SBA Guaranty Loan Programs


SBA Guaranty Loan Programs

• Purpose-provide financing to those creditworthy small businesses that do not qualify for conventional credit

• Mechanism-places government guaranty on Bank originated loan

• Benefits-small business receives financing-Bank retains a customer/expands market share

• Helps maintain critical staffing levels in lending and liquidation areas

• Small business loans help stimulate the economy

• SBA loan programs fill numerous borrower needs

SBA Guaranty Loan Programs

• Government guaranty of 50% to 85%: - Reduces Bank's risk of loss

- Reduces Bank's capital requirement for its small

business loan portfolio

- Allows increased market share

- Facilitates -eustomer retention by Bank's branches

during economic uncertainty

- Provides Bank with cross selling opportunities

- Bank receives eRA credit

SBA Loan Program Overview

• The following slides outline the numerous loan programs that the SBA makes available to assist small businesses that cannot qualify for credit from traditional sources.

• SBA does not make direct loans to borrowers (except for disasterassistance loans), but uses a network of SBA approved lenders.

SBA 7(a) Loans

• The SBA 7(a) loan program is designed to provide loans for expansion or renovation; new construction, purchase of land or buildings; purchase of equipment, fixtures and leasehold improvements; working capital; seasonal lines of credit and debt refinance under certain conditions ..

• $2 million maximum loan amount with $1.5 million maximum guaranty

• 75% guaranty up to $1.5M (85% if loan amt. is $150,000 or less)these guarantees are temporarily extended up to 90% through the Recovery Act signed into law on February 17, 2009.

• Term depends on ability to repay and use of proceeds. Generally 5- 7 years for we and up to 10 years for equipment.

• Benefits to borrowers include: improved cash flow due to long term financing and fixed maturity; no balloons.

SBA Express

• SBAExpress is a sub-program of SBA's 7(a) lending. These loans may be used for revolving lines of credit.

• $350,000 maximum loan amount

• 50% SBA Guaranty for all loans

• Maximum term is 7 years including pay down period.

• Streamlined application process

• Benefits to borrowers include: faster turnaround; streamlined process; easy to use line of credit.

Community Express and Patriot Express

• Has same simplicity of paperwork as SBA Express but provides a 75 percent or 85 percent guaranty to the lender.

• Eligible small businesses for Community Express are located in a HUBZone or Community Reinvestment Act area or any location if requesting $25,000 or less. Maximum loan amount is $250,000. Requires that the lender provide Technical Assistance to small business.

• Eligible small businesses for Patriot Express are owned by veterans, Active Duty military eligIble for the Transition Assistance Program, Reservists or National Guard member; Current spouse of any of the four groups listed above; or current spouse of any Active Duty military; or widowed spouse of a service member or veteran who died of a service-connected disability. Maximum loan amount is $500,000.


• The CAPLines loan program, a special type of 7(a) loan, is designed to finance seasonal working capital; cost to perform contracts; construction costs, advances against existing inventory and receivables and consolidation of short-term debt .

• , $2 million maximum loan amount (small asset based limited to $200,000)

• 75% guaranty if more than $150,000; 85% if total loan is $150,000 or less. These guarantees again are temporarily extended up to 90% through the Recovery Act.

• Up to 5 year term

• Benefits to borrowers include: Funds short term working capital; various lines of credit; allows business to obtain contracts; larger in size to allow growth; can be used to finance existing assets.

SBA 504 Loans

• The SBA 504 Certified Development Company program is designed to provide long term, fixed-rate, subordinate financing for acquisition or renovation of capital assets, including land, buildings and capital equipment.

• $1.5-$4 million maximum loan amount, depending on type of

business. .

• Private lender (no SBA guaranty) lends up to 50% secured with a first mortgage; SBA guaranties (100%) a debenture that finances up to 40% secured with a subordinate lien on the assets being acquired; borrower typically provides 10% equity.

• 1 0 or 20 year term on the debenture

• Benefits to borrowers include: long term, fixed rate financing (debenture); low down payment; full amortization; no balloons.


• Program provides loans from $500 to $35,000.

• SBA provides funds to nonprofit intermediaries that, in turn, make loans directly to entrepreneurs.

• Proceeds can be used for typical business purposes such as working capital, machinery and equipment, inventory and leasehold improvements.

• Interest rates are negotiated between borrower and intermediary.

Export Working Capital Program (EWCPl

• EWCP loans (a subset of 7(a) loans) assist exporters seeking short-term export working capital

• $2 million maximum loan amount,

• 900/0 guaranty or $1.5 million, whichever is less

• Borrower and lender negotiate interest rate and fees

• Proqrarn offers flexible terms, low'fees and quick processing time

International Trade Loan Program

• Program helps small businesses engaged in or preparing to engage in international trade by financing long-term fixed assets.

• Helps businesses adversely affected by competition from importers.

• $1.5 million maximum loan amount ($1.75 under certain conditions).

• Guaranty fees and interest rates are the same as 7(a) loans.

ARC Loan Basics

• New, temporary, 100 percent guaranteed loan program.

• Deferred payment loan.

• Up to $35,000.

• Proceeds used to make P&I payments on qualifying

small business loans.

• Interest free to borrower.

• SBA pays interest to lender.

• No fees charged by SBA or lenders.

• ARC loans available until funding runs out or September 30, 2010, whichever occurs first.

Additional Programs

• Surety Bonds - SBA and surety industry provide bonding assistance to small businesses to guaranty bid, payment and performance bonds.

• Prime Contracts Program - provides assistance to help small businesses secure government contracts.

• 8(a) Business Development Program - provides assistance for small and disadvantaged businesses.

• Information on these and other programs is available on the web site and through SBA district office network.


• SBA Web site

• SBA District Office Network (68 offices in every statelocations and contact information on website)

• SCORE - Service Corps of Retired Executives (10,500

members in 800 locations)

• SBDC's - Small Business Development Centers

• U.S. Export Assistance Centers (major metro areas)

• Women's Business Centers (WBCs) - nearly 100 educational centers

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