The business must be "small" as defined in the SBA code
Businesses whose desired credit is not available on reasonable terms from Non-Federal sources
For Profit operating businesses such as
Hotels,Motels,Trailer Parks(R.V. Parks), campgrounds
Residential Care Facilities such as nursing homes
Equipment rental businesses
Antique Malls, Office Suites, Marinas, equestrian centers
Independent Contractor agents of insurance companies
Retail operations
Manufacturing operations
Service Operations
Wholesale Operations

Non-Profit Businesses
Businesses Engaged In Lending
Passive Holder of Real or Personal Property
Life Insurance Companies
Businesses located in a foreign country
Alien owned businesses
Businesses selling through a pyramid plan
Businesses engaged in gambling
Illegal Businesses
Businesses Which Restrict Patronage
Government owned entities
Businesses Engaged in Promoting Religion
Consumer and Marketing Cooperatives
Businesses Engaged in Loan Packaging
Businesses Owned by Persons of Poor Character
Businesses Providing Prurient Sexual Material
Businesses with Prior Loss to the Government
Political or Lobbying Activities

1. Working Capital
2. Accounts Receivable
3. Inventory
4. Refinancing or Restructuring debt
5. Machinery, Equipment, Furniture, Fixtures with useful life less than 10 years
unless minor part of the total project cost and essential to the business

10 or 20 years depending on the useful life of the assets
Interest rate fixed for term of the loan

Debenture rate at 100% on debenture balance 1st year
For 20 year:Declining by 10% each year…No prepayment after ten years
For 10 year Declining by 20% each year…No prepayment after five years

10 year loan is based on the five year treasury
20 year loan is based on the 10 year treasury
Spread is approximately 1 point over the treasury
Rate is determined two days prior to funding

Personal guarantees of anyone owning 20% or more of operating company
Or owners of 20% or more of Eligible Passive Concern

Adequate cash flow from operations to pay debt
Adequate working Capital
Sufficient Collateral

For Operating Company and Passive Company and Affiliates
Tangible Net Worth $7 million or less
Profits after tax $2.5 million or less (average last two years)

If neither of the above then
7a standards for small business annual sales
or number of employees based on the NAICS code

If in Labor Surplus Area
Tangible Net Worth and Profit after tax may be increased by 25%
$8.75 million and $3.125 million respectively

1 job retained or created per $35,000 of gross debenture financing
If lower job impact then may be eligible if meet one of either Public Policy Goal
or Community Impact Goal.

1. Improve, diversify, stabilize a local community's economy
2. Stimulate other Business Development
3. Bring a new income into the community
4. Assist Manufacturers (SIC codes 20-49)
5. Assist Businesses in labor surplus areas

1. Revitalizing a business district of a community with a written revitalization or redevelopment plan
2. Expand exports
3. Expand minority enterprise development
4. Aid rural development (population under 20,000)
5. Increase productivity & competiveness (retooling, robotics, modernization, competition with imports)
6. Modernize or upgrade facilities to meet health, safety, and environmental requirements
7. Assist businesses affected by Federal Budget reductions, including base closings, either because of loss of federal contracts or the reduction of revenues due to a decreased federal presence
8. Veteran ownership
9. Women ownership

Applies to 20% or more ownership, only computed for each owner…NOT cumulative
(Husband and wife are considered one owner)

Total Financing Package including : 1st mortgage, Gross debenture, borrower equity, any subordinated financing, working capital, equipment, furniture and fixtures, refinancing of first mortgage

The owner may have liquid assets no greater than the following
If Total Financing Package is
$250,000 or less …                         The greater of $100,000 or 2 x The Total Financing Package
$250,000 through $500,000…        The greater of $500,000 or 1.5 x The Total Financing Package
$500,001 or greater                         The greater of $750,000 or 1 x The Total Financing Package

Liquid Assets include:
1. Cash
2. Marketable Securities
3. Savings, CD's, Money Market Accounts
4. Publicly traded stocks, bonds
5. Cash surrender value of unencumbered life insurance

Liquid assets in excess of the above amounts are to be injected into the project as owner equity