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Loan Programs Money in the Hands of Small Businesses

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Loan Programs Money in the Hands of Small Businesses 504 Loans The 3 C’s of the SBA The 504 Program provides small businesses SBA focuses on giving small businesses the tools long-term, fixed-rate financing for fixed assets: needed to grow and create jobs. We like to talk about land, building, and equipment. The 504 finance our 3 C’s — capital, contracting, and counseling. package consists of two loans: one from a bank The first C is capital. If you’re looking for a way to and the other from an SBA licensed Certified finance your growth, an SBA loan might be what you Development Company. Maximum loan size is need. The SBA doesn’t actually make the loans. $5 million ($5.5 million for manufacturing). Instead, we guarantee a percentage of each loan made by lenders who partner with us. Our guarantee reduces the risk, which means these SBA lending Example Loan Structure for $2 Million Project partners are more likely to help small businesses that Bank Loan (1st Lien) $1,000,000 (50%) can’t get access to conventional loans. SBA/CDC (2nd Lien) $ 800,000 (40%) The second C is contracts. The federal government Borrower $ 200,000 (10%) spends $500 billion a year in contracts. We work with Total Project $2,000,000 (100%) all federal agencies to put at least 23 percent of that Loan Programs money in the hands of small businesses. We also work with small business directly, through training For more information visit www.sba.gov and click and business development programs, to help them on the Loans tab or call one of the nine CDC’s in compete for and win contracts. North Carolina. The third C is counseling. North Carolina has 16 Small Business & Technology Development Centers, Avista Business Development Corporation 2 Women’s Business Centers, a Veteran Business Outreach Center, and SCORE chapters located Asheville (828) 645-0439 around NC. These business experts offer counseling North Carolina District and training (nearly always free) to entrepreneurs. Business Expansion Funding Corporation 6302 Fairview Road - Charlotte (704) 414-3000 You can find contact information for lenders and - Raleigh (919) 366-6441 resource partners, and sign up for NC newsletters at Charlotte, NC 28210 “Email Updates” on www.sba.gov/nc. www.sba.gov/nc Carolina Business Capital Business Loan Checklist (formerly Centralina Development Corporation) Before you start applying for a loan, you should get (704) 344-6563 Charlotte (704) 373-1233 some basic documentation together. The following are a few typical items that will be required for any Neuse River Development small business loan application: Asheville (828) 747-7727 New Bern (252) 638-6724 Your cash to invest Business Plan with Cash Flow Projections Piedmont Triad Regional Development Corp. Personal Financial Statement Raleigh (919) 923-6688 Kernersville (336) 904-0300 Personal and Business Credit Report Personal and Income Tax Returns Self-Help Ventures Fund (919) 956-4400 Financial Statements-P&L, Balance Sheet, Wilmington (910) 398-0746 - Charlotte (800) 394-7428 Income Statements - Wilmington (910) 254-9988 Bank Statements List of Collateral How to Get a Loan 7(a)7(a) LoansLoans Types7(a) ofLoans Loans SBA works with large and small banks, credit SBAExpress Loans: Lenders obtain a 50% Obtaining financing for your business venture is unions and non-bank lenders to provide guaranty on loans up to $350k. Lenders use often challenging for an entrepreneur. In addition, government-guaranteed small business loans to their own paperwork. SBA offers no grants to start or expand a start-ups and existing businesses. A list of lenders business. From being in the startup phase to can be found at www.sba.gov/nc. Community Advantage: This pilot program is growing your business, you may face difficulties aimed at helping lenders which support entrepre- with the requirements of traditional bank loans. The 7(a) Loan Guaranty Program serves as SBA’s neurs in underserved communities gain access to The 7(a) Program may be able to help. primary business loan program to help qualified capital by opening up 7(a) lending to mission- small businesses obtain financing when it is not focused, community-based financial institutions Am I eligible? available elsewhere. which were previously not able to offer SBA To be considered eligible for the SBA 7(a) Loan Loan proceeds can be used for most business loans. Maximum loan size is $250,000. Visit Program, your business must meet SBA’s size purposes including working capital, equipment, www.sba.gov/advantage for more information. standards and be considered small within your inventory, land and building. Loan maturities are up The Support Center (919) 803-1437 particular industry, operate for profit and you must to 10 years for working capital and up to 25 years www.thesupportcenter-nc.org have reasonable equity to invest. for real estate. Mountain BizWorks (828) 253-2834 www.mountainbizworks.org How can I use 7(a) funds? SBA’s 7(a) Loan Guaranty Program has a The 7(a) Program lets you secure loan amounts maximum loan amount of $5 million, with maximum Microloans: This program provides loans up to up to $5 million to fund startup costs, buy exposure of $3.75 million. Thus, if a business $50,000 through a network of intermediaries. The equipment and more. receives an SBA guaranteed loan for $2 million, the SBA makes funds available to nonprofit maximum SBA guaranty to the lender will be $1.5 intermediaries that, in turn, make small loans What are the benefits? million or 75%. SBA charges a guaranty fee on the directly to start-up and existing businesses. The 7(a) Program offers flexibility, longer terms guaranteed portion of the loan. In NC, those lenders include: and potentially lower down payments compared to Interest rates on business loans are usually Mountain BizCapital (828) 253-2834 other financing options. There are specialized variable. Rates are negotiated between the lender www.mountainbizworks.org programs for individuals interested in exporting; and the borrower but are subject to SBA those located in underserved communities; maximums. Depending on the size, loan program members of the military community; and small and term of the loan, the SBA maximum interest Intermediary Lending Pilot: similar to the Micro- businesses owners looking to meet their short- rate can range from prime+ 2¼ % to prime+ 6½ %. loan program, this program can lend up to term and cyclical working capital needs. In North Carolina, the interest rates have typically $200,000. been less than the maximum allowed. NC CEED, Fayetteville (910) 323-3377 What are the repayment terms? www.ncceed.org Most 7(a) term loans are repaid with monthly To be eligible for a 7(a) loan, a business must: The Support Center (919) 803-1437 payments of principal and interest. www.thesupportcenter-nc.org Operate for profit What else should I know? Not exceed SBA size standards International Trade Loans/Export Express: Keep in mind that SBA doesn’t fund these loans Not be involved in lending, real estate Lenders receive a guaranty up to 90% for loans directly to small business owners, but banks development, investment or speculation. used to finance exporting operations of a small business. receive a guarantee that the SBA will repay a Not be involved in pyramid schemes, gambling, portion of the loan after all collateral has been and illegal operations. CAPLines: Financing through a participating liquidated if you default on payments. lender for seasonal or short term working capital Visit www.sba.gov and click on the Loans tab for needs. more details involving size, eligibility, use of SBA Veterans Advantage: Through 9/30/2015, proceeds, guaranty percentage, fees, and other lenders will waive the SBA loan guaranty fee for questions. loans under $350,000. .
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