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U.S. Small Business Administration (SBA)ACCESS TO CAPITAL & FEDERAL CONTRACTING

PROCUREMENT, SUPPLY CHAIN & DBE DIVISIONSEPTEMBER 28, 2016

Philadelphia District Office

Parkview Tower

1150 1st Avenue, Suite 1001

King of Prussia, PA 19406

(610) 382-3062

www.sba.gov/pa

[email protected]

610 382-3077

Visit us at www.sba.gov 3Visit us at www.sba.gov 3

Agenda• SBA Programs and Services

– Technical Assistance (Counseling)

– Access to Capital (Capital)• 7a Loan program• Microloans• 504 Loan Program• Alternative Financing


Agenda

COUNSELING(Technical Assistance)

Visit us at www.sba.gov 5

Technical Assistance

• Free Consulting and Low-Cost Training

• Resource Partners– Small Business Development Centers

(SBDC) – www.pasbdc.org– Counselors to America's Small Business

(SCORE) – www.score.org– Women’s Business Centers (WBC)

• Small Business Training Network SBA Training Online


• Start – Up Businesses– Business Plan– Financial

Projections– Financing

Assistance

• Existing Businesses– Managing and Growing a

Business– Developing New Markets– Financing Assistance– Accounting Issues– Human Resources– Product Development– Patent Search– International Trade– And Much More…




General Courses– Write a Business Plan– Start Your Business– Manage Your Business– Exiting Your Business

Targeted Courses– Marketing– Computer Security– Building Your Website– International Trade– Small Business Tax Center

Small Business Training Online

“Anytime, Anywhere”

Small Business Learning Center



Technical AssistanceSmall Business Development Centers

1. BucknellUniversity(E)2. Clarion University(EW)3. Duquesne University(W)4. Gannon University(W)5. Indiana University of PA (W)6. Kutztown University(E)7. Lehigh University(E)8. Lock Haven University(E)9. Penn State University (EW)10. Saint Francis University(EW)11. Saint Vincent College(W)12. Shippensburg University(E)13. Temple University(E)14. University of Pittsburgh(W)15. University of Scranton(E) 16. University of PA: Wharton School of Business(E) 17. Widener University(E)18. Wilkes University(E)

Philadelphia DistrictPittsburgh District

www.pasbdc.org

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Philadelphia District Counties not shown:• Clinton • Fulton• Huntingdon • Juniata• Mifflin • Potter


www.SCORE.org


Women’s Business Centers

Assets Lancaster Women’s Business Center100 South Queen StreetLancaster, PA 17603

Women’s Business Development Center 1315 Walnut Street, Suite 1116Philadelphia, PA 19107

Seton Hill University E-Magnify1 Seton Hill DriveGreensburg, PA

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Agenda

CAPITAL(Access To Capital)


What Lenders Look For• 5 Cs of Credit

– Character• Background, Education,

Experience, Credit

– Capacity• Source of Repayment:

– Collateral• Assets you own

– Capital • Money you have invested

– Conditions • Your Industry


Information for Loan Application• Have you or the business ever filed

for bankruptcy?• Do you have any pending legal

issues?• Do you have any outstanding child

support?• Have you ever defaulted on any

federal contract or loan?• Do you have proof of owner equity?• Have you completed a business

plan with 2 years of financial projections?

• Have you had 3 or more months of sales or do you have contracts for future sales?

• Did your business make a profit last year?

• Do you have formal training/experience in your field of business?

• Have you had any personal or business bank accounts with checks returned due to insufficient funds?

• Will a credit report show that you have been current with creditors over the past 2 years?

• Have you addressed any derogatory statements on your credit report?


What Lenders Look For


Information for Loan ApplicationBusiness Information• Name of Business• Address of Business• Business Phone Number• Names of Principals and Percent

Ownership of each• Type of Business and Structure• Description of Business• Amount of Loan Request• Purpose of Loan Proceeds

– Working Capital– Inventory– Equipment– Supplies– Other

Personal Information• Name• Address• Residence Phone Number• Email Address• SSN• DOB• Experience• Citizenship• Adjusted Gross Income• Source of Income• Assets

– Cash, Savings, Insurance, etc.– Vehicles




Information for Loan ApplicationReal Estate Information• Address• Mortgage Holder• Market Value• Date of Purchase and Purchase

Price• Mortgage Value• Any 2nd MortgagesLiabilities• Personal Loans and Student Loans• Mortgages• Vehicle Loans• Unpaid Taxes• Credit Cards• Pending Lawsuits• Other

Additional Information• If a Franchise – Universal Franchise

Offering Circular• Additional Franchise Information• Copy of Lease or Letter of

Commitment• Resumes of Principals• Use of Proceeds• Personal Financial Statements• Tax Returns for 3 YearsIf Purchasing an Existing Business• 3 Years Tax Returns for Business• Profit and Loss and Balance Sheet

to within 60 Days of Application• Copy of Purchase Agreement or

Letter of Intent to PurchaseVisit us at www.sba.gov 17



Access to Capital• Grants NOT available from SBA• The SBA is not a direct lender.• SBA offers loan guarantees to lenders

– Partial refund for failed loan– Lender obtains guarantee

• Lenders handle all loan transactions– Application– Approval– Disbursement– Servicing– Collection (Liquidation)


Access to Capital

So why would a lender use an SBA Guarantee??


Access to CapitalLoan Application Process

Loan Application

YES –Bank will do loan

commercially

NO –Bank will not do

the loan commercially

SBA –Bank won’t do loan commercially, but WILL do loan with

SBA guarantee


Access to Capital

• Not all loans are eligible for an SBA Guarantee

• The SBA-Guaranteed Loan Program mitigates risk to the lender

• If the lender cannot originate the loan conventionally – the lender can consider an SBA guarantee


Access to Capital

Primary reasons a lender would consider using the SBA loan guarantee:

• Start-ups

• Insufficient collateral

• Non-standard repayment terms

• Industry risk


Ineligible Businesses

• Non-Profit Organizations

• Religious Organizations

• Charitable Organizations

• Lending Activities

• Gambling or Speculation

• Real Estate Investment• Pyramid Sales • Illegal Activities• Religious Schools• Prurient Sexual Material

• Prior Loss To The Gov’t: Owners who defaulted on federal loan or federally-assisted financing


SBA Programs

• 7(a) Guarantee Loan Program– SBA Express– Veteran’s Advantage– CAPLine Program– Export Programs – Community Advantage

• 504 Program• Microloan Program


7(a) Program • Eligibility

Independently owned and operated

Small business based on Federal standards (NAICS code or alternative size standard)

– Maximum Size Restriction Examples• Wholesaling - ≤ 100 Employees• Retail/Service – Avg. Sales $4.5 million to $32.5 million • Manufacturing - ≤ 500 Employees• Construction - $14 million to $33.5 million

– Alternative Size Standard • Tangible Net Worth < $15 million• Two year Avg. of Net Income up to $5 million


7(a) Program

Use of Proceeds– Working capital (day-to-day)– Inventory– Lines of credit– Furniture/Fixtures/Equipment– Refinance debt for compelling reasons– Expansion/Renovation– Leasehold improvements– Land or buildings

(Purchase/Construction/Refinance)


7(a) Program • Loan Amount

– Maximum of $5 Million (gross)• Guarantees

– ≤ $150,000 = 85%• Maximum $127,500

– > $150,000 = 75%• Maximum Guarantee of

$3.75 Million• Terms

– Usually up to 10 years for working capital– Usually up to 10-15 years for equipment– Up to 25 years for real estate


7(a) Program • SBA Guarantee Fees

– Can be included in loan– Calculated on guaranteed portion of loan

• Maturity ≤1 year – 0.25%– ≤$150,000 = 0% (until 9/30/2016)

• Maturity >1 year– ≤$150,000 = 0% (until 9/30/2016)– $150,000 - $700,000 = 3%– >$700,000 = 3.5%

• Guarantee ≥ $1,000,000– Additional 0.25%

Only on guaranteed

portion –not

total loan amount


7(a) Program • Interest Rates

– Determined by lender (Negotiable)– Maximum variable interest rate:

• < 7 Year Term = [Prime + 2.25%] • ≥ 7 Year Term = [Prime + 2.75%]• Loan ≤ $25K

– Additional 2%• Loan $25K - $50K

– Additional 1%• Higher rates may apply for Express programs

– Prepayment penalty • Maturity > 15 years and prepaid during 1st 3 years


Community Advantage • Selected lenders providing Technical Assistance and

Economic development support in underserved markets– Certified Development Companies – SBA Microlenders– Community Development Financial Institutions

• Loans ≤ $25,000– No collateral required

• Technical Assistance– May be provided at Lender’s discretion


• Use of Proceeds– Same as 7(a) – Subprogram of 7(a)

• Loan Amount– Maximum $250,000

• Guarantee– Same as 7(a)

• Maximum Variable Interest Rates– Prime + 6%

Community Advantage


Microloan Program

• Accessed through SBA Microlenders 12 in Eastern Pennsylvania– Microlenders Borrow Dollars from SBA and

Lend Directly to Borrowers– Use of Proceeds

• Working Capital• Machinery and Equipment/Inventory • Leasehold Improvements• *Cannot be used for down payment to

purchase real estate or LOC• TECHNICIAL Assistance


Microloan Program• Small Dollar Amount Loans

– $500 to $50,000• Eligibility

– Generally the same as 7(a) Criteria• Maturity

– Short-term, Not to Exceed 6 Years• Fixed Interest Rates

– Negotiable– Loans ≤ $10,000 = Cost of Funds + 8.5% (Max)– Loans > $10,000 = Cost of Funds + 7.75% (Max)


SBA Microlenders

Microloan Program

Community First Fund | 30 W. Orange St. Lancaster, PACounties: Adams, Berks, Chester, Cumberland, Dauphin, Franklin, Lancaster, Lehigh, Lebanon, Montgomery, Northampton, Perry & York.

Finanta | 1301 N. 2nd St., Philadelphia, PACounty: Philadelphia

Cooperative Business Assistance Corporation328 Market St., Camden, NJ | County of Operation: Philadelphia

First State Community Loan Fund 100 W. 10th St., Ste. 1005, Wilmington, DE 19801Counties: Chester & Delaware.

MetroAction, Inc. | 222 Mulberry St., Scranton, PA Counties: Carbon, Lackawanna, Luzerne, Monroe, Pike, Schuylkill, Susquehanna, Wayne & Wyoming.

North Central Penn. Regional Planning & Development Commission651 Montmorenci Rd., Ridgway, PACounties: Cameron, Clearfield, Elk, Jefferson, McKean & Potter.

The Enterprise Center Capital Corporation4548 Market St., Philadelphia, PA | Counties: Delaware, Montgomery, Philadelphia.

Women’s Opportunities Resource Center2010 Chestnut St., Philadelphia, PACounties of Operation: Bucks, Chester, Delaware, Montgomery & Philadelphia.

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504 Program

• Long-term financing program– Land– Buildings– Capital Equipment

• Access through CDC(Certified Development Company)

– 11 in Pennsylvania


504 Program • Business Eligibility

– For Profit– ≤ 500 Employees

ORTangible Net Worth ≤ $15 million and Net Income After Taxes ≤ $5 million

– Job creation requirement (CDC Portfolio)

• Max 504 Loan Amounts– $5.5 million for Manufacturing/Energy

Improvements - $13,750,000 project– $5.0M for All Other Industries –– $12,500,000 project


Certified Development CompaniesAltoona-Blair County Dev. Corp.

Altoona, PA | Area of Operation: Statewide Pennsylvania

Northeastern Economic Development Company Moosic, PA | Area of Operation: Statewide Pennsylvania

DelVal Business Finance Corp.Philadelphia, PA | Area of Operation: Statewide Pennsylvania

EDC Finance CorporationLancaster, PA | Area of Operation: Statewide Pennsylvania

Lehigh Valley Economic Development CorporationBethlehem, PA Area of Operation: Statewide Pennsylvania

Mid-Atlantic Business Finance CompanyGlen Burnie, MD | Area of Operation: Bucks, Chester, Delaware, Lancaster, Montgomery, Philadelphia and York counties.

NEPA AlliancePittston, PAArea of Operation: Carbon, Lackawanna, Luzerne, Monroe, Pike, Schuylkill and Wayne counties.

Pennsylvania Community Development& Finance CorporationReading, PA | Area of Operation: Statewide Pennsylvania

SEDA-COG Local Development CorporationLewisburg, PA | Area of Operation: Statewide Pennsylvania; concentrating on Centre, Clinton, Columbia, Juniata, Mifflin, Northumberland, Lycoming, Perry, Union and Snyder counties.

SEED Co.Exton, PA | Area of Operation: Statewide Pennsylvania

The 504 CompanyPhiladelphia, PA Area of Operation: Statewide Pennsylvania

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Options• Factoring

– Sell your receivables– Receive 80% - 90% of value up front– Receive remainder when invoices are paid– Interest rates are usually 18% - 30%.

• Lease-Back– Sell your real estate/equipment for cash– Lease real estate/equipment back


Alternative Financing

Options• Cash Advances

– Business receives a lump sum from lender– Lender receives a percentage of daily

receipts until loan and fees are paid in full

• Non-Bank Loans– Available through alternative lending

organizations (non-banks)– Interest rates can be as high as 20%.


Alternative Financing


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Federal Government:Getting Started with

CertificationsJennifer Tilden

Lead Business Opportunity SpecialistPhiladelphia District Office

[email protected]

First Thing To Do

Obtain a Data Universal Number System (DUNS) Numberwww.dnb.com/us

DUNS Number can be obtained free-of-charge at time of SAM registration (see next slide)

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System for Award Management (SAM)www.sam.govMust keep current (updated at least annually)

Replaces both Central Contractor Registration Database (CCR) (www.ccr.gov) and Online Representations and Certifications Application (ORCA) (https://orca.bpn.gov/)

Will eventually include other systems as well – single point of entry for federal contracting

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Register Your Business

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Self-Certifications•Small Business – NAICS Codes*•Woman-owned Business•Veteran-owned Business•Service Disabled Veteran-owned Business•Small Disadvantaged Business (SDB)

Formal Certification Programs•8(a) Business Development: Socially and economically disadvantaged firms enrolled in a 9-year business development program•HUBZone: Small businesses located in areas identified as historically underutilized business zones, and with 35% of its employees living in HUBZones

*online at www.sba.gov/sites/default/files/Size_Standards_Table.pdf

Federal Contract Certifications

WOSB Program

45Visit us at www.sba.gov

Two parts: WOSB and EDWOSB (Economically Disadvantaged)

Set-Aside – sole source contracts available

No maximum contract value

Not all NAICS codes are eligible

Can self-certify or use a third-party certifier

FAR 19.15

Veteran-Owned Small Business

Only exists within the Veteran’s Administration!

Go to Vet Biz for more information on how to register for these set asides, or we can offer some help navigating the process

PTACs are a GREAT resource for working through the VA paperwork, and they’re free!

Temple University

Lehigh

UPenn

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Veteran’s Program


Applies to purchases over $3,000

Self Certified on SAM VA determines Service Disability

No term limits Competitive and sole-source program benefits Subcontracting and Prime Contracting goals FAR 19.14

Service Disabled Veteran Owned Small Business

Small Disadvantaged Business

Much like a state MBE

Business faces challenges above and beyond size, including race or handicap

Self certify on SAM for SDB status

All 8(A) businesses are SDB, not all SDB are 8(A)

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Visit us at www.sba.gov49

Formal Certifications

Requires SBA Approval– 8(a) - Socially and economically disadvantaged firms enrolled in a 9-year business development program.

– HUBZone - Small businesses located in areas identified as historically underutilized business zones,and with 35% of its employees living in HUBZones.

8(a) Overview

Applies to all purchases Must be certified by the SBA Non- and competitive programs 9-year term - no renewals All 8(a) firms are SDBs Award must be made at fair market price FAR 19.8

Visit us at www.sba.gov50

HUBZone Program


Applies to purchases over $3,000 Must be certified by SBA - no term limits Recertification required every 7 years Competitive and sole-source program benefits 10% price evaluation preference Principal office must be in a HUBZone 35% of employees must live in a HUBZone FAR 19.13

Goal Achievement

Small Business (23%)

WOSB (5%)

SDB/8(a) (5%)

SDVOSB (3%)

HUBZone (3%)

FY 2013 23.39%($83.1 B)

4.32%($15.4 B)

8.61%($30.6 B)

3.38%($12.0 B)

1.76%($6.2 B)

FY 2012 22.25%($89.9 B)

4.00%($16.2 B)

8.00%($32.3 B)

3.03%($12.3 B)

2.01%($8.1 B)

FY 2011 21.65%($91.5 B)

3.98%($16.8 B)

7.67%($32.4 B)

2.65%($11.2 B)

2.35%($9.9 B)

FY 2010 22.66%($97.9 B)

4.04%($17.5 B)

7.95%($34.4 B)

2.50%($10.8 B)

2.77%($12.0 B)

FY 2009 21.89% ($96.8 B)

3.68% ($16.3 B)

7.57% ($33.5 B)

1.98% ($8.8 B)

2.81% ($12.4 B)

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Know the Rules

Federal Acquisition Regulations (FAR)www.acquisition.gov/far

Subpart 8.4 – Federal Supply Schedules

Part 13 – Simplified Acquisitions

Part 14 – Sealed Bidding

Part 15 – Contracting by Negotiation

Part 19 – Small Business Programs

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Prime Contract Opportunities

Research Past Purchases‒ GSA Federal Procurement Data System

https://www.FPDS.gov

Identify Current Procurement Opportunities‒ Federal Business Opportunities (FBO)

www.fbo.gov

Subcontracting Opportunities

Directory of Large Prime Contractorshttp://www.sba.gov/category/navigation-structure/contracting/contracting-opportunities/sub-contracting/subcontracting-opportunities-directory

System for Award Management (www.sam.gov)Search by NAICSUse this list to search Federal Procurement Data System

(www.fpds.gov)FPDS identifies companies winning contracts

SUB-Nethttp://web.sba.gov/subnet

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SUBNet

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Investigate GSA Schedule ContractsContracts with no dollars committedMost terms negotiated up frontMay not be the best route for small businesses.

Become a GSA schedule contractor

www.gsa.gov

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GSA Schedules

Investigate Joint Venture/Teaming Arrangements

‒Excluded from affiliation – 13 CFR 121.103(f)(3)

‒“bundled” requirement

‒other than a “bundled” requirement

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Joint Ventures & Teams

Market Your Firm

Present your capabilities directly to the federal activities and large prime contractors that buy your products and services

Attend procurement conferences and business expos

Attend Business Matchmaking events

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Be Remembered-- Be Fabulous!….

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Capability Statement

Capabilities: type of work you can do Facilities & Equipment: List all facilities, equipment and

resources used to manufacture your products or provide your services Expertise: A brief summary of your expertise and key staff

expertise Codes: List your CAGE Code, NAICS, FSC/PSC, DGS vendor

number Certifications: Give your special business status and GSA

number if you have one Customers: Provide a list of at least three to four of your key

customers

3 Rules for a solicitation:

-Read it…Read it…Read it!!!

-Pay attention to contract clauses

Request a Procurement History

Attend Pre-Bid Meetings

& Walk-Throughs

Get clarification of ambiguities

Proofread your proposal

Submit it on time!62

Prepare Your Offer

Helpful Web Sites

Agency Small & Disadvantaged Business Utilization Offices

www.osdbu.gov

Procurement and Technical Assistance Centerswww.sellingtothegovernment.net

Small Business Development Centerswww.sba.gov/sdbc/

SBA’s Government Contracting Pagewww.sba.gov/GC

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Things To Remember

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TARGET YOUR CUSTOMER: Who buys your product or service? How do they buy? When do they buy?

KNOW THE RULES: Federal Acquisition Regulations; Contract requirements and specifications; How to obtain contract history

PERFORM AS PROMISED: On-time delivery, Good Quality, at a Fair Price

Questions?

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Documents

U.S. Small Business Administration (SBA) ACCESS TO …m.septa.org/business/dbe/pdf/2016-09-access-to-capital... · U.S. Small Business Administration (SBA) ACCESS TO CAPITAL & FEDERAL