sba arc seminar

Columbus District OfficeColumbus District Office

SBA Economic Recovery Efforts

$375 Million for temporary fee reductions or eliminations on SBA loans and increased SBA guaranteed percentage up to 90%.

7(a) & 504 is SBA’s dominant loan product. What does this mean –

This eliminated upfront 7(a) fees associated with SBA guaranteed loans

Participant lenders will receive increased government backing to encourage lending to for-profit small businesses.

SBA fees associated with 504 loans have also been reduced.

SBA Economic Recovery Efforts

Lenders with the Columbus District have increased lending dollars by over 50% over the last 10 weeks

versus first 10 weeks in 2009.

In the first 100 days of the recovery act over 113

million dollars in loans have been made to Ohio

small businesses.

American’s Recovery Capital or ARC

$255 Million for ARC to help small businesses meet existing debt payments.

Designed to give Viable small businesses suffering Immediate Financial Hardship some temporary financial relief.

American’s Recovery Capital or ARCWhat are the details on this program:

How is SBA defining “viable”: An established for-profit business with evidence of

profitability or positive cash flow in at least one of the past two years.

Going concern Difficulty making periodic payments of principal and

interest on qualifying small business loans and/or meeting operating expenses

Must show ability to project continued operations beyond the sixth month period of payment assistance with ARC Loan


ARC loan is not for:

start ups change of ownership business expansion Previous loss to government


Ineligible small business for the ARC loans are the same as 7 (a) loans Casinos Casino Hotels Other Gambling Industries Golf Courses and County Clubs Zoos and Botanical Gardens Fitness and Recreational Sports Centers


How is SBA defining “Immediate Financial Hardship: An immediate financial hardship is difficulty making payment of

P & I on loans and/or difficulty meeting operating expenses

Examples Declining sales Frozen Credit Line Difficulty Meeting Payroll Difficulty Making Loan Payments Difficulty purchasing inventory, materials or supplies


ARC loans are up to $35,000. Loan is made by participating 7(a) lenders with 100%

SBA guarantee. SBA does not have direct lending authority with this

program. Use of proceeds is restricted for payment on monthly

debt service Payment on line of credit.


There is no interest charges to the borrower as SBA will pay the interest rate to the lender at prime (presently 3.25%) plus 2% adjustable monthly for life of the loan.

Disbursement period of up to 6 months followed by 12 months of no payments on the ARC loan then Five year amortization of the principal balance (60

equal payments to repay the principal amount of the loan.)


Examples of qualified small business loans which can repaid with ARC funds: Secured or unsecured conventional loans. Credit card debt (used exclusively for the business) Capital Leases Notes Payable (A/P converted to note payable) Home equity loans used to finance business

operations


Loan procceds cannot be used for: Any purpose other than P & I payments on QSBL Personal expenses Payment or refinance funds used for payments or

loans to an associate of borrower SBA guaranteed loans (prior to Feb 17, 2009)


Small businesses who are interested in applying will need to provide to the lender:

Balance sheet & income statements. Personal financial statement on the principles. Listing of qualified small business loans which you

want to pay. Two years of quarterly cash flow projections which

indicate the business’s ability to meet its debt service requirements.


cont Past 3 years tax returns Personal Guaranty for each owner owning 20% or

more Statement which best describes the immediate

financial hardship your business has experenced and provide statement regarding the hardship.

ARC application IRS form 4506 T


Credit Criteria Quarterly cash flow showing sufficient cash flow to

meet debt Certify that debt is current or not more than 60 days

past due Deferred loans are not considered past due until

deferred more than 3 months SBA will credit score the personal & business

information as part of the approval process


If you need assistance with producing the two years of quarterly cash flow projections, the Small Business Development Centers / SCORE which are located throughout the State of Ohio can assist you for free in the production of this information.


Is Collateral pledge going to be required?

That depends on the bank’s/credit union’s internal lending policy for loans of $35,000 or less.

If the lender doesn’t require collateral on conventional loan product of $35K or less, than only the signatures of the business and principles owning 20% or more will be required.

If the lender normally requires collateral, then the borrower is going to be expected to pledge available business/personal assets.


Data Universal Numbering System (DUNS) number.

DUNS number is nine-digit number need to obtain credit score First step is to verify if you already have a DUNS number https://fedgov.dnb.com/webform - click Go or Enter

1. Legal Name

2. Physical Address, City, State and Zip Code mailing if different

3. Telephone Number

4. Contact Name and Title

5. Number of Employees at your location If you see your business listed select “Request your DUNS number “ If your business and location is not listed, click request a New DUNS number If your business is located inside the US call 1-866-705-5711


Funds are limited. Based upon the subsidy model, SBA projects about 10 – 12 thousand loans will be made nationwide.

If you feel you would qualify for an ARC loan, SBA encourages you to speak with your lender and get the process started.


First step in obtaining an ARC loan is to contact your current lender Ask if they are participating in ARC loan program If they are not, contact other lenders in your immediate community. To access a list of SBA lenders listed by counties

1. www.sba.gov/localresouces/district/oh.columbusOH_Columbus_LENDERINFO_INDEX.html

The ARC Loan Program is an entirely new program. We are working with lenders to promote the program and offer assistance. We are encouraged and feel that we will continue to see a rise in participation by area lenders.


Wells Fargo 1-800-359-3557 - non existing customers

National City Bank 1-888-622-4249 - current customers

PNC Bank 1-800-762-5684 - current customers

Tell Ohio Credit Union – Jerome Jones 221-3233 – non existing customers

Huntington National Bank – existing customers

Dealer Floorplan Loans

The Dealer Floor Plan Pilot Initiative – Summary

A pilot 7(a) loan program – Federal Register Notice Began July 1, 2009 and expires 9/30/2010 with Recovery Act provisions “Titleable” inventory eligible (automobiles, boats, RVs, motorcycles, mobile

homes, etc) Loan size: $500,000 - $2 million 5-Year maximum term Eligible for Recovery Act borrower SBA fee relief Pricing: Base rate plus 2 ¼ %; 2% max. fee limit waived Any SBA eligible lender can participate Lender must have policies specific to DFP in 6 areas; submitted to Loan

Guarantee Processing Service Center with first loan Guaranties range between 60% and 75% depending on advance rate and

collateral type

Micro Loans

The stimulus bill provided SBA with $30 million to expand Micro Lending.

Micro loans are made through local intermediaries with a maximum amount of $35,000.

This is a non-traditional source of capital which underwrites each application, but can be more flexible than a traditional lender.

A local micro lender is: ECDI (Economic and Community Development) in

Columbus, OH. Their phone number is (614) 559-0115

Surety Bonding

The stimulus bill provided SBA with $15 million to increase access to surety bonding.

Bonding guaranty amount increased from $2 to 5 million to help small businesses compete for federal construction and service contracts.

If you are interest in SBA surety bonding guaranty, please give us a call at (614) 469-6860.


Additional information is available on SBA’s web page at: www.sba.gov.

My e-mail address is [email protected] or our local phone number is (614) 469-6860.

Links

www.grants www.irs.gov www.ecdi.com www.score.org www.sbdc.org www.sba.gov/recovery/index.html www.sba.gov/services/training/onlinecourses/index.html

Thank you for attending

SBA – Columbus District Office

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