Microloan Program Overview and Application Process
Discover the Microloan Program, designed to support women, low-income individuals, veterans, and minority entrepreneurs. Learn about eligibility criteria, loan terms, and how to participate as an intermediary. Find out about SBA loan terms, interest rate structures, bank account requirements, and permitted MRF account transactions.
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Presentation Transcript
Microloan Program Purpose The Microloan Program assist women, low income individuals, veterans , and minority entrepreneurs and other small businesses in need of small financing assistance and business- based technical assistance.
Microloan Program Loan Side Basics Loans From SBA to Intermediary Lender Loans From Intermediary to Micro- Borrowers Grants for Technical Assistance to micro-borrowers.
SELECTION OF MICROLOAN PROGRAM PARTICIPANTS Applicant must be deemed both eligible to receive funding and qualified to administer the program.
Eligibility to Participate as an Intermediary 1. Have a minimum of one year of internal experience directly making and servicing loans of no more than $50,000. 2. Have at least one year of experience directly providing intensive marketing, management, and technical assistance 3. Be an eligible organization; 4. Located in the United States or its territories.
SBA Loan Terms & Conditions Term: 10 years Maximum loan to intermediary: $750,000 1st Year in Program $1,250,000 per year thereafter Maximum outstanding : $5 million Loans require a 15% non-Federal, non- borrowed cash match
Interest Rate Structure Based on the Cost of Funds 5- Years Treasury Rate (base rate) Discount Rate (2% or 1.25% depending on average loan size) Cost of Funds
SBA Bank Account Requirements 1. Intermediaries need three bank accounts: Microloan Revolving Fund (MRF) Account Loan Loss Reserve Fund (LLRF) Account Technical Assistance (TA) Account 2. Each subsequent loan from SBA requires two new accounts- a MRF and a LLRF account. 3. Any new grant funds may be deposited to the existing TA Bank Account
Permitted MRF Account Transactions To receive funds from SBA; To make payments to SBA; To disburse Microloans; To receive Microloan repayments; and To fund the Loan Loss Reserve Fund (LLRF)
Permitted LLRF Account Transactions 1. Deposit matching funds or other non-federal funds; 2. Transfer principal balance of charged off microloans from LLRF to MRF. Must never go below 15% of the outstanding balance of microloans owed
SBA Loan Closing Closings < = 120 Days of loan approval. Closing Documents at SBA HQ Disbursements made to Intermediary 2 years to take Disbursements if <=$750K 3 years to take Disbursements if > $750K
SBA Loan Disbursement Disbursements may be requested by email First disbursement on initial SBA loan up to 35% of approval. Subsequent disbursements after funding is committed. Generally, loans should be fully drawn down in no more than three requests. Requests may take up to 10 days to process. Disbursement request must include evidence of 15% matching fund deposit (to MRF or LLRF). 24 months from Date of Loan Authorization to take full disbursement (first year loan).
Collateral Requirement Microloan Principal Balance Outstanding MRF Account Balance LLRF Account Balance MUST BE greater than or equal to: 115% Debt Owed to SBA At All Times
SBA Loan Repayment First payment is deferred until 13th month after loan note date. Monthly payment amount is calculated as: The principal balance and interest amortized over 108 months. Loan Interest on disbursed funds during first year are accrued and then amortized over 108 months. Regular payments are generally debited on the 7th of each month. Other payments or final payments may be made via pay.gov or by check.
Technical Assistance (TA) Grants Limited to a maximum of 25% of the amount owed to SBA under the Microloan Program; Grant Match- 25% of the grant amount; HUD Block Grants may be used as matching funds; Grant Match Funding must be fully documented; Need not to be available at time of application.
Technical Assistance (TA) Grants Maximum $50,000 Grand funds during initial year of participation; Term of 1-year; 25% limit for TA to prospective Micro- borrowers; 25% limit to contracts with third parties; Grant budget may include SBA required staff training; 25% limit to marketing costs.
Contact Information For more information on SBA s programs and Services Please contact: Emma Wilson, Branch Manager (304) 347-5220 E-mail: emma.wilson@sba.gov Leo Lopez, Lender Relations Specialist E-mail: leo.lopez@sba.gov Rick Haney, Lender Relations Specialist (304) 623-7449 E-Mail: richard.haney@sba.gov Or, visit our office web site at: www.sba.gov/wv
