SBA Pre-Qualification Loan Program

ECONOMIC VENTURES, INC.
(865) 594-8762

Economic Ventures, Inc., has been selected by the Small Business Administration (SBA) to provide Pre-Qualification Loan Program assistance to entrepreneurs and small businesses in East Tennessee.

What Economic Ventures, Inc. Does

Economic Ventures, Inc., works with the borrower to complete the paperwork necessary to obtain a loan. Once the paperwork is completed, an SBA review is usually accomplished within 48 hours. If the loan is approved, SBA issues a pre-qualification letter to the borrower stating its intent to authorize a loan guarantee for up to 80% of the loan (there is no 100% funding). Economic Ventures then helps the borrower to locate a lender .

Loan Amounts, Maturity Dates, and Interest Charges

The maximum loan amount available under this program is $250,000. Generally, loan maturities are 5 to 10 years for working capital, up to 10 years for machinery and equipment, and up to 25 years for real estate construction. SBA establishes the maximum interest rate allowed; depending on maturity date, it may be 2.25% or 2.75% over the Wall Street Journal Prime Rate. Within this guideline, borrowers negotiate their own rate with the lending bank.

Program Eligibility

To be eligible for the Pre-Qualification Loan Program:

• the business must be at least 51% owned, operated, and managed by women, minorities, veterans, of a specific ethnic origin, or disabled Americans,
• the applicant(s) must have good credit and a minimum of 20% equity in the business,
• the business should be for-profit and have average annual sales less than $5 million, and
• the business must employ less than 100 people, including affiliates.

Primary criteria for a pre-qualification loan are the ability to repay, a good business plan, and good credit. Normally, business assets (and personal assets, when warranted) will be pledged. Loans will not be declined where inadequate collateral is the only unfavorable factor. All owners of 20% or more of the business are required to personally guarantee the loan.

Processing Fees The potential borrower must pay a $50 non-refundable fee, plus $450 if loan is approved. SBA also charges a 3% guarantee fee on the loan.

DOCUMENTS REQUIRED FOR SUBMISSION TO BANKS FOR CREDIT APPROVAL

Note: Place items in order shown from TOP to BOTTOM

SECTION 1 SBA Required Forms and Documents

SBA Form 4, Application for Business Loan

Personal History Statement

SBA Form 1624, Certification Regarding Debarment, Suspension

SECTION 2 Loan Write Up

Loan Analysis (Credit Memorandum including Loan Information)

SECTION 3 Personal/Principal(s) Information

Current personal Credit Reports

Current Personal Financial Statements

Personal Tax Returns 3 years (all Schedules, statements, K1s)

SECTION 4 Affiliates' Information (if applicable):

(Affiliates are companies in which any principal owns 20% or more)

Business Debt Schedule

Current Interim Financial Statements

Affiliates Tax Returns 3 years (all schedules, statements, K1s)

SECTION 5 Business Information

Business Debt Schedule

Current Business Credit Report (Written Explanation(s), if applicable)

Copy of IRS Tax Verification Form 4506

Accounts Receivable and Accounts Payable Aging

Current Interim Financial Statement

Fiscal Year-End Financial Statements

Projections for 12 months (if applicable)

Assumptions to Projections (if applicable)

Resumes of Principals

Business Plan/History of the firm and benefits from the loan (if applicable)

Sellers/Applicants Tax Returns: (All schedules, statements, K1s)

Purchase Agreement (if applicable)

SECTION 6 Other Items Required Prior to Submission (If available)

Appraisal

Copy of Executed Note to be Paid Off

Construction Cost Breakdown

Copy of Franchise Agreement and Current UFOC

Lease

Specific list of collateral including prior liens

Articles of Incorporation and Articles of Organization

Feasibility Study

Partnership Agreement

SECTION 7 SBA Required Forms and Documents - Lender

SBA Form 4-1, Lenders Application for Guaranty

SBA Form 1711, Certification for Contracts. Grants

SBA Form 1623, Certification Regarding Debarment, Suspension

SBA Form 51, Lenders Flood Insurance Certificate