Per your request. A follow-up POST on the CSBLGP.

Did you know that California has a loan guaranty program that works somewhat like the Federal SBA 7a program? In 1968, IBank received seed trust money to reduce unemployment and support small business. That program continues today. IBank in conjunction with California FDCs and your Lender administer this CSBLGP (California Small Business Loan Guaranty Program). There are 7 FDCS located across California. A FDC facilitates the loan approval process with final approval from IBank while the loan is closed and serviced/held by your Lender.

Who/What is iBank? IBank has broad authority to issue tax-exempt and taxable revenue bonds, provide financing to public and private agencies, provide credit enhancements, acquire or lease facilities and leverage state and federal funds. iBank, for all intents and purposes, is providing the Lender guaranty much like the SBA does for 7A loans. To specifically NERD the event of a default, it's that seed money trust held by iBank that funds the guaranty. The program is not part of California’s budget. It is operated from a trust fund of about $100MM today. Parameters are absolutely subject to change.

Much like the SBA 7A and 504 programs, borrowers work directly with a participating LENDER. Your Lender loans the money directly to the borrower and quarterbacks the interaction with the Guaranty Program. The application process involves the FDC underwriting the loan in tandem with your Participating Lender. Once your Lender and the FDC have both approved the loan it is then submitted to IBank for final approval. They issue the approval within a day or two of receiving the loan package and are primarily focused on program eligibility instead of credit standards. After approval you’ll work with your Lender on the closing process and documentation.

BENEFITS: Can provide either term or revolving financing • Maximum guaranty period of 7 years • Loans are guaranteed at 80% of the loan, up to $2.5MM in maximum guaranteed dollars. Maximum gross loan amount is $20MM with a reduced guaranty percentage • No prescribed limitations for interest rates or loan terms, however they are subject to review by iBank • Upfront fee of 2.5% of the guaranteed portion of the loan plus a $250 doc fee is payable to the FDC, however there are no ongoing fees. Lender fees are permissible. • Most requirements should mirror SBA’s – collateral, personal guaranty, need for credit enhancement, etc. • BUT some SBA 7A ineligible components are ELIGIBLE with this program such as Earnouts and Seller Roll.

Borrowers can have multiple SBA 7A loans and the CSBLGP loan outstanding at the same time, funding different acquisitions. However, you cannot use the SBA 7A and the CSBLP in combination for a single acquisition, like a pari-passu or Jr. COMBO structure.

What's the catch? This program has not been widely used in the past due to execution difficulties among all the various facilitators involved. There have also been past funding limitations that have made confidence-to-close hard to predict. Word on the street is that some of the program difficulties have been improved? We're in the process of working with a CEO that has utilized all of their SBA 7A allotted guaranty and we're testing this program out for his add-on.

Take Aways: Bring your curiosity and patience.

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