sba cleveland district office sba lending update burton d. morgan series hudson public library mark...

SBA Cleveland District Office

SBA Lending UpdateBurton D. Morgan Series

Hudson Public Library

Mark Hansel, Cleveland [email protected]

216-522-4191

mailto:[email protected]

Entrepreneurship & SBA

• The three “Cs”• Credit, counseling and contracting

• Start-ups, purchases, franchises• Venture capital• Tech transfer


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 Loan Limits

• $5 M for 7(a)

• $350 K for Express• $500 K for Patriot Express

• $5-$5.5 M for 504


Types of 7(a) Loans

• Regular • SBA approves

• Preferred (PLP) and Express• Bank approves with nod from SBA• About 80% of volume for ‘11



Loan Uses

• Working capital• Equipment• Real estate and leaseholds• Refinance• Buy-outs


Eligible Businesses

• For profit• Based in US • Active, not passive• Some types not eligible

• Like gambling or banking


Eligible Owners

• Good character

• Satisfactory credit

• US or LPR status


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


Franchises

• Franchise registry• www.franchiseregistry.com• Clear or “repaired”

• May not be on registry• But still eligible



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 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


Collateral Issues

• Defer to bank on Express • Bank’s usual policy

• Some CRE requires Phase I

• Assignments of life insurance



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


Revised CAPLines

• Full guaranty up to $5 M

• Easier for bank to manage

• Different programs(1) Working Cap (2) Seasonal

(3) Contract (4) Builders


504 and Refinance

• Regular 504: Bank, CDC and Borrower

• 504 Refinance • New revisions• Up to 90% of appraised value


Floor Planning

• Cars, boats, etc.

• Line of credit

• $500K to $5M


More Information

• www.sba.gov

• Cleveland District Office• 216-522-4180


http://www.sba.gov/

sba cleveland district office sba lending update burton d. morgan series hudson public library mark...

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