SBA MATERIALS - SECTION 1.doc.doc

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455 Market Street 6 th Floor San Francisco, CA 94105 415/744-6820 www.sba.gov/ca/sf San Jose eCenter 84 W. Santa Clara Street San Jose, CA 95113 408/494-0211 www.ecenteronline.org How does the SBA bank guarantee loan program work? SBA enables its participant banks to provide financing that is otherwise not available by guaranteeing approximately 75% - 85% of the loan (the banks also have some of their own money at risk). This helps to offset the risk associated with lending to small businesses. For bank guaranteed loans, the maximum amount is generally $2,000,000. There is no minimum amount; and some banks will make loans as small as $5,000. SBA provides the bank with a written authorization outlining the conditions of the SBA guarantee (e.g., the interest rate, loan maturity, and the collateral). In the event the business fails, SBA pays the bank its pro rata share and SBA also shares in any recoveries obtained from the collateral. The borrower remains liable for the full loan amount. SBA does not currently have funding for direct loans nor does it provide grants or low interest rate loans for business start-ups or expansions. If you are buying real estate or heavy equipment, you may also qualify for a Certified Development Loan (504) loan with as little as 10% down. (See the attached list of SBA San Francisco District Certified Development Company (CDC) Participants.) How do I apply for an SBA loan? Our participating banks have the SBA loan applications and they are responsible for processing, closing, disbursing, and servicing the loan. Your local bank of account is a good place to start. When you contact a bank, make sure to ask for the “SBA Loan Department.” Many of the banks now have on-line application procedures, so you may check their web site before you start. SBA’s involvement is limited to reviewing the loan application submitted by the bank to assure it meets eligibility and credit standards. The following information is generally needed: your FAQ SBA LOANS SAN FRANCISCO DISTRICT

Transcript of SBA MATERIALS - SECTION 1.doc.doc

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455 Market Street 6th Floor San Francisco, CA 94105 415/744-6820 www.sba.gov/ca/sf

San Jose eCenter 84 W. Santa Clara Street San Jose, CA 95113 408/494-0211 www.ecenteronline.org

How does the SBA bank guarantee loan program work?

SBA enables its participant banks to provide financing that is otherwise not available by guaranteeing approximately 75% - 85% of the loan (the banks also have some of their own money at risk). This helps to offset the risk associated with lending to small businesses. For bank guaranteed loans, the maximum amount is generally $2,000,000. There is no minimum amount; and some banks will make loans as small as $5,000. SBA provides the bank with a written authorization outlining the conditions of the SBA guarantee (e.g., the interest rate, loan maturity, and the collateral). In the event the business fails, SBA pays the bank its pro rata share and SBA also shares in any recoveries obtained from the collateral. The borrower remains liable for the full loan amount. SBA does not currently have funding for direct loans nor does it provide grants or low interest rate loans for business start-ups or expansions. If you are buying real estate or heavy equipment, you may also qualify for a Certified Development Loan (504) loan with as little as 10% down. (See the attached list of SBA San Francisco District Certified Development Company (CDC) Participants.)

How do I apply for an SBA loan?

Our participating banks have the SBA loan applications and they are responsible for processing, closing, disbursing, and servicing the loan. Your local bank of account is a good place to start. When you contact a bank, make sure to ask for the “SBA Loan Department.” Many of the banks now have on-line application procedures, so you may check their web site before you start. SBA’s involvement is limited to reviewing the loan application submitted by the bank to assure it meets eligibility and credit standards. The following information is generally needed: your business plan supported with pro forma cash flow assumptions and balance sheets, personal financial statements and copies of IRS returns, business financial statements (if already in business), collateral available to secure the loan, and management resumes of those involved in operating the business. Be prepared to discuss your proposal in detail. Once a bank determines they are comfortable with making the loan, they will then forward your loan application and a credit analysis to SBA (our Preferred or Express Lenders have delegated lending authority and this helps to expedite the process).

What do I need to qualify for the loan?

The business must be “for profit” and meet size and other eligibility standards (including your criminal history and alien status). It is estimated that 97% of all small businesses are eligible for SBA assistance (please check the SBA web site at www.sba.gov for details). SBA requires an equity injection by the applicant. 100% financing is not possible. A reasonable equity injection or down payment is generally 20% and may require up to 35% or more for startups. This is generally in the form of cash, but machinery and equipment or other tangible assets may be substituted. The owners or managers must demonstrate they have the knowledge and experience needed to operate and manage the business successfully. The business must demonstrate it can generate sufficient profits to both repay their loan and provide the owner with reasonable compensation for operating the business.

FAQ SBA LOANSSAN FRANCISCO DISTRICT

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What if I have a bad credit history?

Like all lenders, SBA loans do take into consideration your past credit history. The first thing a bank will do when you apply for a loan is obtain your Credit Report. If you have not already reviewed your report, you should do so before you apply. You can access them on-line at www.annualcreditreport.com. Be prepared to discuss any problems (e.g., late pays, collection accounts, judgments, and bankruptcies). If they can be justified by extenuating circumstances, you may have a chance at obtaining credit.

What kind of collateral is required?

Repayment ability from the cash flow of the business, not collateral, is the primary consideration in the SBA loan decision (good character, management capability, collateral and owner’s equity contribution are also important). All owners of twenty percent (20%) or more of the business are required to personally guarantee the SBA loan. The SBA does not decline a loan solely due to lack of collateral; however, if collateral is available and a borrower refuses to pledge it, the loan can be declined. The SBA guaranty acts like a substitute for collateral from a bank’s point of view (this is why the SBA loan program was created).

What are the terms and interest rates on an SBA loan?

SBA does not set the interest rate on the loans, only the maximum rate the bank may charge (they are generally variable rate loans and tied to prime plus 1% - 6½% depending on the size and type of loan). SBA also charges a 1% to 3½% guaranty fee on the loan (it is charged to the bank, but usually passed on to the borrower). The actual rates and terms are negotiated between the lender and the borrower.

If there is no break on the interest rate, what is the benefit of the SBA guaranty?

SBA’s loan program was designed to provide assistance to businesses that cannot obtain financing at reasonable rates and terms elsewhere. If a borrower can access credit with better terms, it usually means they have established credit or they have plenty of equity in real property.

How long do I have to repay the SBA loan?

When a bank uses the SBA guaranteed loan program, the borrower benefits by having a longer maturity, which equates to lower monthly payments. The repayment term for SBA loans is generally between five and twenty-five years depending on the life of the assets being financed and the cash needs of the business. Working capital loans (inventory and accounts receivable) should be repaid in five to ten years.

What if I am declined for an SBA loan?

The best defense is a good offense….so be prepared when you apply for the loan. You must be able to sell your idea and its merits to the banker. By law, a lender must substantiate the reason for any loan they decline. If the lender questions the business plan, ask what can be done to improve it. Then, correct the business plan and resubmit it to the lender. If that lender is unwilling to approve the loan or submit the application to SBA, try another lender.

If you would like additional technical assistance advise on how to obtain credit you may also consider one on one counseling from The Service Corp of Retired Executives (SCORE) www.score.org or a local Small Business Development Center (SBDC) http://sbdcnet.utsa.edu/sbdc.htm. These programs are partly funded by SBA. Please visit our web page, which is located at www.sba.gov/ca/sf for additional information about these and other technical assistance resources in the area. You may also take advantage of our training workshops and view our quarterly calendar of events, and electronically register for SBA training at the following sites: San Francisco District www.acteva.com/go/sba; San Jose eCenter at www.ecenteronline.org

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SBA San Francisco District Certified Development Company (CDC) ParticipantsCounties Served: Certified Development Company Phone Number Description

Del Norte, HumboldtLake, & Mendocino

Arcata Economic Development100 Ericson Court, Suite 100Arcata, CA 95521http://www.aedc1.org/

(707) 822-4616The CDC Program provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings. CDCs work with the SBA and private-sector lenders to provide this financing. Typically, a 504 project includes a loan secured with a senior lien from a private-sector lender covering up to 50 percent of the project cost, a loan secured with a junior lien from the SBA-guaranteed debenture covering up to 40 percent of the cost, and a contribution of at least 10 percent from the business.

Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano & Sonoma

Bay Area Employment Development1801 Oakland Blvd., Suite 100Walnut Creek, CA 94596http://www.baydevco.com/

(925) 504-0504

Santa Clara, Santa Cruz, Monterey, San Benito, San Luis Obispo, Santa Barbara, Ventura

California Coastal Rural DC221 Main Street, Suite 301Salinas, CA 93901http://www.calcoastal.org/

(831) 424-1099

State of CaliforniaCalifornia Statewide CDC426 “D” StreetDavis, CA 95616http://www.californiastatewide.org/

(800) 348-6258

State of California Capital Access Group150 California Street, Suite 250San Francisco, CA 94111http://www.capitalaccess.com/

(415) 217-7600

Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano & Sonoma

Los Medanos Fund329 Railroad AvenuePittsburg, CA 94565http://www.504cdc.com/

(925) 439-1200

State of CaliforniaThe Mortgage Capital Dev. Corp.611 Front StreetSan Francisco, CA 94111http://www.tmcdcapital.com/

(415) 989-8855

SBA San Francisco District Microlender ParticipantsCounties Served: Microlender Phone Number Description

Del Norte, Humboldt, Lake, Mendocino, Siskiyou & Trinity

Arcata Economic Development Co.100 Ericson Court, Suite 100Arcata, CA 95521http://www.arcataedc.com/

(707) 822-4616Provides loans of $35,000 or less to start-up, newly established, or growing businesses. SBA loans funds to nonprofit intermediaries, which, in turn, makes loans to eligible borrowers. Applications are submitted to the local intermediary and all credit decisions are made by the Micro lender

Monterey, San Benito,San Luis Obispo,Santa Barbara, Santa Cruz and Ventura

California Coastal Rural Dev. Co.221 Main Street, Suite 301Salinas, CA 93902http://www.calcoastal.org./

(831) 424-1099

Alameda, Contra Costa, Marin, Merced, Sacramento, San Francisco, San Joaquin, San Mateo, Santa Clara & Stanislaus

San Francisco Micro Loan Program(Southeast Asian Community Center)875 O’Farrell StreetSan Francisco, CA 94109http://seacc.us

(415) 885-2743

Alameda, Contra Costa and Solano OBDC Small Business Finance Co.519 17th Street, Suite 700Oakland, CA 94612http://www.obdc.com/

(510) 763-4297

SBA Small Business Investment Companies (SBIC’s)

This program was created to fill the gap between the availability of venture capital and the needs of small businesses in start-up and growth situations. SBIC’s, licensed and regulated by the SBA, are privately owned and managed investment firms that use their own capital, plus funds borrowed at favorable rates with an SBA guarantee, to make venture capital investments in small businesses. All SBIC’s are profit-motivated businesses. They provide venture capital, long-term loans, debt-equity investments and management assistance to qualifying small businesses. Their incentive is the chance to share in the success of the small business as it grows and prospers. This is not a local program, and information about SBIC financing and the SBIC’s operating in this area can be obtained on-line at www.sba.gov/inv.

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SBA San Francisco SCORE ChaptersArea Served: Chapter Name Phone Number Description

San Francisco, San Mateo, and Marin Counties

San Francisco SCORE455 Market St., 6th FloorSan Francisco, CA 94105Email: [email protected]

(415) 744-6827Provides free one-on-one counseling by experienced professionals, “How to Start a Business Seminars,” “How to Write a Business Plan Seminars,” and other business services for existing and startup businesses. Please call for an appointment.

Santa Clara CountySilicon Valley SCORE84 W. Santa Clara St., Suite 100San Jose, CA 95113Email: [email protected]

(408) 288-8479

Alameda, Contra Costa & Solano Counties

East Bay SCORE519 17th St., Suite 240Oakland, CA 94612Email: [email protected]

(510) 273-6611

North Coast Counties(Sonoma to Oregon and Lake and Napa Counties)

California North Coast SCORE777 Sonoma Ave., Suite 115 BSanta Rose, CA 95404

(707) 571-8342

SBA San Francisco Small Business Development CentersTerritory: SBDC Phone Number Description

Monterey West of Hwy. 101 and Santa Cruz Counties

Central Coast SBDCTeresa Thomae, Director6500 Soquel DriveAptos, CA 95003 www.businessonline.org

(831) 479-6136 A cooperative effort of the private sector, the educational community and federal, state and local governments. Delivers up-to-date counseling, training and technical assistance in all aspects of small business management. SBDC services include, but are not limited to, assisting small businesses with financial, marketing, production, organization, engineering and technical problems and feasibility studies.Special SBDC programs and economic development activities include international trade assistance, technical assistance, procurement assistance,venture capital formation and rural development.

Contra Costa CountyContra Costa SBDC Beverly Hamile, Director2425 Bisso Lane, #200Concord, CA 94520 www.contracostasbdc.com

(925) 646-5377

Alameda County East Bay SBDCRaj George, Director475 14th Street, Suite 150Oakland, CA 94612www.eastbaysbdc.org

(510) 208-0411

Napa and Lake CountiesNapa Valley College SBDCElizabeth Pratt, Director1556 First Street, Suite 103Napa, CA 94559 www.napasbdc.org

(707) 253-3210

Del Norte and Humboldt Counties North Coast SBDCJudith St. Clair, Director520 “E” StreetEureka, CA 95501 www.northcoastsbdc.org

(707) 445-9720

Mendocino, Sonoma & Marin Counties

Redwood Empire SBDCLorraine DuVernay, Director606 Healdsburg AvenueSanta Rosa, CA 95401http://www.santarosa.edu/instruction/jtwd/sbdc/

(707) 524-1770

San Francisco and Northern San Mateo Counties

San Francisco SBDCAl Dixon, Director455 Market Street, #600San Francisco, CA 94105www.sfsbdc.org

(415) 908-7501

North Santa Clara and South San Mateo Counties

Silicon Valey SBDCKulbir (Bill) Singh, Director84 West Santa Clara St., #100San Jose, CA 95113 www.siliconvalley-sbdc.org

(408) 494-0240

Solano CountySolano County SBDCCharles Easton, Director360 Campus Lane, Suite 102Fairfield, CA 94534 www.solanosbdc.org

(707) 864-3382

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Other Loan Related Resources

Area Served: Resource Phone Number Description

San FranciscoMayor’s Office of Community Dev.25 Van Ness Ave. #700San Francisco, CA 94102http://www.ci.sf.ca.us/mocd/

(415) 252-3169Small Business Loans $100,000 and less

OaklandCity of Oakland519 17th Street, #600Oakland, CA 94612www.oaklandnet.com

(510) 763-4297Small Business Loans of $50,000 -$100,000

Daly CityDaly City Business Center355 Gellert Blvd. #230Daly City, CA 94015www.ci.daly-city.ca.us

(650) 757-2060Maximum loan $25,000 a minimum of $5,000

State-wideNor-Cal Development Corporation5776 Stoneridge Mall Road, #345Pleasanton, CA 94588www.norcalfdc.com

(925) 416-6491Helps companies that do not meet traditional lending guidelines

Alameda, San Francisco, san Mateo, Santa Clara counties

Lenders for Comm. Development111 West St. John St., Suite 800San Jose, CA 95113www.L4CD.org

(866) 299-8173Non-profit, community institution funded by 27 member banks

Northern CaliforniaEx-Im Bank250 Montgomery St. 14th FloorSan Francisco, CA 94104www.exim.gov

(415) 705-2285Helps finance the overseas sales of U.S. goods and services

Oakland, San Francisco, San Jose and East Palo Alto.

Pacific Community Ventures539 Bryant Street, Suite 302San Francisco, CA 94107www.pacificcommunityventures.org

(415) 442-4300Provides resources & capital to businesses with potential to low-income communities

NapaNapa Economic Development Corp.433 Soscaol Ave. #B131Napa, CA 94559www.nvedc.org

(707) 253-3212Non-profit that has a small business loan fund to serve for-profit businesses

State-wideCalifornia Environmental Redevelopment Fund (CERF)1812 J Street, Suite 21Sacramento, CA 95814

(916) 326-5227Provides otherwise unavailable financing for contaminated sites

State-wideCalifornia Export Finance Office1670 S. Amphlett Blvd.San Mateo, CA 94402http://commerce.ca.gov/state/ttca/ttca_homepage.jsp

(650) 573-4342Enables a small bus. to obtain a term loan or line of credit when otherwise not available

State-wideCEDLI (Calif. Econ. Dev. Lending Int.)1333 Broadway, Suite 1060Oakland, CA 94612www.caratnet.org/cedli.htm

(510) 267-8990Multi-bank dev. corp. providing investment capital to small businesses

State-wideUSDA Business & Industry Loans430 G Street, Dept. 4169Davis, CA 95616www.rurdev.usda.gov

(530) 792-5800Helps create jobs and stimulate rural areas by guaranteeing a bank’s loan

Silicon ValleySilicon Valley Econ. Dev. Corp.1155 North First St.San Jose, CA 95112http://www.sved.org

(408) 298-8455Provides loans and technical assistance

Small Business Technical Assistance Providers & Other Resources

Area Served: Name Phone Number Description

San Francisco Bay AreaAnew America Community Corp.1918 University Ave., Suite 3ABerkeley, CA 94704

(510) 540-7785,X302

Women’s business centerwww.anewamerica.org

San Francisco Asian, Inc. www.asianinc.org1670 Pine StreetSan Francisco, CA 94109

(415) 928-5910Development & growth of disadvantaged small businesses

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Bayview Area (San Francisco)Bayview Small Bus. Resource Cntr.3801 3rd Street, Suite 240San Francisco, CA 94124www.rencenter.org/bay

(415) 647-3728Training and support to emerging & est. entrepreneurs in Bayview District

WatsonvilleEl Pajaro Comm. Dev. Corporation318 Main Street, Suite 208 Watsonville, California 95076

(831) 722-1224Training and technical asst. to help start or grow a business

Bay AreaLegal Services for Entrepreneurs131 Steuart St. # 400San Francisco, CA 94105www.lccr.com

(415) 543-9444 X217

Assists low-income individuals who start or enlarge for-profit businesses

San Francisco (Mission District)Mission Economic Development3505 20th St., 2nd FloorSan Francisco, CA 94110www.medasf.org

(415) 282-3334Assistance for minority & women owned businesses (Loan Packaging)

Bay AreaNorthern California Supplier Development Council1999 Harrison St., Suite 655Oakland, CA 94612http://www.ncsdc.org/

(510) 587-0636Links minority owned businesses with corporate purchasing representatives

San Francisco Bay AreaRenaissance Entrepreneurship Ctr.275 Fifth Street, 2nd FloorSan Francisco, CA 94103www.rencenter.org

(415) 348-6237Micro-business incubator for low income & minorities

San MateoSan Mateo Economic Dev. Asst.235 East 3rd Ave., Suite 213San Mateo, CA 94401www.cityofsanmateo.org

(650) 522-7240Business resource guide for downtown storefront development

Silicon ValleySV Assc. Of Startup Entrepreneurs (SVASE) PO Box 5646South San Francisco, CA 94083www.svase.org

On-line onlyContacts in the investment community & service providers for successful start-ups

Bay AreaSoftware Development Forum111 West Saint John St., Suite 200San Jose, CA 95113www.sdforum.org

(408) 494-83782000+ members & the premier software & Internet org. in the Bay Area.

San FranciscoSmall Business Network2261 Market Street, #228San Francisco, CA 94114www.sfsbn.org

(415) 281-8412Small business advocacy, and educational seminars

Bay AreaTechnology Advisory Prog. (TAP)San Jose Entrepreneur Center84 W. Santa Clara St.San Jose, CA 95113www.sbdctap.com

(408) 494-0212Management consulting specializing in improving business operations through technology consulting

San FranciscoUrban Solutions1083 Mission Street, 2nd FloorSan Francisco, CA 94111www.urbansolutions.org

(415) 553-4433Technical Assistance, Loan Packaging and other services.

Rural Northern CaliforniaWest Enterprise CenterNorth State Street, Suite 201Ukiah, CA 95482 e-mail: [email protected]

(707) 468-3553Technical assistance for Micro-enterprises targeting low-income women & minorities

Bay AreaWomen’s Initiative 1390 Market Street, Suite 113San Francisco, CA 94102www.womensinitiative.org

(415) 247-9473 x 320

Skills training and technical assistance for low-income individuals & women

Bay AreaWorking Solutions611 Front StreetSan Francisco, CA 94111 www.tmcworkingsolutions.org/

(415) 989-2255Links small bus. with applicants from local nonprofit job training & employment programs

SBA’s publication of these resources and information is not an endorsement of the views, opinions, products or services of any of these entities - they are provided for reference purposes only.

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