SBA-APPROVED LENDERS

The U.S. Small Business Administration (SBA) is a federal government agency that plays a crucial role in supporting and assisting small businesses in the United States. One of its key functions is to facilitate access to financing for small businesses through loan guarantee programs. The SBA does not directly lend money; instead, it provides guarantees to loans made by private lenders, such as banks. Here's an overview of the SBA's role in guaranteeing loans to businesses:

 

Loan Guarantee Programs:

The SBA operates several loan guarantee programs, with the most common being the 7(a) Loan Program.  The 7(a) program provides loan guarantees to eligible small businesses, encouraging lenders to offer loans that they might not otherwise provide due to higher risk.

 

Eligibility Criteria:

Small businesses that meet the SBA's size standards and operate for profit are generally eligible for SBA loan programs.  Eligibility criteria may vary depending on the specific loan program.

 

Lender Relationship:

Businesses apply for SBA-guaranteed loans through participating lenders, such as banks and credit unions.  Lenders evaluate the creditworthiness of the business and, if approved, may request an SBA guarantee to mitigate some of the risks.

 

Loan Terms and Amounts:

SBA-guaranteed loans typically offer longer repayment terms and more favorable terms than conventional loans.  Loan amounts can vary based on the specific program and the business's financial needs.

 

Loan Uses:

SBA loans can be used for various purposes, including working capital, equipment purchase, real estate acquisition, and debt refinancing.

 

Loan Guarantee Percentage:

The SBA guarantees a percentage of the loan amount, reducing the lender's risk.  The guarantee percentage varies depending on the loan program and the size of the loan.

 

Benefits for Lenders:

SBA guarantees provide lenders with an incentive to extend credit to small businesses that may not qualify for conventional loans.

It encourages lenders to offer more favorable terms, such as lower down payments and interest rates. In the event of a borrower default, the SBA covers a portion of the outstanding balance, reducing the financial impact on the lender.

 

Additional SBA Programs:

Besides the 7(a) program, the SBA administers other loan programs, including the 504 Certified Development Company (CDC) program and microloan programs, each catering to specific business needs.

The SBA's role in guaranteeing loans aims to foster small business growth, job creation, and economic development by providing businesses with improved access to capital. Businesses seeking SBA-guaranteed loans should work with approved lenders and adhere to the eligibility requirements of the specific program they are interested in.

​

PRIVATE NON-BANK LENDERS

Private non-bank lenders refer to financial institutions or entities that provide loans and financial services outside the traditional banking system. These lenders operate independently of banks and may offer a variety of loan products to individuals, businesses, and investors. Here are some common types of private non-bank lenders:

​

1. Peer-to-Peer (P2P) Lenders:

   • P2P lending platforms connect borrowers directly with individual lenders or investors.

   • Borrowers create profiles, and investors can choose to fund specific loans.

   • Interest rates are often determined through a bidding process.
      

2. Online Lenders:

   • Online lending platforms provide a digital alternative to traditional banks.

   • They use technology to streamline the loan application and approval processes.

   • Some online lenders focus on specific niches, such as small business loans or personal loans.
      

3. Private Mortgage Lenders:

   • Private individuals or companies may offer mortgage loans outside the traditional banking sector.

   • These lenders might be more flexible in terms of eligibility criteria and loan terms.
     ​

4. Hard Money Lenders:

   • ​Hard money lenders offer short-term loans secured by real estate

   • These loans are often used for real estate investments or property purchases.

   • Interest rates can be higher, reflecting the short-term nature and higher risk.
      

5. Family Offices:

   • Family offices manage the financial affairs of high-net-worth families.

   • Some family offices engage in direct lending, providing loans to businesses or individuals associated with the family.
      

6. High Net Worth Lender (HNW);

   • HNW refers to an individual, institution, or entity that has a substantial amount of financial assets and resources. The term "high net worth"

   • (HNW) is often used to describe individuals or entities with a significant net worth, which is the total value of their assets minus their liabilities.

   • High-net-worth lenders typically have substantial financial resources that they can deploy for various purposes, including lending.

 

For individuals, a high net worth individual is generally someone with a considerable amount of wealth, often measured in terms of millions or billions of dollars. High net-worth lenders may include wealthy individuals, family offices, private investment firms, and other entities with substantial financial capacity.

 

In the context of lending, high-net-worth lenders may provide loans or financial support to individuals, businesses, or projects. They might offer financing for various purposes, including real estate investments, business expansion, acquisitions, or other high-value transactions. High-net-worth lenders may have the flexibility to structure loans in ways that traditional lenders might not, and they may be more open to higher-risk ventures.

 

It's important to note that high-net-worth lenders may operate outside the traditional banking system, and their lending activities may be subject to different regulations and terms. Additionally, high-net-worth lending is often associated with private lending, where the lender's decision-making process may be more personalized and based on individual assessments of risk and opportunity.  It's important to note that private non-bank lenders often operate with different risk profiles, terms, and interest rates compared to traditional banks.

 

THE US DEPARTMENT OF ENERGY (DOE)

As part of 2022’s Inflation Reduction Act, Congress supersized the Energy Department’s authority to arrange loans to companies trying to bring emerging energy technologies to market, increasing it tenfold from $40 billion to more than $400 billion. That makes it potentially one of the biggest economic development loan programs in United States history.

 

DOE’s Title 17 funding parameters.

Section 1703 of the Energy Policy Act of 2005 (EPACT05) describes what makes a project eligible for Title 17 loan guarantees.  Eligible projects must: “avoid, reduce, utilize, or sequester air pollutants or anthropogenic emissions of greenhouse gasses.  It’s not an exact fit, but I believe that Rugged Telemetry’s Remote Tank Monitoring, as well as the benefits of efficient data collection in emergency conditions (such as oil spills), would meet the above criteria.

 

According to publicly available information, a total of 21 companies navigated the Title 17 funding process since its enactment in 2005.  While specific loan terms are confidential, here’s what we know about companies that have navigated the Title 17 funding process:

• companies are active with Title 17 financing,

• were conditionally approved but are inactive,

• closed on loans without receiving proceeds,

• discontinued operations after receiving funding.

 

DOE will consider smaller $5-10M loans, but their average loan size has been more than $100M per company.  The interest rate pegged to U.S. Treasury rates plus 0.375% and a risk-based charge, ranges from 5.875% to 6.4% over ten years.