Why Go Into Business?
•
Make money
•
Have fun
•
Be your own boss
•
Prestige of owning your own firm
Cruel Facts of Entrepreneurial Life
•
70% survive for 2 years
•
About 50% make it 5 years
•
Failures are due to lack of :
•
Funding
•
Business skills/planning
SBA Cares About Small Business
•
Small Business is important to our
Economy
•
More than 94% of all businesses in the
U.S. are classified as “Small Businesses”
•
Generate more than 50% of non-farm
GDP
SBA’s “Three Cs”
•
To Virginia’s small businesses we
provide:
1.
Sources for
Counseling
2.
Access to
Capital
3.
Government
Contracting
and
Business Development
SBA Lending Process
SBA Financing
•
SBA is a guarantor of loans made
by banks and other institutions
•
Up to 90% guarantees
•
SBA does not offer grants to
start or grow small businesses
SBA Loan Types
504 Loans 7(a) Loans
Use this for: Fixed assets and related soft costs only Working capital, fixed assets, refinance (if 10% cash flow savings).
Amounts: $5 million in many cases. $5 million maximum loan size.
Guarantee: 90% on SBA portion 50% - 90% depending on specific loan
Term: 10 or 20 years only. 25 years max fixed assets. 10 years max on working capital.
Eligibility:
Net worth below $15.0 million and net income for previous 2 years less than $5.0 million average (no sales or employee limitation)
Either on number of employees or annual sales (determined by industry).
Interest Rate: Fixed monthly by open market debenture sale
on Wall Street.
2.75% above prime interest rate or and usually variable
Participants: CDC, Lender, and the SBA. Funding comes from the Lender. SBA provides guaranty (up to 85%).
Fees: 2.65%, . 0.5% of 1st Mortgage amount to SBA. 2% SBA guaranty fee on loan up to $150,000. Up to 3.75% on higher amounts.
Capital – Results & Trends
Number of Loans Dollar Size of Loans 1 Full & Limitied Service Restaurants 1 Hotels & Motels
2 Child Day Care Services 2 Full & Limitied Service Restaurants 3 Hotels & Motels 3 Dentists
4 Dentists 4 Gas Stations with Convenience 5 Gas Stations with Convenience 5 Car Washes
6 Auto Repair 6 Child Day Care Services 7 Beauty Salon 7 Dry Cleaning
8 Convenience Stores 8 Convenience Stores 9 Fitness Centers 9 Machine Shops 10 Chiropracters 10 Auto Repair
Assistance Starting or Growing
•
Starting:
•
Developing a business plan
•
Accessing resources
•
Completing loan applications
•
Growing:
Virginia Resources
•
SBA District Office in Richmond
•
Resource Partners:
•
SCORE (Service Corp of Retired Executives)
•
Small Business Development Centers
•
Women’s Business Centers
•
Veteran’s Business Opportunity Centers
Plus Extended Resources that aren
’
t directly
Small Business Advantage
Category Goal
All Small Businesses 23%
• Women Owned Small Business 5% • Disadvantaged (8a) Businesses 5% • Service-Disabled Veteran Owned 3%
• The world’s largest buyer of goods and services.
• Over $425 billion a year.
• Federal agencies are required to establish small
business contracting goals.
Certifications
•
Formal SBA Certification Programs
•
8(a) Business Development Program
•
HUBZone Program
•
Self-certification Programs
Program Preference
•
There is no order of precedence among the 8(a)
BD, HUBZone, SDVO SBC or WOSB
programs.
•
SBA believes that Progress in fulfilling the
various small business goals, as well as other
factors such as the results of market research,
programmatic needs specific to the procuring
agency, anticipated award price, and the
8(a) Business Development Program
Purpose: The purpose of the 8(a) BD program is to assist eligible small disadvantaged business concerns compete in the American economy through business development.
Eligibility: A concern meets the basic requirements for admission to the 8(a) BD program if it is a
small business which is unconditionally owned and controlled by one or more socially and economically disadvantaged individuals who are of good character and citizens of and residing in the United States, and which
Historically Underutilized Business Zone (HUBZone)
Purpose: The purpose of the HUBZone program is to provide federal contracting assistance for qualified SBCs located in historically
underutilized business zones in an effort to
increase employment opportunities, investment, and economic development in such areas.
Eligibility: Its principal office must be located within a “Historically Underutilized Business Zone,” which includes lands considered “Indian Country” and military facilities closed by the Base Realignment and Closure Act and at least 35% of its employees must reside in a
HUBZone.
Service Disabled Veteran Owned (SDVO)
Purpose: To provide procuring agencies with the
authority to set acquisitions aside for exclusive competition among service-disabled veteran-owned small business concerns, as well as the authority to make sole source awards to
service-disabled veteran-owned small business concerns.
Eligibility: A concern must be at least 51% unconditionally and directly owned by one or more
service-disabled veterans who has a service-connected disability that has been determined by the
Women-Owned Small Business Program
(WOSB)
Purpose: The Women-Owned Small Business (WOSB) Federal Contract program authorizes
contracting officers to set aside certain federal contracts for eligible Women-owned small businesses (WOSBs) or Economically
disadvantaged women-owned small businesses (EDWOSBs). The goal of the program is to expand federal contracting opportunities for women-owned small businesses.
Eligibility: A firm must be at least 51% owned and controlled by one or more women, and primarily managed by one or more women. Type of Program: Contracting Program
