slides from public resources for business development event for minnesota cup and cleantech open...
DESCRIPTION
On Monday, August 16, 2010, the MN Department of Employment & Economic Development (DEED), University of Minnesota's Carlson School of Management and Holmes Center for Entrepreneurship, Minnesota Cup and CleanTech Open hosted an event for Minnesota Cup and CleanTech Open entrepreneurs on public resources for business development and sources of funding.TRANSCRIPT
Agricultural Utilization Research Institute
Leading Agricultural Innovation From Idea to Reality
Kate ParisAugust 2010
AURI’s Mission• To foster long-term economic benefit through
increased business and employment opportunities with:– Research and development of innovative new uses or
value improvements for Minnesota agricultural commodities and products,
– Implementation of basic and applied research to support innovation, technology and growth of the agricultural industry; and
– The development of renewable energy and biobased opportunities from Minnesota agricultural commodities and coproducts.
AURI Focus Areas
• Renewable Energy• Food Processing• Bio-Based Products• Coproduct or
Waste Product Utilization
Renewable Energy• Opportunity
– Liquid Biofuels– Biogas– Biomass Utilization
• AURI Services– Densification– Pellet formulation– Gas analysis
• Examples– Northern Excellence Growers– Alternative Energy Solutions
Food Processing• Opportunity
– Food product development– Functional Foods– Local Foods
• AURI Services– Recipe Formulation– Nutritional Labels– Shelf Life Testing– Food Safety
• Example– French Meadow Bakery
Minneapolis
Bio-Based Products
• Opportunity – replace petroleum and other
ingredients with ag-based or other natural products
– Industrial, personal care, consumer products
• AURI Services– Product formulation– Analytical testing
• Example– Suntava
Coproduct Utilization
• Opportunity – A “second harvest”– Offers revenue stream or cost
savings– Increased efficiency greater
• AURI Services– Densification– Pellet formulation– Analytical testing
• Examples– Compost-A-Mat– Swheat Scoop
Services Offered By AURI
• Direct Client Services– Technical and market feasibility, analytical testing
of processes and products, etc.– Driven by Individual Clients
• Broad Impact Initiatives– Identify emerging opportunities with potential to
impact large number of producers, public information
– Driven by Industry Stakeholders
• Targeted Network Development
AURI Facilities
• Meat Lab, Marshall• Fats & Oils Lab,
Marshall• Product Development
Kitchen, Crookston• Microbiology Lab,
Crookston• Coproducts Lab,
Waseca
When to Call AURI
• Working on Renewable Energy, Food, Biobased, or Coproduct product or process development
• Proof of Concept, Proof of Application, Feasibility Stages
• Working with an agricultural product• Looking for information
What To Expect• Work with a Project Development
Director to identify need, explore resources, and see how AURI can help.
• Technical Assistance or Product Development Services Programs
• Getting connected to a variety of resources that will help your business achieve its goals
Who To Contact
• Website www.auri.org • Crookston Office (218) 281-7600• Marshall Office (507) 537-7440• Waseca Office (507) 835-8990
• Kate Paris– [email protected] – 651-331-0936
Agricultural Utilization Research Institute
www.auri.org
Rural Business-Cooperative Service
1. Business & Industry Loan Guarantees2. Rural Business Enterprise Program 3. Rural Business Opportunity Program 4. Intermediary Relending Program5. Rural Economic Development Loans & Grants 6. Value-Added Producer Grants 7. Rural Cooperative Development Grants8. Small, Social Disadvantaged Producer Grants9. Rural Energy for America Program10. Rural Microenterprise Assistance Program
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A rural area is other than an urban area of 50,000 or more in population and its adjacent urbanized areas, as determined by the latest federal decennial census. Rural area determinations can be made by accessing the following website: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do
Rural Areas
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• Loan Limits
• Percent of Guarantee
• Equity
• Guarantee Fees
Business & Industry (B&I)
17
Ineligible Purposes:
• Housing
• Most agricultural production
• Golf courses
• Lines of credit
• Charitable, fraternal or church organizations
Business & Industry (B&I)
18
The Sweet Spot:
• $500,000 to $7,500,000 loan
• > 10% tangible balance sheet equity per GAAP
• Expansion (RE, M&E); working capital; limited refinance
• Owner has successful track record
• Realistic projections and assumptions
• Time enough to do it right
Business & Industry (B&I)
Intermediary Relending Program (IRP)
Program Purpose:
To finance business facilities and community development projects in rural areas; for innovative projects; for land, building construction or repair, equipment; for working capital, interest, feasibility studies, professional services.
Intermediaries:
Private nonprofit corporations, any state or local government, Indian group, or cooperative. Intermediary Relending Program money is lent to them, which in turn is re-lent by them to ultimate recipients. The ultimate recipient must not be able to obtain credit elsewhere.
Intermediary Relending Program (IRP)
Intermediaries:
• 1% Interest for a term of up to 30 years.
•Defer principal for 3 years.
• Initial loan limited to $2MM, Subsequent loans limited to $1MM and total debt limited to $15MM.
Ultimate Recipients:
• Interest rate and term established by Intermediary in work plan (Usually 4 - 6% interest with terms of 3 to 10 years depending on loan purpose).
•Maximum loan of $250,000 or 75% of the project cost whichever is less.
Intermediary Relending Program (IRP)
• Microenterprise Development Organization (MDO)• Microentrepreneur
Rural Microentrepreneur Assistance Program (RMAP)
• Loan – up to $500,000; $50,000 to business• Grant – up to 25% of loans or for technical assistance only,
up to $130,000
Rural Microentrepreneur Assistance Program (RMAP)
• Agricultural Producer
• Rural Small Business - meets SBA definition of small business (typically 500 or fewer employees and $20 million or less in total annual receipts). Most non-profits, such as schools, are ineligible. Tribal electric utilities are eligible.
Rural Energy for America Program(REAP)
25
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Ineligible Purposes:
• Non-profits, such as schools
• Residential Use
• Vehicles and farm tillage
• Research and Development
Rural Energy for America Program(REAP)
• Maximum guaranteed loan: $25,000,000
• Grants cannot exceed 25% of eligible project costs, or:
$500,000 ($2,500 minimum) -- renewable energy
$250,000 ($1,500 minimum) -- energy efficiency
Rural Energy for America Program(REAP)
Further Information
• General information: www.rurdev.usda.gov/rbs/busp/bpdir.htm
• Program regulations: rdinit.usda.gov/regs/regs_toc.html
• Minnesota web site: www.rurdev.usda.gov/mn
• E-forms: http://rdinit.usda.gov/regs/regs_toc.html
SBIR/STTR BasicsBecky Aistrup
SBIR/STTR Program DirectorMinnesota Science & Technology Authority
www.PositivelyMinnesota.com/SciTech [email protected]
(651) 259-7634
North Central Cleantech Open Public Resources Seminar,
August 16, 2010
Program Descriptions• SBIR (Small Business Innovation Research):
• 2.5% set-aside of extramural research budget for small businesses to participate in federal R&D
• STTR (Small Business Technology Transfer): • 0.3% set-aside program to facilitate cooperative
R&D between small businesses and non-profit research institutions
• Both offer potential for commercialization
Three Phase Program• Phase I
– Proof-of-concept/feasibility study– SBIR = Up to $150,000 for 6 month project – STTR = $100,000 for 12 months
• Phase II– Full Research/R&D effort– SBIR = Up to $1 Million for 2 year project– STTR = $750,000 for 2 years
• Phase III– Commercialization phase– Requires the use of non-SBIR/STTR funds
Program Objectives
• Stimulate technological innovation• Strengthen/increase the role of small
business in meeting Federal R&D needs• Increase private sector commercialization of
SBIR R&D• Foster participation by socially and
economically disadvantaged and women-owned small businesses
Comparing SBIR & STTR Programs
SBIR STTRFirm eligibility U.S., for-profit, <500 employees including affiliates
Collaboration w/research institution
May subcontract Must collaborate with university/nonprofit research institution
PI (Principal Investigator)
Must be >50% time employed by firm
May be employed by firm or research institution
Work breakdown Firm 2/3 or more of work in Phase IFirm 1/2 or more of work in Phase II
Firm must perform 40% or more of work and research institution >30% of work (Phase I and Phase II)
Applies at the time of award and for the duration of the project
Participating Agencies
$2.5 Billion in FY09
Agency * SBIR funding STTR fundingDoD $1.23 Billion $141 Million
HHS (NIH, CDC, FDA) $600 Million $72 Million
Energy (DOE) $138 Million $17 Million
NASA $113.4 Million $13.6 Million
NSF $97 Million $13 Million
Homeland Security (DHS) $20.5 Million NA
Agriculture (USDA) $18.3 Million NA
Education $9.9 Million NA
Transportation $8 Million NA
Commerce $8 Million NA
EPA $5 Million NA * Grants Contracts Both Grants & Contracts
Agency Differences
• Many differences among agencies:– Funding levels– Topic areas– Number and timing of solicitations– Proposal preparation instructions– Submission process– Type of award– Review process– Odds of receiving funding– Commercialization assistance
Read solicitations carefully!
Grants vs. Contracts• SBIR/STTR programs that award GRANTS:
– Rarely the Final Customer– Will not buy your product/process/software or your
intellectual property– They do want to see you commercialize your
research
• Programs that award CONTRACTS:– Will specify agency needs and request solutions– Will likely be a Final Customer
Phase I Process
• Agencies describe R&D topics in solicitations.
• Firms prepare proposals. Unsolicited proposals are not accepted.
• Agencies evaluate on technical merit, firm’s qualifications, commercial potential & societal impact.
• Agencies make Phase I awards.
Solicitation Topics
Proposal Submission
Evaluation
Phase I Award
~6-
9 m
onth
s
Phase II Process
1. Only Phase I winners may apply2. Phase II applicants at DOD (and select others) must
be invited to submit Phase II.3. Submission timing/deadlines vary –talk to your
funding agency– 4 to 18 month gap between Phase II submission & award
~5 years from Phase I through Phase III Commercialization
Your Odds of Winning
• Phase I SBIR Proposal: About 1 in 8/9• Phase I STTR Proposal: About 1 in 5• Phase II Proposal: About 40%-70%
– varies by agency
• ½ of Phase I proposals go to companies who never won before.
Typical Award Winner Profile
• Proposed solution meets agency need• Submitted 2+ proposals before winning• Understands current state-of-the-art and can
relate it to their innovation• Adequately communicates path to market• Adequate qualifications & experience for
research & commercialization• Adequate support staff and equipment
Ask before you decide to participate:
• Does winning enhance your corporate goals?
• Do you possess the required technical competence?
• Can you gain access to necessary resources?• What agencies should you consider?• What agency need/opportunity must you
address?
Getting Started: Register for Electronic Submission
1. Obtain a DUNS number FIRSTDun & Bradstreet: 1-866-705-5711 or
http://fedgov.dnb.com/webform/displayHomePage.do
2. Register in Central Contractor Registry CCR site: http://www.ccr.gov
Keep a copy of all usernames/passwords!
3. Register your organization on Grants.gov
Guide & Checklist
Tutorial
Getting Started: Register for Electronic Submission
Assistance with grants.govhttp://www.grants.gov/applicants/resources.jsp
Find a Topichttp://www.grants.gov/applicants/find_grant_opportunities.jsp
Register for Opportunity Notifications
Multiple browsing & searching options
Getting Started: Find a Topichttp://www.pnl.gov/edo/opportunities/sbir.stm
Cross-agency alerting service
Getting Started: Find a Topichttp://www.zyn.com/sbir/
Find Your Local Resourceshttp://www.sbir.gov/
Why You Should Participate
• No pay-back requirement! • No equity lost!• Visibility and credibility• IP rights maintained by the small business
– Data rights extend to 4 years after project completion, 5 yrs. for DoD
• Seed money for high risk R&D projects that may attract strategic partners or future investment
More Reasons to Participate
• Small and isolated companies compete on equal footing
• Opportunity to establish a sole-source position with federal government
• Fosters partnerships• No penalty for failure, other than time
invested
Useful Links
• http://www.sbir.gov/ (Official SBIR portal)• http://www.zyn.com/sbir/ (SBIR Gateway)• http://www.pnl.gov/edo/opportunities/sbir.stm
(SBIR Alert)• http://www.ccr.gov (CCR site)• http://www.grants.gov (Grants.gov site)• http://center.ncet2.org/ (NCET2 courses and
resources site)
Thanks to colleague Kris Johansen for slide content:
Kris JohansenOffice of Intellectual Property and Technology Transfer
Iowa State University Research Foundation, [email protected]
515.294.3208
Contact information:
Becky Aistrup
MN SBIR/STTR Program Director
651.259.7634
Small Business Administration
www.sba.gov
To help small businesses succeed
Our Mission
Loan Programs
SBA Makes Guaranteed Loans
Maximum rates: 2 ¼ % to 2 ¾ % above prime
Maximum Loan: $2,000,000
Guarantees: 75% to 85%
Fees: 2% to 3.5%
Loan Programs
Programs Eligibility
-The business must be defined as small (defined by either gross revenue or number of employees)
-A business must be operated as a “for profit”
-Business must be found in good character
-Repayment ability
Using The Programs
•SBA programs-•7(a)
•SBA Express•Community Express
•Patriot Express•Export Express
•Rural Lender Advantage•504’s
•Caplines •Microloans
•Surety Bonds
Using The Programs
2009 Recovery Act
ARC loans
Dealer Floor Plan Loans
*These loans expire at the end of September
Resources
•SCORE
•Women’s Business Center
•Small Business Development Center (SBDC)
Government Contracting
•Businesses that want to sell goods to the federal government
•To sell to the Federal Government then they need to register with the government
(CCR)
Minority based groups
One or more individuals that can demonstrate that they are socially or
economically disadvantaged.
8(a) Program7(j) Program
Mentor Protégé
Government Contracting
Small Business Exporting
Exporting Working Capital (EWCL)
-Short term Financing for small exporters
-Maturity
-May be used for Pre- and Post- shipment
-One page application
•International Trade Loan
-Long and Short term Financing
-Loan usages for businesses that are:
-Preparing or engaging in international trade
-Adversely affected by import competition
Small Business Exporting
Advocacy
•To protect, strengthen and effectively represent the nation's small businesses within the federal government's legislative and rule-making processes.
•To reduce the burdens that federal policies impose on small firms.
Thank you!
Any Questions…
There’s been no better time for an SBA Loan
Jeff Kemink
District President – Business Banking
Minneapolis, MN
2010
© 2009 Wells Fargo Bank, N.A. All rights reserved. For public use.
Why there’s never been a better time for an SBA Loan
More companies than ever are eligible
Tangible net worth <$8.5MM
Net profits <$3MM in each of last two years
Transaction costs are at an all time low
Interest rates are at all time lows
67© 2009 Wells Fargo Bank, N.A. All rights reserved. For public use.
Advantages to SBA Loans
Lower down payment
Up to 90% financing
For Purchase of Owner Occupied Real Estate
Up to 85% financing
For Business Acquisition Transaction
Up to 90% financing on Partner Buy Out
68© 2009 Wells Fargo Bank, N.A. All rights reserved. For public use.
Advantages to SBA Loans
Longer amortization
Up to 25 year term
on owner occupied commercial real estate
Up to 10 Year Term
For Business Acquisitions, equipment purchase
or working capital
Means lower monthly payments
69© 2009 Wells Fargo Bank, N.A. All rights reserved. For public use.
Types of Loans
Acquisition of owner-occupied real estate
Financing available on projects up to $9MM
7(a) is up to $2MM Can include other expenses including
moving expenses, improvements
Refinance of existing CRE loans
Up to $2MM
Must cut payments by 10% or more
70© 2009 Wells Fargo Bank, N.A. All rights reserved. For public use.
Types of Loans
Business acquisition
Individual or corporate buyers
Partner or Management Buy-Outs
Loans up to $1.75MM
Start Ups Requires 30% equity
Business plan with projections and assumptions
71© 2009 Wells Fargo Bank, N.A. All rights reserved. For public use.
Five Helpful Hints to Get Started
On Obtaining an SBA Loan
1. Get Your Financial House In Order
2. Realistically Define Your Goals
3. Recognize Your Strengths And Weaknesses
4. Start Early
5. Work With An Experienced Lender
72© 2009 Wells Fargo Bank, N.A. All rights reserved. For public use.
#1: Get Your Financial House in Order
A. Obtain a copy of your personal credit report. Check for any inaccuracies or mistakes. Make certain that all accounts are current and there are
no outstanding judgments or liens. If there is any derogatory information, be proactive and
prepare to explain the problems and why the problem is not likely to occur again.
73© 2009 Wells Fargo Bank, N.A. All rights reserved. For public use.
#1: Get Your Financial House in Order
B. Gather personal and/or business records For the past three years, including:
Tax returns, financial statements with schedules and attachments, and interim YTD financial statements.
Any other financial documents that might help a lender.
Neatly photocopy all of the documents and prepare them for your presentation.
74© 2009 Wells Fargo Bank, N.A. All rights reserved. For public use.
#2: Realistically Define Your Goals
Evaluate your needs and purpose for financing Determine the specific use of the borrowed funds Prepare projected cash flows to determine
your estimated future revenues from the project Have a specific loan amount in mind
Never ask to borrow as much money as possible. Be realistic about your contribution
You will be required to finance a portion of the project costs. Be prepared to have guarantors and possible collateral
75© 2009 Wells Fargo Bank, N.A. All rights reserved. For public use.
#3: Recognize Your Strengths And Weaknesses
Address your strengths and challenges Be realistic & honest
Most common weaknesses lenders find are: Inability to demonstrate repayment ability Insufficient collateral Lack of management experience Insufficient cash injection Poor personal credit
Address weaknesses with a noteworthy
and compensating strength.
76© 2009 Wells Fargo Bank, N.A. All rights reserved. For public use.
#4: Start Early
Be realistic about the timeframe The more you do to prepare, the smoother the process
Understand the process for your request Small lines of credit or loans (under $100,000)
May be credit scored approvals Commercial transactions (loans over $100,000)
Requires complete underwriting process
Again, be prepared and reap the benefits
77© 2009 Wells Fargo Bank, N.A. All rights reserved. For public use.
#5: Work With An Experienced Lender
Starts with banker/lender knowledge Bankers and lenders should know their products and
process, the credit parameters, and eligibility issues
Check your institution Just because your deposit is there does not mean you
have to get a loan from the institution
If you’re getting an SBA loan Are they a top-ranked SBA lender?
Are they a Preferred Lender? Authority to make credit decisions on behalf of the SBA,
which means a quicker process
78© 2009 Wells Fargo Bank, N.A. All rights reserved. For public use.
Why Wells Fargo SBA Lending
#1 SBA 7(a) lender in the nation, based on $
#1 SBA 7(a) lender in Minnesota For the last 10 years running!!
Preferred SBA Lender
Experienced lenders and underwriters
It’s a marathon not a sprint
We don’t sell our loans
79© 2009 Wells Fargo Bank, N.A. All rights reserved. For public use.
How to get started
Just pick up the phone or email:
Meghan Hormann
Wells Fargo SBA Lending
Tel: 612-667-5031
Cell: 507-993-5590
80© 2009 Wells Fargo Bank, N.A. All rights reserved. For public use.