U.S. Small Business Administration (SBA)

ACCESS TO CAPITAL & FEDERAL CONTRACTING PROCUREMENT, SUPPLY CHAIN & DBE DIVISION SEPTEMBER 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

Agenda • SBA Programs and Services – Technical Assistance (Counseling) – Access to Capital (Capital) • • • •

7a Loan program Microloans 504 Loan Program Alternative Financing

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Agenda

COUNSELING (Technical Assistance)

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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 Visit us at www.sba.gov

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Technical Assistance • 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… Visit us at www.sba.gov

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Technical Assistance Small Business Training Online General Courses – – – –

Write a Business Plan Start Your Business Manage Your Business Exiting Your Business

Targeted Courses

“Anytime, Anywhere”

– – – – –

Visit us at www.sba.gov

Marketing Computer Security Building Your Website International Trade Small Business Tax Center 7

Small Business Learning Center

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Technical Assistance Small Business Development Centers Pittsburgh 1. Bucknell University (E) District 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) Visit us at www.sba.gov 18. Wilkes University (E)

Philadelphia District

www.pasbdc.org 9

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

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www.SCORE.org

Visit us at www.sba.gov

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Women’s Business Centers

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Assets Lancaster Women’s Business Center 100 South Queen Street Lancaster, PA 17603

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

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Seton Hill University E-Magnify 1 Seton Hill Drive Greensburg, PA

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Agenda

CAPITAL (Access To Capital)

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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 Visit us at www.sba.gov

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What Lenders Look For Information for Loan Application • • • • • •

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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?

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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?

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What Lenders Look For Information for Loan Application Business 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

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What Lenders Look For Information for Loan Application Real Estate Information • Address • Mortgage Holder • Market Value • Date of Purchase and Purchase Price • Mortgage Value • Any 2nd Mortgages Liabilities • 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 Years If 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 Purchase

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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) Visit us at www.sba.gov

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Access to Capital

So why would a lender use an SBA Guarantee?? Visit us at www.sba.gov

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Access to Capital Loan 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 Visit us at www.sba.gov

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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 Visit us at www.sba.gov

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Access to Capital Primary reasons a lender would consider using the SBA loan guarantee: • Start-ups • Insufficient collateral • Non-standard repayment terms • Industry risk

Visit us at www.sba.gov

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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 Visit us at www.sba.gov

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SBA Programs • 7(a) Guarantee Loan Program – SBA Express – Veteran’s Advantage – CAPLine Program – Export Programs – Community Advantage • 504 Program • Microloan Program

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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

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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) Visit us at www.sba.gov

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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 Visit us at www.sba.gov

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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

Only on guaranteed portion – not total loan amount

– Additional 0.25% Visit us at www.sba.gov

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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

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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

Visit us at www.sba.gov

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Community Advantage • 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% Visit us at www.sba.gov

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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 Visit us at www.sba.gov

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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) Visit us at www.sba.gov

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Microloan Program SBA Microlenders 1 Community First Fund | 30 W. Orange St. Lancaster, PA Counties: Adams, Berks, Chester, Cumberland, Dauphin, Franklin, Lancaster, Lehigh, Lebanon, Montgomery, Northampton, Perry & York. 2

Finanta | 1301 N. 2nd St., Philadelphia, PA County: Philadelphia 3

Cooperative Business Assistance Corporation 328 Market St., Camden, NJ | County of Operation: Philadelphia 4

First State Community Loan Fund 100 W. 10th St., Ste. 1005, Wilmington, DE 19801 Counties: Chester & Delaware. MetroAction, Inc. | 222 Mulberry St., Scranton, PA Counties: Carbon, Lackawanna, Luzerne, Monroe, Pike, Schuylkill, Susquehanna, Wayne & Wyoming. 5

6 North Central Penn. Regional Planning & Development Commission 651 Montmorenci Rd., Ridgway, PA Counties: Cameron, Clearfield, Elk, Jefferson, McKean & Potter. 7 The Enterprise Center Capital Corporation 4548 Market St., Philadelphia, PA | Counties: Delaware, Montgomery, Philadelphia. 8 Women’s Opportunities Resource Center 2010 Chestnut St., Philadelphia, PA Counties of Operation: Bucks, Chester, Delaware, Montgomery & Philadelphia.

Visit us at www.sba.gov

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

• Access through CDC (Certified Development Company) – 11 in Pennsylvania Visit us at www.sba.gov

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504 Program •

Business Eligibility – For Profit – ≤ 500 Employees OR Tangible Net Worth ≤ $15 million and Net Income After Taxes ≤ $5 million – Job creation requirement (CDC Portfolio)

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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

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Certified Development Companies 1

Altoona-Blair County Dev. Corp. Altoona, PA | Area of Operation: Statewide Pennsylvania 2 Northeastern Economic Development Company Moosic, PA | Area of Operation: Statewide Pennsylvania 3

DelVal Business Finance Corp. Philadelphia, PA | Area of Operation: Statewide Pennsylvania 4 EDC Finance Corporation Lancaster, PA | Area of Operation: Statewide Pennsylvania 5 Lehigh Valley Economic Development Corporation Bethlehem, PA Area of Operation: Statewide Pennsylvania 6 Mid-Atlantic Business Finance Company Glen Burnie, MD | Area of Operation: Bucks, Chester, Delaware, Lancaster, Montgomery, Philadelphia and York counties. 7

NEPA Alliance Pittston, PA Area of Operation: Carbon, Lackawanna, Luzerne, Monroe, Pike, Schuylkill and Wayne counties. 8 Pennsylvania Community Development & Finance Corporation Reading, PA | Area of Operation: Statewide Pennsylvania 9 SEDA-COG Local Development Corporation Lewisburg, PA | Area of Operation: Statewide Pennsylvania; concentrating on Centre, Clinton, Columbia, Juniata, Mifflin, Northumberland, Lycoming, Perry, Union and Snyder counties. 10 SEED Co.

Exton, PA | Area of Operation: Statewide Pennsylvania 11 The 504 Company

Philadelphia, PA Area of Operation: Statewide Pennsylvania

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Alternative Financing 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 Visit us at www.sba.gov

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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%. Visit us at www.sba.gov

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Visit us at www.sba.gov

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Federal Government: Getting Started with Certifications Jennifer Tilden Lead Business Opportunity Specialist Philadelphia District Office 610-382-3083 [email protected] 41

First Thing To Do  Obtain a Data Universal Number System (DUNS) Number

www.dnb.com/us  DUNS Number can be

obtained free-of-charge at time of SAM registration

(see next slide)

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Register Your Business System for Award Management (SAM) www.sam.gov Must 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 43

Federal Contract Certifications  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

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

WOSB Program 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

Visit us at www.sba.gov 45

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

Service Disabled Veteran Owned Small Business  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 Visit us at www.sba.gov 47

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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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.

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Visit us at www.sba.gov

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

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Visit us at www.sba.gov

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

Visit us at www.sba.gov 51

Goal Achievement Small Business (23%)

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WOSB (5%)

SDB/8(a) (5%)

SDVOSB (3%)

HUBZone (3%)

FY 2013

23.39% 4.32% 8.61% 3.38% 1.76% ($83.1 B) ($15.4 B) ($30.6 B) ($12.0 B) ($6.2 B)

FY 2012

22.25% 4.00% 8.00% 3.03% 2.01% ($89.9 B) ($16.2 B) ($32.3 B) ($12.3 B) ($8.1 B)

FY 2011

21.65% 3.98% 7.67% 2.65% ($91.5 B) ($16.8 B) ($32.4 B) ($11.2 B)

FY 2010

22.66% 4.04% 7.95% 2.50% 2.77% ($97.9 B) ($17.5 B) ($34.4 B) ($10.8 B) ($12.0 B)

FY 2009

21.89% 3.68% 7.57% 1.98% ($96.8 B) ($16.3 B) ($33.5 B) ($8.8 B)

2.35% ($9.9 B)

2.81% ($12.4 B)

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 53

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

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Subcontracting Opportunities  Directory of Large Prime Contractors http://www.sba.gov/category/navigation-structure/contracting/contracting-opportunities/subcontracting/subcontracting-opportunities-directory

 System for Award Management (www.sam.gov) Search by NAICS Use this list to search Federal Procurement Data System (www.fpds.gov) FPDS identifies companies winning contracts

 SUB-Net http://web.sba.gov/subnet 55

SUBNet

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GSA Schedules Investigate GSA Schedule Contracts Contracts with no dollars committed Most terms negotiated up front May not be the best route for small businesses.

Become a GSA schedule contractor www.gsa.gov

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Joint Ventures & Teams 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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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

Prepare Your Offer  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 62

 Submit it on time!

Helpful Web Sites  Agency Small & Disadvantaged Business Utilization Offices www.osdbu.gov

 Procurement and Technical Assistance Centers www.sellingtothegovernment.net

 Small Business Development Centers www.sba.gov/sdbc/

 SBA’s Government Contracting Page www.sba.gov/GC 63

Things To Remember  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

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Questions?

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