When do the two key provisions go into effect?
These provisions are retroactive back to Feb. 17, 2009. For eligible loans approved between Feb. 17, 2009, and now, the agency will make funds available to refund payments for these fees.
How long will the SBA Recovery Act be in effect?
The program level has been set at approximately $8.7 billion and, depending on the loan volumes in the 7(a) program, the SBA estimates that it will be able to eliminate the upfront guarantee fees on loans approved through Dec. 31, 2009.
What types of businesses can benefit from the SBA Recovery Act?
Depending on the industry classification of the company, almost any owner-occupied business with revenue less than $6.5 million or fewer than 500 employees will qualify. There are exceptions to these limits, but this covers the majority of the industry types.
Types of businesses that do not qualify are nonprofit organizations and real estate investment properties that collect rent from a nonrelated entity. In addition, state or local governments, casinos or gambling establishments, aquariums, zoos, golf courses and swimming pools do not qualify.
How much money can a company borrow under this program, and what can the funds be used for?
Under the SBA 7(a) program, a company can borrow up to $2 million for purposes such as purchasing new equipment and/or inventory, purchasing an owner-occupied building, acquiring an existing business, refinancing existing debt, a construction project or leasehold improvements, just to name a few.
The SBA 7(a) loans are term loans with amortization up to 25 years — amortization length is determined by the use of the proceeds. In addition, the SBA express program has a maximum amount of $350,000 to cover working capital needs a company may have.
What type of information should an interested small business put together to begin the process?
A business’s application checklist should include:
■ SBA loan request form
■ Management resume (must be completed for each partner holding 20 percent or more ownership and all key management)
■ Statement of Personal History (SBA Form 912) must be completed for each partner holding 20 percent or more ownership
■ Business federal tax returns for three prior fiscal years
■ Interim business financial statements (year-to-date)
■ Business plan
■ Month-to-month projections for the current year and the following two fiscal years
■ Business debt schedule
■ Personal Financial Statement (SBA Form 413)
■ Personal federal tax returns for three years prior
Darlene Nowak-baker is an executive vice president, commercial lending at First Place Bank. Reach her at [email protected] or
(248) 358-6403.
