February 2003      Vol. 12, No. 2  REAP HOME PAGE  A publication of the Center for Rural Affairs    
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REAP's Partnership with the Small Business Administration
From backing small business loans to encouraging outreach and mentoring for underserved entrepreneurs, we look at the many programs offered by the U.S. Small Business Administration.


Members and clients of REAP are fortunate that we have a good working relationship with the Small Business Administration (SBA). We’ve worked directly with SBA’s Microloan Program for several years. REAP is in the second year of a cooperative agreement with the SBA for our Women’s Business Center project.

The SBA has been integral to making REAP’s work possible across Nebraska. In addition to being an excellent resource for REAP, they have several financial assistance and entrepreneurial development programs that small business owners and managers can use.

Microloan Program
SBA’s Microloan Program has been used by REAP for many years. Under this program, SBA makes funds available to nonprofit intermediaries, who make loans directly to entrepreneurs.

While REAP has used a variety of loan sources to make both our peer and direct loans, the SBA Microloan program has provided the majority of our loan capital. We closely follow the policies and guidelines of the SBA in operating our microloan program, regularly reporting loan data and program information.

Loan Guaranty Programs
SBA’s loan guaranty programs provide a key source of financing for prospective and current small businesses that have real potential, but cannot qualify for loans from traditional sources with the terms they need. There are three principal players in an SBA-guaranteed loan – the small business borrower, the private lender, and the SBA.

First, the private lender determines whether a borrower’s application is acceptable. If it is, the lender forwards the application and its credit analysis to the SBA. After SBA review and approval, the lender makes the loan and disburses the funds to the borrower, who then makes payments to the lender.

SBA loan guaranty programs and requirements are listed on the Quick Reference sheet inserted in this newsletter. Also you may read more about each of the SBA loan programs in detail on the web at www.sba.gov.

Loan Qualifications
Loan programs commonly used in Nebraska include the 7(a) Loan Guaranty Program, the LowDoc loan guaranty, and the SBA Express loan. The 7(a) Loan Guaranty Program is the SBA’s basic loan program.

To qualify for an SBA guaranty, a small business owner must meet the eligibility criteria, and the lender must certify that it could not provide funding on reasonable terms except with an SBA guaranty. The SBA then guarantees 85 percent on loans of up to $150,000 and 75 percent on loans of more than $150,000.

LowDoc is one of SBA’s most popular programs. Once you have met your lender’s requirements for credit, LowDoc offers a simple, one-page SBA application form and rapid turn-around on approvals for loans up to $150,000.

Express Loans Growing
Participation in SBA’s Express loans has been limited during a pilot period; however the Nebraska SBA District office has recently been working to expand its network of Express lenders.

Express lenders are designated by SBA. See the web at http://assist.neded.org/sbalendrs.html for a list of all of the SBA Nebraska Express lenders.

This program allows lenders to use most of their own forms, analysis, and procedures to process, service, and liquidate SBA guaranteed loans. Fifty percent of a loan up to $250,000 is guaranteed by the SBA on the Express loans.

Loans under $25,000 do not require collateral. Like most SBA guaranty loans, maturities are usually up to 7 years for working capital, generally up to 10 years on equipment, and up to 25 years for real estate. Revolving lines of credit are allowed for a maximum of 7 years in the Express program.

Entrepreneurial Development
Women’s Business Centers fall into the Entrepreneurial Development category of SBA’s work. The REAP Women’s Business Center (WBC) program serves as a catalyst for enhancing the participation of women entrepreneurs in the rural Nebraska economy.

Funding from the SBA for REAP’s WBC helps us do more outreach to women, especially through REAP’s Basic Business Plan and eCommerce trainings across the state. The sponsorship of women in business roundtables and the Online Women’s Business Center on the Internet ( www.onlinewbc.gov ) are other examples of services targeted to women business owners by SBA.

Executive Mentors Available
Service Corps of Retired Executives (SCORE) is a volunteer association sponsored by the SBA. SCORE matches volunteer retired business owners or managers to new or existing small business owners who request management counseling and training. SCORE volunteers help prospective and established small businesses identify problems, then help find solutions.

Communities across Nebraska have active SCORE chapters. More information and a list of SCORE chapters nearest you may be found at www.score.org or you may call the SBA/SCORE Business Information Center in Omaha at 402.221.3606.

The Business Information Center in Omaha works in conjunction with the SBA District Office and SCORE to provide many small business planning tools, such as a computer lab and applicable business software and an extensive business reference library.

Business Development
Nebraska Business Development Centers (NBDC) is a cooperative program of the SBA and the University of Nebraska at Omaha (UNO). Business consulting, educational services and assistance in preparing loan applications may be obtained at an NBDC. More information about this program may be found at: http://nbdc.unomaha.edu.

Government Contracting
Government contracting assistance is available by experts at the SBA. The SBA has a number of programs to help small firms do business with the federal government.

Working closely with federal agencies and the nation’s leading large contractors, the SBA works to ensure that small businesses obtain a fair share of government contracts and subcontracts. Dwight Johnson (dwight.johnson@sba.gov ) in the SBA Omaha District office is the Iowa and Nebraska SBA Procurement Center Representative.

SBA Cooperates with Others
REAP values the opportunity to partner with many resource providers to help our members/clients. Regional training opportunities for current and future small business owners are only possible with the cooperation of many. An example is the “How to Start and Grow Your Business” seminar recently offered at the community college in Norfolk.

REAP partnered with the Norfolk Area Chamber of Commerce, Nebraska Workforce Development, Nebraska Business Development Center, and several SBA personnel to put on the program.

Please keep in mind as you plan your REAP association activities and program for 2003 that SBA Nebraska District office personnel may be available as speakers. Let your REAP Business Specialist know about your ideas and needs, and we’ll put you in touch with the right SBA professional.

Reference: Nebraska Small Business Resource Guide, 2002 Edition. Your Guide to Starting, Building or Expanding a Small Business. Courtesy of the Nebraska District Office of the U.S. Small Business Administration and RENI Publishing.

 Contact: Glennis McClure, REAP Women's Business Center Director at reapwbc@diodecom.net or 402.645.3296 for more information.
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