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2014 Lake Business Conference. Funding Your Business. I Am Ready to Begin My Dream Business, How Do I Fund It?. Free Money - Grants It All Begins at Home Friends and Family Plan ‘Sharks’ Government Loans Bank Loans Small Business Administration. Free Money - Grants.

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2014 lake business conference

2014 Lake Business Conference

Funding Your Business

i am ready to begin my dream business how do i fund it

I Am Ready to Begin My Dream Business, How Do I Fund It?

  • Free Money - Grants
  • It All Begins at Home
  • Friends and Family Plan
  • ‘Sharks’
  • Government Loans
  • Bank Loans
  • Small Business Administration
free money grants

Free Money - Grants

  • Federal Grants
  • Grant ‘Brokers’
  • Who Gets Grant Money?
it all begins at home

It All Begins At Home

  • Cash/Savings
  • Credit
  • Second Mortgage
friends and family plan

Friends and Family Plan

  • Relatives
  • Friends
  • Silent Business Partners
sharks crowds and sellers

‘Sharks, Crowds and Sellers’

  • Investors
  • Crowd Funding
  • Seller Funding
  • Leasing and Leveraging
government loans

Government Loans

  • Missouri Department of Economic Development
  • Job Creation
  • Action Fund Loan Program
  • Veterans Loan Program
  • Small Business Loans
bank loans

Your Personal Bank

  • Business Planning
  • Financial Projections
  • Reduce Their Risk
  • Skin In the Game

Bank Loans

sba loans

Your Personal Bank

  • Business Planning
  • Financial Projections
  • SBA Guarantees Part of the Loan
  • Reduce Banks Risk
  • Skin In the Game
  • Suzanne Stearman, SBA

SBA Loans

sba programs and resources

SBA Programs and Resources

Suzanne Stearman, Branch Manager

U.S. Small Business Administration

Springfield, MO Branch Office

sba loan numbers in southwest mo
SBA Loan Numbers in Southwest MO
  • 351 SBA loans were made in southwest MO in FY13 for a total of $103,644,200
sba loan programs
SBA Loan Programs
  • Several loan programs through participating lenders and guaranteed by SBA - lender chooses which program is appropriate fit
  • Loan funds come from bank - not directly from SBA
  • Borrowers work with lender and lender works with SBA on paperwork
sba loan uses
SBA Loan Uses
  • Start a business
  • Purchase an existing business
  • Refinance debt
  • Purchase/construct building, leasehold improvements, equipment and inventory
  • Working capital and lines of credit
benefits to borrower
Benefits to Borrower
  • Help banks make loans in some cases where they may not normally be able to make the loan
  • Longer term = lower payment = improved cash flow
  • Helps with shortfall in collateral
  • Favorable interest rates
  • Maximum to one borrower/business outstanding at one time: $5,000,000
  • Generally, 50-85% guaranteed to bank; this is how much SBA will pay out on a loss to the bank
  • Building purchase or construction: up to 25 years
  • Equipment, working capital, inventory: up to 10 years
  • If combined uses: between 10 and 25 years
  • Lines of credit: 5, 7 or 10 years depending on type
interest rates e xcept sba express and 504 programs
Interest Rates (Except SBA Express and 504 programs)
  • Variable Rate Maximum
    • Under 7 years: Prime + 2.25%; Currently 5.5%
    • 7 years and over: Prime + 2.75%; Currently 6.0%
  • Fixed Rate Maximum
    • Under 7 years: Currently 7.56% (March 2014)
    • 7 years and over: Currently 8.06% (March 2014)

Loans $25K or less: add 2% more to maximum

Loans over $25k -$50k: add 1% more to maximum

preferred lender program plp
Preferred Lender Program (PLP)
  • A lender that has the authority to internally review and approve an SBA loan without sending all the paperwork to SBA for review
  • Can generally turn approvals around faster
certified lender program clp
Certified Lender Program (CLP)
  • Lender sends in paperwork to SBA for approval, but get preference as to where the application stands in the queue.
  • Expected to do some of the paperwork in advance that SBA would normally do when approving the loan.
sba express
SBA Express
  • Less paperwork process than the Standard program
  • Faster approval as lender inputs information online to SBA
  • Up to $350,000
  • Lines of credit available
  • Line of credit program
  • Up to $5 million
  • 75-85% guaranty to the bank
  • Types
    • Working capital
    • Builders
    • Seasonal
    • Contract
504 fixed asset loan program
504 Fixed Asset Loan Program
  • A 504 loan can be used for:
    • The purchase of land, including existing buildings
    • The purchase of improvements, including grading, street improvements, utilities, parking lots and landscaping
    • The construction of new facilities or modernizing, renovating or converting existing facilities
    • The purchase of long-term machinery and equipment
504 fixed asset loan program1
504 Fixed Asset Loan Program
  • Borrower puts in 10% of cost
    • New business or special purpose property – 15%
    • Both new business & special purpose property – 20%
  • Bank finances 50%
  • Certified Development Company (CDC) finances 30-40% depending on amount of equity injection
  • 10 & 20 year terms
  • Great fixed interest rates on CDC’s financing
fees to borrower except 504
Fees to Borrower (except 504)

Guaranty Fee to SBA*:

Loans over 1 year and based on guaranteed portion:

  • Loans $150,000 or less: 0% until 9/30/2014
  • Over $150,000 to $700,000: 3%
  • Over $700,000: 3.5%
  • Additional .25% for guaranteed portion over $1 million
  • Loans to veterans up to $350,000 through SBA Express program-0% until 9/30/2014

Loans 1 year or less: .25% of guaranteed portion

Can be added to proceeds of loan*

eligibility criteria
Eligibility Criteria
  • Must be for-profit
  • Business must be located in U.S.
  • Show ability to repay loan through cash flow
  • Not be on parole, probation or incarcerated
  • Must be considered “small”
    • Not more than $15 million in tangible net worth or more than $5 million in net profit (avg last 2 years)
  • Eligibility Questionnaire from lender
    • Several types of businesses or scenarios may be ineligible
items to bring to bank
Items to Bring to Bank
  • Business plan
  • History/description of business
  • Management experience/resumes
  • Last 3 years of income statements and balance sheets with interims to date
  • Last 3 years of filed business tax returns
  • Cash flow projections
items to bring to bank1
Items to Bring to Bank
  • Aging of receivables; inventory listings
  • Quotes/purchase contracts for items to be purchased with loan proceeds
  • Listing with terms of other business debts
  • Franchise agreements
  • Leases
  • Details of additional financing
  • Details of criminal history: type of offense, dates, etc

Suzanne Stearman, Branch Manager

Springfield Branch Office

830 E Primrose, Ste. 101

Springfield, MO 65807

Telephone: 417-890-8501 Ext. 215

Email: suzanne.stearman@sba.gov