Title: Financing Value-Added Ag Ventures
1- Financing Value-Added Ag Ventures
- Gail Gesell
2Sources of Small Business Financing
- Self-funding
- Expand current business
- Re-direct to new niche
3DogDayz Playhouse and Retreat
4Sources of Small Business Financing
- R D
- Grants
- Cooperative Agreements
5Small Business Innovative Research
- Department of Agriculture
- Department of Commerce
- Department of Defense
- Department of Education
- Department of Energy
- Department of Health and Human Services
- Department of Transportation
- Environmental Protection Agency
- National Aeronautics and Space Administration
- National Science Foundation
6SBIR
- Qualifications
- American-owned and independently operated
- For-profit
- Principal researcher employed by business
- Company size limited to 500 employees
7Three Phases
- Phase I - startup phase
- Up to 100,000
- 6 months
- explore technical merit or feasibility of
idea/technology - Phase II
- Up to 750,000
- 2 years
- Phase III
- Phase II innovation moves from the laboratory
into the marketplace - No SBIR funds support this phase. The small
business must find funding in the private sector
or other non-SBIR federal agency funding.
8Access to SBIR Money
- Pre-Solicitation Announcement (PSA) - single
source for the topics and anticipated release and
closing dates for each agency's solicitations - US Small Business Administration Office of
Technology 409 Third Street, SW Washington, DC
20416 (202) 205-6450
9Sources of Small Business Financing
10- FedBizOpps.gov is the single government
point-of-entry (GPE) for Federal government
procurement opportunities over 25,000 - Government buyers publicize their business
opportunities by posting information directly to
FedBizOpps via the Internet - FedBizOpps (FBO) single portal for commercial
vendors seeking Federal markets for their
products and services search, monitor and
retrieve opportunities solicited by the entire
Federal contracting community -
-
11Sources of Small Business Financing
- Angel funds
- Venture capital
12Sources of Small Business Financing
- Receivables factoring
- Equipment financing
13Sources of Small Business Financing
- Loan from financial institution
- Line of credit
- Term loan
14SBA Guaranteed Loan Programs
- 504 Certified Development Company Loan Program
- 7(a) Loan Guarantee Program
15Benefits of an SBA Guaranteed Loan
- SBA guarantee encourages lenders to loan money
- Money available for start-up
- No pre-payment penalty for loans under 15 years
- Reduced Owner Investment Collateral
Requirements - No balloon payments
- Interest rate limits
- Longer amortization
16Eligibility for SBA Guaranteed Loans Must
qualify as Small based on NAICS
- Manufacturing 500-1,500 employees
- Wholesaling 100 employees for financial
assistance programs(500 employees for
contracting assistance programs) - Services 6 million to 29 million in annual
receipts, or - 1,500 employees
- Retailing 6 million to 24.5 million in annual
receipts - General and heavy construction 17 million to
28.5 million in annual receipts - Special trade construction 12 million in annual
receipts - Agriculture From 750,000 to 6 million in
annual receipts
17Eligibility for SBA Guaranteed Loans
- Operated for profit
- Open to the general public
- Owners must be U.S. citizens or have permanent
residence status - Owners must have financial stake in the business
18Copper Ridge Alpacas, LLC
19504 Certified Development Company (CDC) Loan
Program
- Proceeds from 504 may be used for
- Purchasing land
- Construction of new facilities
- Improvements to existing facilities
- Improvements to real estate
- Purchase major machinery and equipment
- Financing
- SBA Debenture (CDC) 40
- Bank 40-50
- Borrower 10-20
20504 Certified Development Company (CDC) Loan
Program
- Debenture
- Maximum typically 1,500,000
- 2 million for projects meeting public policy
goals - 4 million for small manufacturers
- Create or retain one job for every 50,000
- Fees approximately three (3) percent of the
debenture - Interest rate calculated from the current rate
for 5-year and 10-year U.S. Treasury issues - Maturities of 10 or 20 years
- Collateral - project assets being financed
- Personal guaranties required from principals
21504 Certified Development Company (CDC) Loan
Program
- Owners must be of good character
- Size Standards
- Tangible net worth up to 7 million
- Preceding 2 year average net income after taxes
up to 2.5 million - Business cannot be engaged in speculation or
investment in rental real estate -
227(a) Loan Guarantee Program
- Working Capital
- Purchase Equipment/ Furniture/ Fixtures
- Acquire Land/Building
- Construct New Facilities
- Debt Refinancing
- Purchase an Existing Business
23INELIGIBLE Uses
- Purchase partial ownership of a business
- Repay owners for their investment in the business
- Pay for delinquent taxes
- Refinance of delinquent loans
- Speculative, lending or investing purposes
- Real Estate held for investment, sale or rent
- Illegal or gambling activities nor for sexually
oriented businesses - Business Pyramids
- Political, lobbying or religious activities
24 7(a) SBA Guarantee Program
- Loans up to 2.0 million
- SBA can guarantee up to 1,500,000
- Multiple loans permitted up to 2.0 million total
guarantee - Percent of Guarantee
- 85 guarantee for loan amounts of 150,000 or
less - 75 guarantee for loan amounts over 150,000
- SBA guarantee for lenders
- Borrowers responsible for 100 loan repayment
257(a) Guarantee Loan Maturities
- Working Capital
- 1 to 10 years depending on cash flow needs
- Equipment
- up to its expected useful life
- Building/Land
- up to 25 years
26(No Transcript)
27Financial Information Required - Established
Business -
- Current balance sheet past 3 full years income
(profit loss) - Projection of revenues, expenses profits for
the next 12 months - Cash flow projection for the next 12 months
- Written business plan with narrative of major
assumptions - Current personal financial statement for each
owner, partner, or stockholder - List of collateral
- Statement of the amount and intended uses of the
loan
28Financial Information Required - New Business -
- Prepare a detailed estimate of how much capital
is needed to start - 12 month projection of revenues, expenses and
profits - 12 month projection of cash flow
- Written business plan with narrative of major
assumptions - List of collateral
29SBA Resources
- District Office
- www.sba.gov/in
- Small Business Development Centers
- SCORE
- Womens Business Centers
30Financing Value-Added Ag Ventures