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Federal Resources for Small Businesses Lending

BusinessUSA implements a “no wrong door” approach for small businesses and exporters by using technology to quickly connect businesses to the services and information relevant to them, regardless of where the information is located or which agency’s website, call center, or office they go to for help. The website helps lenders and small businesses to quickly find the federal programs relevant to their efforts. BusinessUSA is an interagency initiative administered by the U.S. General Services Administration’s Office of Citizen Services and Innovation Technology.

U.S. Small Business Administration (SBA) - The SBA helps small business owners by providing the financial support, contracts, counseling and other forms of assistance they need to succeed.  Many of the SBA’s lending programs work with banks and other lenders. SBA's support programs include financial and federal contract procurement assistance, management assistance, and specialized outreach to women, minorities and armed forces veterans. SBA also provides loans to victims of natural disasters and specialized advice and assistance in international trade.

SBA 7(a) Loan Guaranty Program - This loan guaranty program is designed to help eligible small businesses obtain bank financing when they might not qualify for traditional financing. Loan proceeds may be used for most business purposes, including working capital, machinery and equipment, furniture and fixtures, land and buildings, leasehold improvements, and debt refinancing. SBA offers tips (PDF) for ensuring that 7(a) loan guaranty claims get paid in full.  Visit the SBA’s Web site for further information on participating in the SBA 7(a) program.

Regulated lenders can request guaranties through different procedures, based on the lender’s experience and comfort with SBA products and procedures, the lender’s level of authority provided by the SBA, and, in some circumstances, the size, type, and complexity of the loan being guaranteed.

Standard 7(a) loan processing is used by lenders originating a small number of SBA loans annually or by lenders with less familiarity with the program. Lenders submit a full application package when they request SBA guaranty. The SBA confirms the credit decision of the originating lender with its own analysis of the application.

The Certified Lenders Program (CLP) is for experienced, performing SBA lenders. The SBA provides expedited loan processing and services under this program. Lenders submit a full application package, just like in Standard 7(a) loan processing. Rather than re-analyzing the materials, however, the SBA confirms the credit decision of the originating lender.

The Preferred Lenders Program (PLP) is used by the most experienced SBA lenders. PLP lenders have delegated authority to process, close, service, and liquidate most SBA guaranteed loans without prior SBA review.

Express programs are processed similarly to the PLP. Qualified lenders have delegated authority to make the credit and eligibility decisions. The program allows lenders to utilize, to the maximum extent practicable, their respective loan analyses, procedures, and documentation. In return for the expanded authority and autonomy provided by the program, lenders agree to accept a maximum SBA guaranty of 50 percent.

Loans of $350,000 or less may be processed under 7(a) Small Loans. The lender can prescreen applications by submitting certain information to the SBA electronically. A credit score is issued. If the application receives an acceptable credit score, a shorter and simplified application for guaranty can be used. The SBA offers a number of specialized lending programs under the 7(a) umbrella.

The International Trade Loan Program offers up to $5 million in term loans for the acquisition, expansion, or improvement of fixed assets to businesses that plan to start or continue exporting, or that have been adversely affected by competition from imports. The proceeds of the loan must enable the borrower to be in a better position to compete.

Community Advantage is a pilot initiative aimed at increasing the number of SBA 7(a) lenders who reach underserved communities, targeting community-based, mission-focused financial institutions which were previously not able to offer SBA loans. Community Advantage makes loans up to $250,000 and is open to mission-focused lenders, including Community Development Financial Institutions, SBA’s Certified Development Companies and SBA’s nonprofit microlending intermediaries. Community Advantage lenders will be expected to maintain at least 60 percent of their SBA loan portfolio in underserved markets.

The following specialized lender programs can also be structured as revolvers.

CAPLines was reengineered in 2011 to help more small businesses finance contracts through a SBA revolving line of credit. CAPLines provides a path for small businesses to finance contracts while avoiding high-interest rates. There are four distinct loan programs under the CAPLine umbrella: Contract Loan Program; Seasonal Line of Credit Program; Builders Line Program; and Working Capital Line Program.

Export Working Capital Program provides lenders with up to a 90% guaranty on export working capital loans, so that the lenders will make the necessary export working capital available. Maximum loan amount is $5 million.

SBAExpress is designed to increase the number of smaller SBA loans by offering limited paperwork and processing times. Qualified lenders may make SBA eligibility determination. The program provides a 50% guaranty, and has a maximum amount of $350,000. The program is open to current SBA lenders meeting certain performance standards, or non-SBA lenders with a proven track record in small ($50,000 or less) business loans.

The Export Express offers flexibility and ease of use to both borrowers and lenders. It is the simplest export loan product offered by the SBA and allows participating lenders to use their own forms, procedures and analyses. The SBA provides an answer in 36 hours or less.

SBA 504 Certified Development Company Loan Program - The 504 Loan Program This program is a financing tool for small businesses that promotes economic development. The program accomplishes this by providing small businesses with long-term, fixed-rate financing for the acquisition of major fixed assets for expansion and modernization. Under the program, a lender partners with a certified development company (CDC), a specialized SBA-certified nonprofit corporation, to finance small businesses looking to expand. Each partner makes a loan to a qualifying small business. Typically, the lender’s loan is secured by a first lien covering 50 percent of a project’s cost. The CDC’s loan is secured by a second lien for up to 40 percent of the project’s cost and is also backed by a 100 percent SBA-guaranteed debenture. While there is no limit to total project size, for most businesses the maximum CDC loan (up to 40% of total project cost) is $5 million; for manufacturers it is $5.5 million. The borrower contributes equity of at least 10 percent of the project’s cost.

The SBA Microloan Program provides small, short-term loans to small business concerns and certain types of not-for-profit child-care centers. The SBA makes funds available to specially designated intermediary lenders, which are nonprofit community-based organizations with experience in lending as well as management and technical assistance. These intermediaries make loans to eligible borrowers. The maximum loan amount is $50,000, but the average microloan is about $13,000.

The Intermediary Lending Pilot Program (ILP) - The Small Business Jobs Act of 2010 (Section 1131) established this three year pilot program to provide direct loans to eligible non-profit intermediaries for the purpose of making small business loans of up to $200,000. Annually, the program anticipates awarding 20 grants of up to $1 million each to established non-profit intermediaries. Applications have been received for FY2011 and FY2012 awards.

Small Business Investment Companies (SBIC) - SBICs are privately owned and managed companies licensed by the SBA. The primary benefit of becoming a licensed SBIC is that once approve, the SBA provides a 2:1 public/private-funding match on the required minimum private capital, thereby leveraging the investor's initial equity contribution. Funds raised by SBICs are then invested in firms which meet the SBA's definition of small businesses.

U.S. Department of Treasury

The Small Business Lending Fund is a $30 billion fund that encourages lending to small businesses by providing Tier 1 capital to qualified community banks with assets of less than $10 billion. A map of participating lenders can be found here. Reports on the small business lending activity of the participants can be found here.

The State Small Business Credit Initiative is a $1.5 billion initiative that is expected to help spur up to $15 billion in lending to small businesses.  Under the State Small Business Credit Initiative, participating states will use the federal funds for programs that leverage private lending to help finance small businesses and manufacturers that are creditworthy, but are not getting the loans they need to expand and create jobs.  The State Small Business Credit Initiative will allow states to build on successful models for state small business programs, including collateral support programs, Capital Access Programs (CAPs), loan participation and loan guarantee programs, and venture capital programs.  Existing and new state programs are eligible for support.  Please see the SSBCI Resource Directory for more information. 

Community Development Finance Institutions Fund New Markets Tax Credit Program
Community Development Financial Institutions (CDFI) Fund
- The Treasury Department's CDFI Fund, established by the Riegle Community Development and Regulatory Improvement Act of 1994, expands the capacity of financial institutions to provide credit, capital, and financial services to underserved populations and communities in the United States. The CDFI Fund is the administrator of the NMTC program. The New Markets Tax Credit Program (NMTC Program) was established by Congress in 2000 to spur new or increased investments into operating businesses and real estate projects located in low-income communities. The NMTC Program attracts investment capital to low-income communities by permitting individual and corporate investors to receive a tax credit against their Federal income tax return in exchange for making equity investments in specialized financial institutions called Community Development Entities (CDEs). The New Markets Tax Credit (NMTC) Program provides information on the program, including eligibility and application materials.

U.S. Department of Agriculture – Business and Cooperative Programs

Business and Industry Guaranteed Loan Program - U.S. Department of Agriculture - The Business and Industry (B&I) Guaranteed Loan Program helps create jobs and stimulates rural economies by providing financial backing for rural businesses. This program provides guarantees up to 90 percent of a loan made by a commercial lender. Loan proceeds may be used for working capital, machinery and equipment, buildings and real estate, and certain types of debt refinancing. The primary purpose is to create and maintain employment and improve the economic climate in rural communities.

The Intermediary Relending Program is designed to alleviate poverty and increase economic activity and employment in rural communities. Under the IRP program, loans are provided to local organizations (intermediaries) for the establishment of revolving loan funds. These revolving loan funds are used to assist with financing business and economic development activity to create or retain jobs in disadvantaged and remote communities. Intermediaries are encouraged to work in concert with State and regional strategies, and in partnership with other public and private organizations that can provide complimentary resources.

The Community Facilities Program provide loans and grants and loan guarantees for water and environmental projects, as well as community facilities projects. Water and environmental projects include water systems, waste systems, solid waste, and storm drainage facilities. Community facilities projects develop essential community facilities for public use in rural areas and may include hospitals, fire protection, safety, as well as many other community-based initiatives.

Rural Business and Cooperative Service (RBCS) - The USDA's RBCS office provides financial assistance for rural businesses and also funding assistance for nonprofits or CDCs that in turn loan to rural businesses in their local area.

U.S. Department of Transportation

U.S. Department of Transportation Short Term Lending Program (STLP) - This program assists Disadvantaged Business Enterprises (DBE) in obtaining short-term working capital. The Short Term Lending Program (STLP) offers certified DBEs the opportunity to obtain short-term working capital at prime interest rates for transportation-related projects. The primary collateral consists of the proceeds of the contracts. Borrowings under the lines of credit are to meet the short-term costs of performing the contract(s) being financed.

Federal Resources to Increase Small Business Exports

National Export Initiative, announced January 27, 2010, has a goal of doubling small business exports by the end of 2014.  It is expected to support 2 million jobs.  

Export.gov brings together resources from across the U.S. Government to assist American businesses in planning their international sales strategies and succeed in today’s global marketplace.

The International Buyer Program recruits thousands of qualified foreign buyers, sales representatives, and business partners to U.S. trade shows each year, giving your exhibitors excellent opportunities to expand business globally. The next opportunity to apply to the program is expected to be in September 2013.

Free Trade Agreement Compliance Program - The U.S. Government vigorously monitors compliance with and enforces U.S. trade agreements. This ensures that American consumers, workers, businesses, investors, and farmers can take full advantage of the agreements. This process begins before a free trade agreement (FTA) goes into effect, and is part of the day-to-day operation of the agreement. 

The Export Import Bank of the United States is the official export credit agency of the United States. Ex-Im Bank's mission is to assist in financing the export of U.S. goods and services to international markets.  Ex-Im Bank enables U.S. companies — large and small — to turn export opportunities into real sales that help to maintain and create U.S. jobs and contribute to a stronger national economy.  Ex-Im Bank does not compete with private sector lenders but provides export financing products that fill gaps in trade financing. Ex-Im Bank assumes credit and country risks that the private sector is unable or unwilling to accept. Ex-Im Bank also helps to level the playing field for U.S. exporters by matching the financing that other governments provide to their exporters.  Ex-Im Bank provides working capital guarantees (pre-export financing); export credit insurance; and loan guarantees and direct loans (buyer financing). 

Ex-Im Bank Programs include:

The Working Capital Guarantee Program provides 90% guarantees on working capital loans made by commercial lenders that will help businesses to grow international sales and compete more effectively in the international marketplace.

The Global Credit Express Pilot Program is specially designed to provide short-term working capital loans to creditworthy small business exporters. Global Credit Express adds liquidity to the U.S. small business export market by financing the business of exporting rather than specific export transactions. This is a pilot program currently offered through a select number of Originating Financial Institutions (lenders) nationwide.

The Supply Chain Finance Guarantee, offered to lenders, benefits U.S. exporters and their suppliers through accounts receivable financing. It is designed to inject liquidity in the marketplace and provide suppliers, particularly small businesses, with access to capital faster and at a lower cost.

The Loan Guarantee Program provides guaranteed term loan financing to creditworthy international buyers for purchases of U.S. goods and services.  

The Direct Loan Program provides fixed rate loans to creditworthy international buyers for purchases of U.S. goods and services.

The Finance Lease Guarantee Program provides guaranteed lease financing of U.S. goods and services to creditworthy international lessees when financing is not otherwise available or applicable interest rates are not economically viable.  

Export Credit Insurance allows small businesses to increase export sales by limiting international risk, offering credit to international buyers, and enabling greater access to access working capital funds.

The Small Business Administration provides a number of resources to support small business exporting, including:

The Export Express program offers flexibility and ease of use to both borrowers and lenders. It is the simplest export loan product offered by the SBA and allows participating lenders to use their own forms, procedures and analyses. The SBA provides an answer in 36 hours or less.  Maximum loan amount is $500,000. 

Export Working Capital Program provides lenders with up to a 90% guaranty on export working capital loans, so that the lenders will make the necessary export working capital available.  Maximum loan amount is $5 million. 

The International Trade Loan Program offers term loans of up to $5 million for the acquisition, expansion, or improvement of fixed assets to businesses that plan to start or continue exporting, or that have been adversely affected by competition from imports. The proceeds of the loan must enable the borrower to be in a better position to compete. 

The State Trade and Export Promotion Grant (STEP) Program created by the Small Business Jobs Act, will provide grants to States for small business exporting assistance programs. The aim of the STEP Program is to increase the number of small businesses that are exporting and increase the value of exports for those small businesses that are currently exporting.  The STEP Grant Program is a 3-year pilot program that aims to increase the number of small businesses across America that are exporting goods or providing services.  States receiving STEP grants must use the money to carry out exporting programs that assist small businesses.   A total of $30 million is authorized for STEP grants for each of Federal fiscal years 2011, 2012 and 2013. 

U.S. Department of Agriculture (USDA)

USDA International Marketing Program offers an array of services that give buyers and sellers of agricultural products a competitive advantage in the global marketplace. 

USDA Foreign Agricultural Service Export Credit Guarantees underwrites credit extended by the private banking sector in the U.S. to approved foreign banks using dollar-denominated, irrevocable letters of credit to pay for food and agricultural products sold to foreign buyers.  The programs encourage exports to buyers in countries where credit is necessary to maintain or increase U. S. sales, but where financing may not be available without the guarantees.

Overseas Private Investment Corporation   

OPIC’s Small and Medium-Enterprise Financing is available for businesses with annual revenues under $250 million. OPIC Financing provides medium- to long-term funding through direct loans and loan guaranties to eligible investment projects in developing countries and emerging markets. The financing supports large-scale projects that require large amounts of capital, such as infrastructure, telecommunications, power, water, housing, airports, hotels, high-tech, financial services, and natural resource extraction industries. OPIC can also provide long-term working capital and multiple-year capital expenditure programs. The amount of capital needed for any project can be greater than one financial institution can provide on its own due to per-project limits or diversifications guidelines. As a result, OPIC works with other co-lenders, if necessary, to bring sufficient resources to a given project.