-SBA Financing- New Opportunities for Green Businesses & Sustainability Entrepreneurs David Tiller Public Information Officer U.S. Small Business Administration-TN District Office Nashville, TN 615-736-7176 david.tiller@sba.gov
Energy Assistance Energy Assistance for Small Businesses: Small Business Development Centers (SBDCs) provide counseling, training and technical assistance to thousands of small businesses each year. In the past three years, SBA has made over $2.5 million in targeted grants to SBDCs for special programs that focus on helping small businesses that develop and commercialize clean energy technology, processes and services, as well as helping all small businesses reduce their energy costs.
Adopting Green SBA is collaborating with the Departments of Commerce (NIST and MEP), Energy, Labor and the Environmental Protection Administration on the E3 Pilot Program (Economy, Energy, Environment). SBA helps small manufacturing businesses address energy and sustainability challenges manufacturers, utilities, local government, and federal resources. Partnering agencies have successfully piloted this program in 13 states, and another 33 states have expressed interest in implementing the program.
Tech Innovation Clusters SBA funds Greater Philadelphia Innovation Cluster (GPIC) for Energy-Efficient Buildings + 2 agencies. Four other support agencies provide technical assistance. The initiative brings together DoE HUB grant for R&D in green building tech-- funds from Economic Development Administration, the Manufacturing Extension Partnership & SBA SBA supports the region to leverage this funding into a partnership to commercialize those technologies, build businesses in relevant supply chain areas, and develop a skilled industry.
Entrepreneurial Mentor Corps Entrepreneurial Mentor Corps -a pilot program in 2011: 100 early-stage clean energy companies paired with four business accelerators and experienced business mentors to help them understand business strategy and finances, learn from past experience, and gain access to professional networks that could lead to sales, investment, or recruiting. SBA worked in partnership with the Department of Energy and Advanced Research Projects Agency- Energy (ARPA-E) on the pilot program
Energy Retrofit- Most SBA Loans Could be used for Retrofit and Green Upgrades Small Business Guide to Energy Retrofit Opportunities: Recovery through Retrofit - SBA worked with the Council for Environmental Quality, the Department of Energy, the Environmental Protection Administration, the Department of Labor, and other agencies to create a free, online course, that helps small businesses better understand whether green business opportunities, like energy auditing or efficiency retrofitting might be right for them. In its first three months, the course was viewed more than 19,000 times
SBA Serves a Wide Variety of Capital Needs-New Loan Limits Growth in Business & Changes in Capital Needs $5.0 million $5.0 million (land & buildings) $50,000 Microloans $250,000-500,000 Patriot Express Community Express $350,000 SBAExpress (Can be green ) 7(a) Loans 504 Loans
MicroLoans Direct loans through nonprofit intermediaries- PathwayLending is TN s only MicroLender Loans of up to $50,000-can include Franchises Fast turnaround Maximum of 6 years to repay -- Pathway also does solar industry loans Machinery, equipment, fixtures Leasehold improvements Inventory & Working capital Technical and management assistance available
Treasury Department Provisions in Jobs Act Small Business Lending Fund $30 billion The law provided smaller community banks with low-cost capital (as low as 1%) if they go above and beyond 2009 small business lending levels. Established State Small Business Credit Initiative The law will provide up to $1.5 billion to support state-run small business lending programs.
Small Loan Advantage Loan Initiative Part of New Markets Initiative For minorities, Vets, women business owners Also: businesses in targeted urban and rural areas, including green businesses No collateral, tax returns or financial statement for loans under $25,000 Maximum loan amount of $250,000 Technical training and support required Financial Assistance
SBAExpress Loans Underwriter uses own forms -- not SBA s Use bank s lending policies -- not SBA s Loans or revolving lines of credit to $350k limit Interest rate maximums apply Popular with green business borrowers Financial Assistance
Loans for Fixed Assets 504 Loan Program 504 Certified Development Co. Program Jobs Bill increased limits from $2m to $5 million Long-term, fixed-rate financing including for Franchise businesses: Land & Buildings Up to $2million in SBA-backed debentures- Loans can be higher than $5million For each $65,000 in SBA guaranteed funds, one job must be created or maintained. Financial Assistance
Benefits of a SBA 504 Loan High-leveraged financing for fixed-asset purchases 10-15% equity required from borrower Long-term pay back - 10 or 20 years Lower interest rate: currently 4.6% Franchises where franchisors own the business property of borrower are not eligible for 504 loans 504 loans are for owner-occupied businesses Financial Assistance
To Qualify for a 504 Loan* Business must be operated for a profit Most green/sustainable businesses may qualify if in need of land, buildings, fixtures Tangible net worth of less than $15 million Average net income of less than $5million for the preceding two years * Business cannot be involved in speculation or rental real estate investment Financial Assistance
A Typical 504 Project A private sector loan covering up to 50% A loan from the CDC covering up to 40% (100% SBAguaranteed debenture) At least 10% equity from the business Participating lender has first lien on assets BCS:Can you borrow $1million with $100,000 in equity: Yes Financial Assistance
Basic 7(a) Loan Guaranty Program Businesses (incl Green) can apply for a loan guaranty with an SBA participating lender-up to 90% guaranty Interest rates are negotiable-rate is capped Lender submits application for SBA review and approval Loans are centrally processed After SBA approval, lender disburses funds Green/borrower pays bank, not the SBA Financial Assistance
Loan Proceeds Eligible for Most Business Uses 7(a) loans to $5million may be used to: Purchase Franchise business or pay fees* Expand, renovate facilities Buy machinery, equipment, fixtures, buildings and land for business Finance receivables and augment working capital Refinance existing debt (with compelling reason) Finance seasonal lines of credit Construct commercial buildings *SBA has limitations on good will financing Financial Assistance
References www.sba.gov Green.sba.gov www.franchise.org www.sbirsttr.com www.sbir.gov www.zyn.com
Thank You! David Tiller Public Information Officer david.tiller@sba.gov 615-736-7176