FEDERAL AGENCY:

SMALL BUSINESS ADMINISTRATION

AUTHORIZATION:

Public Law 102-140, Public Law 102-302, Public Law 102-366 and Public Law 105-135.

OBJECTIVES:

To assist women, low-income, and minority entrepreneurs, business owners, and other individuals possessing the capability to operate successful business concerns and to assist small business concerns in those areas suffering from a lack of credit due to economic downturns. Under the Program, the Small Business Administration (SBA) will make loans or provide guaranties to private, non-profit, and quasi-governmental organizations (intermediary lenders) who will use the loan funds to make short-term, fixed interest rate microloans in amounts up to $25,000 to start-up, newly established, and growing small business concerns. These microloans are to be used exclusively for working capital, inventory, supplies, furniture, fixtures, machinery, and/or equipment. In addition, the SBA will make grants to participating intermediary lenders to provide marketing, management, and technical assistance to borrowers receiving microloans. In addition, the SBA will make grants to non-profit organizations, which are not intermediary lenders, to provide marketing, management, and technical assistance to low-income individuals seeking private sector financing for their businesses. Under the Program, SBA will also provide training for intermediary lenders and non-lenders participating in the Program.

USES AND USE RESTRICTIONS:

Loans to intermediaries with terms and restrictions as provided in Public Laws 102-140, 102-366 and105-135 and subsequent regulations as published in the Federal Register.

ELIGIBILITY REQUIREMENTS:

Applicant Eligibility:   An applicant is considered eligible to apply if it meets the definition of an intermediary lender as published in program materials, 13 CFR, and PL 102-140, and meets published minimum experience and capability requirements.

Beneficiary Eligibility:   Small businesses, minority entrepreneurs, nonprofit entities, business owners, women and low- income, and other individuals possessing the capability to operate successful business concerns.

Credentials/Documentation:   An entity may apply to SBA to become an Intermediary lender. A small business may apply to an intermediary for a microloan. Small business seeking funding must: 1) Meet SBA size standard requirements as defined in Chapter 13 of the U.S. Code of Federal Regulations; 2) meet type of business requirements as published by SBA; and 3) meet lending requirements of local intermediary lenders.

Pre-application Coordination:   None. This program is excluded from coverage under E.O. 12372.

Application Procedure:   Microloan Borrowers: Apply directly to intermediary lenders. Intermediary Lenders: Apply to the SBA Office of Financial Assistance prior to deadlines and according to established procedures.

Award Procedure:   Intermediaries are notified by SBA. Microborrowers are notified by the intermediaries.

Deadlines:   Not applicable.

Range of Approval/Disapproval Time:   Loan applicants can expect an answer from the SBA approved intermediary lender within 15 days from the date of application acceptance.

Appeals:   Decisions on the part of the SBA are final. SBA will not become involved in appeals by microborrowers to intermediary lenders except in the case of suspected violation of Federal regulations.

Renewals:   Based on performance.

ASSISTANCE CONSIDERATIONS:

Formula and Matching Requirements:   No statutory formula in current CFR.

Length and Time Phasing of Assistance:   The maximum life of a loan to an intermediary lender is 10 years. Grants are based on the outstanding balance of the loan amount.

POST ASSISTANCE REQUIREMENTS:

Reports:   Reports will be required of the intermediary on a quarterly basis and at the time of each Microloan closing.

Audits:   Required annually.

Records:   Systems sufficient to generate accurate and acceptable reports.

FINANCIAL INFORMATION:

Account Identification:   (Loans) 73-1154-0-1-376; (Grants) 73-0100-0-1-376.

Obligations:   (Direct Loans) FY 01 $19,455,000; FY 02 est $60,000,000; and FY 03 est $60,000,000. (Loan Guarantees) FY 01 $24,631,000; FY 02 est $11,995,000; and FY 03 est $16,000,000. (Formula Grants) FY 01 $10,000,000; FY 02 est $12,000,000; and FY 03 est $12,000,000.

Range and Average of Financial Assistance:  
No data available.

Microloan Funds became available to end users in August 1992. Since that time, over $100 million have been loaned to microborrowers. The average amount of microloan is about $10,000.

REGULATIONS, GUIDELINES, AND LITERATURE:

Contact the SBA Office of Financial Assistance, Microenterprise Development Branch, 409 3rd Street SW., Mail Code 7881, Washington, DC 20416.

INFORMATION CONTACTS:

Regional or Local Office:  
See Regional Agency Offices. See Appendix IV of the Catalog of Federal Domestic Assistance under Small Business Administration.

Headquarters Office:  
Daniel Upham 409 3rd St., SW 8th Floor Office of Economic Opportunity, Washington, District of Columbia 20416 Email: daniel.upham@sba.gov Phone: 202-205-7001

Web Site Address:  
http://www.sba.gov

EXAMPLES OF FUNDED PROJECTS:

1. Organization in Mid-South operating in thirty-two counties in the State, all but one classified as rural. Established in 1987, this organization has approved numerous microloans and provided the much needed technical assistance to small businesses and entrepreneurs. 2. Urban organization founded in 1976, established a loan pool in 1982. Through a program of financial assistance and other aid to business concerns, including small businesses, that are not able to obtain funds from conventional commercial sources, the organization has been able to assist in the relief of poverty, lessening of neighborhood tensions and assist in combating community deterioration in certain economically depressed areas. 3. Rural organization founded in 1976, has provided services that have included economic development, planning, grant writing and administration, small business incubator operations, business counseling services and loans to small businesses. Approximately 12.4 percent of the service population is below poverty level.

CRITERIA FOR SELECTING PROPOSALS:

Applications are evaluated individually. Each is rated on its own merits or, in the case of an affiliated group, on the merits of each of the organizational parts that make up the whole. Qualitative and quantitative information regarding the applicant is reviewed. Criteria include but may not be limited to: 1. Organizational qualifications; 2. Knowledge of the local economy; 3. Lending experience and lending operations; 4. Current and proposed technical assistance program; 5. Current and Proposed Microloan Operation; 6. Availability and probability of matching contributions; 7. Information submitted in the grant package.