All Borrowers must give Personal Guaranty  Personal assets required to cover shortfall  Loan is with the Lender not the SBA  SBA Guaranty is for the Lender  Borrower still liable for 100% of the loan

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 Veterans Business Outreach Center  Veterans Online Business Registry  Service Disabled Owned Small Business  Indiana’s Veteran Business Enterprise Program 28

 Indiana – David Puls  or  Illinois – Robert Paoni   Kentucky – Tommie Causey   Ohio – Joe Lauterdale - Cincinnati  29

U.S. Small Business Administration Indiana District Office Presented by Eric Armacost Lending Relations Specialist (317) ext

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Our Resources. Your Success.

 The S.W. ISBDC provides no-cost confidential business advising for businesses in the areas of:  Business Planning  Access to Capital  Market Research  Budgeting/Accounting  Loan Packaging Assistance

To have a positive and measurable impact on the formation, growth, and sustainability of small businesses in Indiana, and to develop a strong entrepreneurial community.

S.W. ISBDC Office

 23% established business > one year  21% in business < one year  56 % “pre-venture” Client Portfolio Overview Status

 56% Start-up assistance  16% Accounting/budgeting  10% Financing/Capital  6% Management/planning  5% Buy/sell a business  4 % Market research

Lucas Oil Products The first store by Lucas in the nation Investment exceeded $2.7 mil Hired x# of employees Expanding to 2 nd store in fall 2012 ECS Solutions Patented new technology Increased company’s bottom line with new markets and new Revenues

– Purchased or started new business 781 – Jobs Created $3.1 million – Change in Sales $15.8 million – Cap Investment Other: identified new products, services and new markets, secured training dollars, etc.

 Call  Go to the ISBDC.org website and complete the business survey

Our Resources. Your Success.

Chambers WorkOne Accounting & Law ISBDC LEDOs Banks Universities

SBDC Summary  New business creation  Local investment  Business expansion  Job Creation  Encourage entrepreneurship  Regional engagement

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Export Working Capital Program (EWCP) International Trade Export Express Maximum Loan Amount $5,000,000 $500,000 Maximum Guaranty Percentage 90% 90% for loans $350,000 or less 75% for loans Greater Than $350,000 51

504 Certified Development Company (CDC) Loan Program and 7(a) Loan Program 52

 Long-term, Fixed-asset Financing to: Purchase Land and Existing Building Purchase Land for New Construction Building Renovation or Expansion Purchase Major* Machinery / Equipment  Financing Structure: SBA (CDC):up to 40% of total project costs Lender:50% of total project costs Borrower:10%* of total project costs 53

 Project Size Maximum:Unlimited  100% SBA Guaranteed Debenture (CDC) Minimum:$25,000 Maximum: $5.0 Million Standard $5.0 Million Public Policy Goal $5.5 Million Small Manufacturer or Energy Savings 54

 Lender 1 st Lien Position with only 50% Loan-to-Value 90% financing increases potential opportunities CRA credit  Borrower Lower down payment preserves capital Fixed Rate with full amortization  Community Creates or retains jobs 55

 Maximum Loan Amount: $5.00 Million  Maximum Guaranty Amount: $3.75 Million  Maximum Guaranty Percentage: 85% up to $150,000 75% over $150,000  Multiple loans permitted up to $3.75 Million Guaranty Maximum 56

 Real Estate Up to 25 years  Equipment Up to 10 years or expected useful life  Working Capital Generally 7 years, but may be extended to 10 years depending on cash flow 57

$100,000, 10 year term  Fixed Rate Option: Base Rate: 5.47% %= 8.22%  Variable Rate Option: Prime: 3.25% %= 6.00% 58

59  7(a) Program = 827 $265,834,000  504 Program = 143 $189,050,000  Combined 7(a) and 504 Statistics 12,740 Jobs Created or Retained 270 Loans to Start-Ups 103 Veteran-Owned

60 Step 1: Create / Update your Business Plan  Free Counseling Available from SBA Resource Partners SCORE Small Business Development Center (SBDC) Women's Business Center (WBC)

61 Step 2: Visit a Lender  Lists are available from the SBA Approved Lenders and Most Active Lenders  Lender makes initial credit decision May or may not need SBA Guaranty Lender has right to say ‘no’  Lender chooses appropriate SBA Loan Program SBA decision to lender in 0-15 business days  Be Prepared Treat meeting like a job interview Having supporting financial documentation

 Business Plan  History/description of business  Management experience/resumes  Cash flow projections  Last 3 years of income statements and balance sheets with interims to date  Last 3 years of filed business tax returns and personal tax returns  Aging of receivables; inventory listings 62

 Quotes/purchase contracts for items to be purchased with loan proceeds  Listing with terms of other business debts  Franchise agreements  Leases  Details of criminal history: type of offense, dates, etc. (if any) 63

 $500 Billion Spent Annually  23% Goals For Small Business ($115B)  DNS # Data Universal Numbering System  Register with System for Award Management SAM.gov  Register at Vetbiz.gov 64

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LOAN AMOUNTBASE RATE* + MARGIN Maturity < 7 years Maturity > = 7 years Over $50,000Fixed or Variable %+ 2.75% $25,000 to $50,000Fixed or Variable %+ 3.75% $25,000 or lessFixed or Variable %+ 4.75% 67