June 2009 Business Alliance Grubstake Breakfast

Almost 300 attendees registered for the June Grubstake Breakfast featuring six young entrepreneurial companies seeking $250k-2M in investment capital, remarks by SBA’s Sr. Advisor & Acting AA for Entrep. Dev. Penny Pickett, Grubstake Alumnus Craig Bandes, Intersouth’s David Pierson, Mita Group’s Jim Hunt, and Valhalla Partners’ Kevin Greene.  

Parabon Nanolab’s Steve Armentrout, NextGen's Ross Shariati, HeMemic's Isaac Gadsden, and TRX's Karina Drees presented their investment opportunities from the podium.  SCIT Labs and Endtone also were featured at the spotlight tables.

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More Information Regarding Past Presenters

Summary of Ms. Pickett’s Remarks (at the June 12, 2009 Grubstake Breakfast):

SBA and the Recovery Act

Remarks by Penny Pickett,

Acting Administrator for Entrepreneurial Development,

U.S. Small Business Administration

June 12, 2009 Business Alliance Grubstake Breakfast

The SBA provisions in the Recovery Act were designed not only to help small businesses keep the doors open, but also to help them grow and create jobs.

Results to Date

The SBA has $730 million in Recovery Act funding. The funding is already in the marketplace and the results are good.

• The average weekly loan volume is up more than 30% compared to the weeks before launching the Recovery Act. 
• More lenders are giving out loans – including many – more than 500 - who hadn’t participated in SBA programs since 2007.
• And in total – about 12,000 Recovery Act loans have been approved with $4 billion in credit support to small businesses. 
• 25% rural; 21% minority; 19% women; 19% veterans

Main Points for Small Businesses

• Guarantees to up to 90 percent on most types of 7(a) loans to qualified small businesses
• Temporary Elimination of Loan Fees on 7(a) and 504
• 7(a) Secondary Market Liquidity  - buy guarantees from broker-dealers, but seeing some movement already
• As of 6/15/09, SBA will start accepting loans for a temporary new program called America’s Recovery Capital.  “ARC” loans of up to $35,000 are designed to provide a “bridge” for viable small businesses with immediate financial hardship – to keep their doors open until they get back on track.  100% backed by the SBA, no fees for the borrower, & SBA covers the interest costs, repayment starts in 12 months.
• Expanded Microloans up to $50 Million in new loan authority
• Surety Bond guarantee raised from $3M to $5M – certain contracts up to 10 Million
• Establish process for private sector entities to apply for federal guarantees on pools of first-lien positions on 504 loans
• Expanded refinancing for 504 loans
• Expansion of SBIC program – of interest to Grubstake attendees:
• Privately owned & managed VC firms licensed by SBA (with private capital and SBA-backed borrowed funding)
• SBICs eligible for additional SBA-backed funding
• Requires 25% of dollar investment go to ‘smaller’ businesses
• SBIC can now invest 10 percent in a single small business
• Maximum Federal funding can be three times the capital raised or $150 M – which ever is less. For multiple funds, the cap is $225 M for multiple SBICs jointly owned
• Limits higher for SBICs licensed after October 1, 2009 that certify 50% of investments will be made in low income areas - $175 M for one; $250 M for multiple licensees.
• Changes made to SBIC program under Recovery are permanent.

SBIR

One last SBA program of interest here is the SBIR (Small Business Innovative Research) program – very effective and it really does what it is intended it do through grants to small businesses for necessary R & D:

• Reauthorization due by July 31 and House and Senate bills quite far apart.  White House supporting SBA and wants the program reauthorized now.
• SBA administers and supervises the program but it is delivered in 11 agencies
• Remarkable flexibility allows agencies to operate effectively as a grant program
• Good source of capital for companies like those seeing here today – check it out.

More Information

• www.sba.gov

Information Regarding Featured Companies

Application to Present at October 15 Breakfast (9/9 deadline)