SBA Revised Rules and the Jobs Act A Look at the Landscape for Small Business.
2015 03 17 SBA Beauty Industry West- revised
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Transcript of 2015 03 17 SBA Beauty Industry West- revised
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SBA Programs/International Trade
Presented by Natalie Orta, SBA and Mark Morales, Vice President SBA Division,
HomeStreet Bankwww.sba.gov www.homestreet.com
Presentation for Beauty Industry West
March 17, 2015
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• A department in a bank?• A type of loan?• The Small Business Association?• A chamber of commerce?• Part of the Department of Commerce?
What is the SBA?
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Actually…
• The U.S. Small Business Administration
is an independent federal agency.• Established by Congress in 1953
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About the LA District Office
• Serves Los Angeles, Ventura, and Santa Barbara counties
• One of 80 SBA district offices
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Our Five-Pronged Mission
• Access to Capital• Counseling and Training• Government Contracting• Disaster Recovery Assistance• Small Business Advocacy
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Capital
• SBA does not make direct loans• We guarantee the loans• The bank is your first stop• Banker wants to know 3 things
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Access to Capital –SBA Loan Programs
• 7(a) Loan - Our “flagship” and most flexible loan program
• 504 Loan - Our “Real Estate and Fixed Equipment” program
• Microloans - For those “small-but-crucial” loans
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Access to Capital –7(a) Loan Program
• Designed to help start or expand businesses
• Available through SBA lenders• Loans up to $5 million
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Access to Capital –7(a) Loans May Be Used To• Expand, renovate facilities• Buy machinery, equipment,
fixtures, furniture, buildings and land for business use
• Augment working capital• Refinance existing business debt• Buy inventory• Construct/Purchase commercial
buildings
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Access to Capital –7(a) Loan Terms• 7-10 years for working capital,
machinery, equipment, and business acquisition
• Up to 25 years for fixed assets such as real estate, new construction, heavy machinery, and large equipment
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Access to Capital –7(a) Loan Interest Rates• Negotiated between borrower and
lender• Cannot exceed prime rate (WSJ)
plus 2.75%* *May be higher on smaller loans
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Access to Capital –7(a) Loan Collateral• Personal guaranties from principals
with 20% or more ownership• SBA requires loans to be fully
secured• Liens on personal assets may be
required• Loans are not declined for
insufficient collateral alone
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Use of 7(a) Loan Proceeds
•Purchase of land, buildings or expansion or conversion of existing facilities•Purchase of equipment, machinery, furniture, fixtures, supplies, or materials•Long-term working capital, •Short-term working capital needs
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Use of 7(a) Loan Proceeds •Financing against existing inventory and receivables.•Refinancing of existing business indebtedness•Purchase of an existing business
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Access to Capital –7(a) Loan Eligibility• Business must be for profit• Must not exceed size standards• Must not engage in lending, real-
estate development, investments, gambling, or speculation
• Nonprofits, houses of worship, pyramid sales, passive investing, or businesses of a sexual nature are not eligible
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Access to Capital –7(a) Loan Documentation• Purpose of loan• 3 years Tax returns (personal and
business)• Signed person financial statements• Personal resumes• Projections of income, expenses
and cash flow
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Access to Capital –7(a) Loan Documentation For new businesses:• Projected opening-day balance
sheet• Proof of cash injection• Feasible Business plan
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Access to Capital –7(a) Loan Requirements Borrowers must have:• Good character• Management expertise• Reasonable personal contribution
or business equity• Feasible business plan• Collateral if available• Ability to repay loan from cash flow
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Access to Capital –504 Loan Program• Long-term, fixed rate financing• 10% down, 40% SBA portion (up to $5
million), lender 50%• Must create or retain one job for
every $75,000 of financing• Must be at least 51% owner occupied• Can be used for real estate or fixed
assets such as heavy machinery and equipment
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504 Loan Use of Proceeds
•Purchase of land, including existing buildings•Purchase of improvements:grading, street improvements, utilities, parkinglots and landscaping•Construction of new facilities or modernizing, renovating or converting existing facilities•Purchase of long-term machinery and equipment
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Unacceptable Uses of 504 Loan Proceeds
A 504 loan cannot be used for:•Working capital or inventory•Consolidating, repaying or refinancing debt•Speculation or investment in rental real estate
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Access to Capital –CAP Lines Program
Working Capital CAPlines
Revolving lines of credit to finance short-term working capital needs
Contract CAPlines
Contract financing to finance all costs associated with specific eligible
contracts. May be revolving.
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Access to Capital –CAP Lines Program
Seasonal CAPlines
Finance seasonal working capital needs. May be revolving.
Builders Line
Financing to construct or rehabilitate residential or commercial property
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Access to Capital –Microloan Program• Direct loans through intermediaries• Loans of up to $50,000• Less paperwork, faster turnaround• Up to six years to repay• Business management assistance
available• Interest rate subject to negotiation
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Access to Capital –Microloan Program• California Coastal Rural Dev. Corp.
(805) 962-9251• PACE
(213) 989-3275• Pacific Cost Regional SBDC
(213) 739-2999• Valley Economic Development Center
(818) 907-9977
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International Trade
• Important Facts to consider:
96% of Consumers live outside the U.S.2/3 of the world’s purchasing power –
outside of the U.S.Great power in the term “Made in the
U.S.A.”
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Why Export?
• Strong foreign demand• world economy growing > 4%• world trade growing > 6%• Advancements in e-Commerce and logistics =
lower costs of doing business overseas.• Free trade agreements in Australia, Chile,
Singapore, Jordan, Israel, Canada, Mexico,
and Central America
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The Exporter’s AdvantageExporters are:
• Better prepared to respond to foreign competition and global market trends.
• Able to weather downturns in the domestic economy.
• More competitive and less likely to go out of business.
• Able to extend the sales potential of existing products and maintain productive capacity by stabilizing seasonal markets.
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Prepare for Exporting
Take an Export Readiness Self-Assessment
Take advantage of Training and Counseling
Create your Export Business Plan Conduct Market ResearchFind BuyersLook into Export Financing Options
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Exporting Resources
• CITD • Six Steps to Begin Exporting• Export.gov• www.sba.gov
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What About Grants?
• SBA does NOT provide grants for starting and expanding a business
• A good source for information on how to find and apply for federal grants is www.grants.gov
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Counseling SBA has 3 funded resource partners:• Small Business Development Centers
(SBDC) 8 Service Centers in LA Region• SCORE – Counselors to America’s
Small Business 3 Chapters within service territory
• Women’s Business Centers (WBC) 4 Service Centers in service area
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Business Counseling and Training• Serve Los Angeles, Ventura, and
Santa Barbara counties.• Free business advising• No-cost and low-cost training and
workshops• Online consultations available• Short and long-term client-counselor
relationships
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Business Counseling and Training Proven business consultants provide:• One-on-one consulting services• Customized advice for each client’s
situation• Confidential consultations• Financing and loan packaging assistance• Reviews of business financials• Interactive workshops and seminars
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Business Counseling and Training Advisors help with:• Legal issues re: corporate structures• Advice regarding leases and contracts• Assistance securing intellectual property• Business planning, including: research,
preparation, development, and review• Marketing and business development, target
markets, strategy, and implementation
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Business Counseling and Training
Advisors can even assist with:• Financial statement development and analysis• Cash flow management• Contract proposals, preparation, negotiation,
and management• International trade (Import/Export)• Some centers have attorneys, CPA’s and other
specialists on staff
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Business Counseling and Training Small Business Development Center
(SBDC)• Centers hosted by higher learning
institutions and economic development organizations
• All Areas: (866)588-SBDC (7232)• www.smallbizla.org
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Business Counseling and Training SCORE• Counseling is held at sites throughout
the community
Los Angeles: (818)552-3206 Santa Barbara: (805)563-0084
Ventura: (805)204-6022• www.score.org
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Business Counseling and Training Women’s Business Centers (WBC)
Focus on women but provide services to all, regardless of gender
Los Angeles: (213)473-1605 Los Angeles: (213)353-9400 Van Nuys: (818)907-9922 Santa Barbara: (805)965-6073
sba.gov/content/womens-business-centers
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Thank you!!!!