August 16, CBNA Commercial Banking SBA Loan Programs

Transcription

1 August 16, 2011 CBNA Commercial Banking SBA Loan Programs

2 Table of Contents Topics Pages What is the SBA? 2 Program Benefits 3-4 SBA 7A Loan 5-7 SBA Application Requirements 12 SBA Loan Process 13 Q & A 14 Exhibits Page 1

3 What is the SBA? The Small Business Administration (SBA) was established in 1953 as an agency of the Federal Government SBA was created to aid & protect the interests of small business owners SBA provides loan guarantees to give small business greater access to long term capital SBA partners with banks /lending institutions to deliver loan programs Page 2

4 SBA Program Benefits - Client Why is it good for the Client? Long term financing Lower down payment Lower Collateral requirements Page 3

5 SBA Program Benefits - Lenders Why is it good for the Bank? Government guaranteed-75% (SBA 7A loan) Lower Risk Exposure improved LTV (SBA 504) Profitability Excellent Cross Sell Opportunities Bank does not have to reserve for guaranty portion of loan. Page 4

6 SBA 7(a) Loan Purpose Loan purpose Expand or acquire a business Purchase or construct real estate to be used by the business Refinance debt (SBA conditions apply) Buy equipment Provide working capital Construct leasehold improvements Inventory Page 5

7 SBA 7(a) Loan Size and Amortization Project Size $250M to $5MM SBA guarantees a portion ( up to 75% ) Amortization 25 years for real estate 10 years for equipment, & business acquisition 7 to 10 years for working capital All loans are fully amortized No balloon payments Page 6

8 SBA 7(a) Rates and Fees Rates Variable Rate Loan Packaging Fee of $1,000 SBA guaranty Fee Up to $150M % of guaranteed portion of loan amount $150,001 to $700M --- 3% of guaranteed portion of loan amount $700, % of guaranteed portion of loan amount (*) Additional.25% on guaranteed portion above $1MM. Guaranty Fee on $2MM loan would be $53,750. Page 7

9 SBA 504 Loan Purpose Used primarily to purchase, construct, or expand a real estate facility (with 51% occupancy), such as: Commercial office building Industrial building Industrial warehouse Industrial manufacturing facilities Retail building May also be used to finance long term equipment Page 8

10 SBA 504 Loan Project Size, Amortization, and Structure Project Size $500,000 to $20,000,000 Combination program with bank loan & SBA debenture Features Up to 25 years fully amortized Fixed Rates No balloon payments Structure 50% - Non-SBA bank loan in 1 st lien position 40% - SBA direct loan ( handled by a CDC) in 2 nd lien position 10% - Cash down payment from borrower Page 9

11 SBA 504 Loan Rates and Fees Rates Required to meet RORC and Minimum Pricing Hurdles Citibank Fees (CITI portion may be negotiable) 1.0% Citibank fee on 1 st mortgage amount..25% Citibank fee on Bridge Loan Approximately 1% on Construction Loan Fees, if applicable SBA/CDC Fees Approximately.65% of the debenture amount Page 10

12 Benefits of the SBA 504 Program Lender Holds First Lien Position CDC processes all SBA paperwork Improved LTV ratio reduces risk to lender Lender sets interest rate and fees on 1st mortgage Minimum 10% down payment Page 11

13 Application Requirements Completed SBA business loan application Personal financial statement of all owners/principal with 20% share 3 years tax returns for business and personal Interim business financial statements Business entity documentation Purchase agreement (if applicable) Copy of bank statement to document availability of owner s injection Page 12

14 SBA Loan Process SBA Director works directly with the CDC/SBA to: Determine SBA Eligibility Determine Creditworthiness of the Customer Make sure the loan conforms to Citibank RACs Upon acceptance of the initial review, the SBA Director will coordinate with the RM/BDO, the CDC and the Citibank Credit Center through the collection of a complete loan package, approval and funding process. Page 13

15 Page 14 Q&A

16 Page 15 EXHIBITS

17 Exhibit A Who is eligible for SBA loans 7a Most for profit small businesses Most Retail and Service industries identified by NAICS code with gross sales less than $6.5MM Manufacturers with less than 500 employees Wholesalers with less than 100 employees 504 Same as 7a or alternative standard of Net Worth < $15MM or Net Profit < $5MM Page 16

18 Exhibit B Who is NOT Eligible for SBA loans? Companies that are not eligible for SBA 504 and 7a loans are: Not-for-profit businesses Businesses engaged in lending Passive holders of real estate and/or personal property Life insurance companies Businesses located in a foreign country or owned by aliens Businesses selling through a pyramid plan Illegal businesses Businesses which restrict patronage Government owned entities (excluding Native American Tribes); Businesses engaged in promoting religion Consumer and marketing cooperatives Businesses engaged in loan packaging Businesses owned by persons of poor character; equity interest by lender, CDC or associates in applicant concern Businesses providing prurient sexual material Businesses that have previously defaulted on a Federal loan Businesses engaged in political or lobbying activities; and speculative businesses. Page 17

19 Contact Information Alex Fouquet, Business Relationship Manager Phone No: (954) alex.p.fouquet@citi.com Page 18