California Community Economic Revitalization Team
Minority and Women's Prequalification Pilot Loan Program
Agency:Small Business Administration
Program:Minority and Womens Prequalification Pilot Loan Program
Program Description: The Minority Prequalification Loan Program and the Womens Prequalification Pilot Loan Program use intermediaries to assist prospective minority and women borrowers in developing viable loan application packages and securing loans. The Womens Program uses only non-profit organizations as intermediaries; the Minority Program uses for-profit intermediaries as well.
Eligibility: Eligibility requirements include: Businesses at least 51% owned, operated and managed by people of ethnic or racial minorities or by women; businesses with average annual sales for the preceding three years that do not exceed $5 million; businesses that employ fewer than 100, including affiliates.
Funding Information: The maximum amount for loans under the Womens program is $250,000; under the Minority Program, it is generally the same, although some districts set other limits. With both, the SBA will guarantee up to 80 percent of loans $100,000 and less and up to 75% of loans above $100,000. The intermediary then helps the borrower locate a lender offering the most competitive rates. Intermediaries (usually small business development centers) may charge a reasonable fee for loan packaging. Fees charged by for-profit organizations will be higher. The maximum loan maturities are 25 years for real estate and equipment and generally 7 years for working capital. To offset the costs of the SBA loan programs, SBA charges lenders a guaranty and a servicing fee for each loan approved. These fees can be passed on to the borrower once the lender has paid them. The amounts of the fees are determined by the amount of the loan guaranty. Holders of at least 20% ownership in the business are generally required to guaranty the loan. Although inadequate collateral will not be the sole reason for denial of a loan request, the nature and value of that collateral does factor into the credit decision.
Interest rates are negotiated between the borrower and the lender but are subject to SBA maximums, which are pegged to the Prime Rate. Interest rates may be fixed or variable. Fixed rate loans must not exceed Prime plus 2.25% if the maturity is less than seven years, and Prime plus 2.75% if the maturity is seven years or more. For loans of less that $25,000, the maximum interest rate must not exceed Prime plus 4.25% and 4.75% respectively; for loans between $25,000 and $50,000, maximum rates must not exceed 3.25% and 3.75%, respectively. Variable rate loans may be pegged to either the lowest prime rate or the SBA optional peg rate. The optional peg rate is a weighted average of rates the federal government pays for loans with maturities similar to the average SBA loan.
Timelines: Applications are accepted year round.
Contact: Int www.sba.gov
Sacramento (916)498-6410 Fresno (209)487-5791
Glendale (818)552-3210 San Diego (619)557-7250
Santa Anna (714)550-7420 San Francisco (415)744-6820