Government Federal Government Contracting and The Historically - - PowerPoint PPT Presentation

Selling to the Federal Government

Bryan, OH | November 7, 2018

Federal Government Contracting and The Historically Underutilized Business Zone (HubZone) Program

Federal Contracting

Consider This!

• Huge Market ($500+ BILLION!)
• On-time payment
• Great repeat customer
• Bring the $$$$ to Northern Ohio
• Some company somewhere is getting this

work, why not here??

Small Business – 23% ($100+ Billion) 5% ($25+ Billion) Women-Owned 5% ($25+ Billion) Disadvantaged/8(a) 3% ($15+ Billion) HUBZone 3% ($15+ Billion) Service-Disabled Veterans * The Veterans Administration has a 12% goal for

Veteran-Owned Small Businesses and a 10% goal for Service Disabled Veteran Owned Small Businesses.

Federal Spending Goals

Federal Contracting in State of Ohio!!!

Total Sales in 5 years = $10,218,085,094

$0 $500,000,000 $1,000,000,000 $1,500,000,000 $2,000,000,000 $2,500,000,000 $3,000,000,000 2013 2014 2015 2016 2017

Small Businesses

Small Businesses

Federal Contracting in 4 Counties of NW Ohio in the past two years

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Defiance Williams Fulton Henry Federal Contracting dollars the last two years $52,361,127 $410,843 $1,066,693 $0 # Companies with Federal Sales 4 2 10 2

Certifications

• Formal Certification

– 8a – HubZone

• Verification (for VA

contracts only) – SDVOSB – VOSB

• Self Certification

– Small Business – Veterans and SDVOSB – Woman Owned

• SBA Repository
• 3rd party certifier

Agencies can set-aside (restrict competition) to any of the above groups if market research shows that there is adequate competition. Federal market research is done through the use of a sources sought notices in www.fbo.gov

Required Registrations

• SAM – System for Award Management

– If you want to do business on the Federal level, you MUST be on SAM! – www.sam.gov – DUNS Number – call 1-866-705-5711 / www.dnb.com – SBA Small Business Dynamic Database

Small Businesses in SAM in the Four County Area

• Defiance

12

• Fulton

21

• Henry

6

• Williams

13

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HUBZone Program Purpose

The purpose of the HUBZone program is to provide federal contracting assistance for qualified SBCs located in historically underutilized business zones in an effort to increase employment opportunities, investment, and economic development in such areas.

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HUBZoneImpact

• Number of Participants: 5,306 as of 6/30/18
• Annual Contracting Levels: $7.3 Billion (FY 2017)
• Annual Goal: 3.0%
• FY 2017 HUBZone Achievement: 1.65%
• FY 2016 HUBZone Achievement: 1.67%

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HUBZoneBenefits

• Helps Agency meet/exceed HUBZone goal with set-aside
• ption
• An additional tool for economic revitalization of

underutilized areas.

HUBZone Program Eligibility

• Small business
• Be at least 51 percent owned and controlled by U.S.

citizens, a Community Development Corporation (CDC), an agricultural cooperative, a Native Hawaiian Organization (NHO), or an Indian tribe

• Effective May 25, 2018 – indirect ownership requirement

removed from U.S. citizens

• Principal office located in a HUBZone
• At least 35 percent of its employees live in a HUBZone

https://maps.certify.sba.gov/

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HUBZone Contracts

HUBZone contracts (including Multiple Award Contracts) include awards to qualified HUBZone SBCs through:

• Sole source awards
• 100% HUBZone set-aside awards and partial set-asides
• Full and open competition, where the HUBZone price evaluation

preference is applied

• Reserves for HUBZone SBCs under Multiple Award Contracts (MAC)
• Orders set-aside for HUBZone SBCs against a MAC, where the MAC was

awarded in full and open competition

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Status as a HUBZone Small Business Concern

• To be eligible for a HUBZone contract, a concern must be a

HUBZone SBC both at the time it submits its initial offer AND at the time of contract award (13 CFR 126.601(c))

• A HUBZone SBC may joint venture with one or more other

small business concerns or its SBA-approved mentor for the purpose of submitting an offer for a HUBZone contract. Note: The joint venture itself need not be certified as a qualified HUBZone SBC.

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Price Evaluation Preference For HUBZone SBCs

• The HUBZone price evaluation preference (PEP) shall

be used in acquisitions conducted using full and

• pen(F&O) competition
• The CO shall give offers from HUBZone SBCs a price

evaluation preference by adding a factor of 10% to the lowest, responsive, responsible large business offeror.

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The All Small Mentor-Protégé Program

Protégés get business development help from their mentors:

• Guidance on internal business management systems, accounting,

marketing, manufacturing, and strategic planning

• Financial assistance in the form of equity investments, loans, and

bonding

• Assistance navigating federal contract bidding, acquisition, and

performance process

• Education about international trade, strategic planning, and

finding markets

• Partnership on Contracts

Questions?

Cleveland District SBA John Renner 216-522-4167

john.renner@sba.gov

Vanessa Behrend 216-522-4171

vanessa.behrend@sba.gov

Northwest Ohio PTAC Kent Kahn 419-995-8283 (Office) 419-860-4032 (Cell)

Kahn.k@rhodesstate.edu

Lending in the HUBZone/Rural Areas

SBA Cleveland District Office | SBA Indiana District Office

November 7 1pm to 230pm 1425 E. High St. Bryan, OH 43506 For a copy: Raymond.Graves@sba.gov

Ohio Rural Business Initiative

➢ Loans to Rural Entrepreneurs by FY – Northern Ohio ➢Increased Outreach & Partnership with USDA

• SBA & USDA entered into a new MOU 04/04/2018
• Formalized interagency cooperation

➢ Outreach efforts ➢ Partnering on credit transactions

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Row Labels Count Dollars 2017 Rural 342 $ 58,756,650.00 2018 Rural 363 $ 96,516,800.00 Grand Total 705 $ 155,273,450.00

What’s the SBA Doing To Support Rural Entrepreneurs?

➢ 7(a) Loan Fee Relief

• Borrowers in rural / HUBZone areas
• Loans < $150,000

➢Upfront guaranty fee reduced to 66.67 basis points (.6667%) ➢Ongoing servicing fee waived entirely ➢Rural includes counties that are 30% or more rural by population

➢ Williams, Fulton, Defiance, Henry, Paulding, Putnam – not Wood or Allen

➢504 Rural Initiative Pilot Program

• CDC’s are able to make loans anywhere within their SBA Region

➢You're in SBA Region 5: Illinois, Indiana, Michigan, Minnesota, Ohio and Wisconsin

• Available from July 19, 2018 to July 20, 2020

➢Renewed effort to reach out to rural areas and populations

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HUBZoneMap https://maps.certify.sba.gov/hubzone/map

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Williams County Financing Activity

PROJ COUNTY NAME WILLIAMS Row Labels Count Dollars 2017 11 $794,700 Other Specialized Design Services 2 $85,600 General Freight Trucking, Long Distance, Truckload 1 $13,200 Residential Remodelers 1 $20,000 All Other Specialty Trade Contractors 1 $125,000 Other Clothing Stores 1 $50,000 Caterers 1 $13,000 Portfolio Management 1 $55,000 Convenience Stores 1 $44,000 All Other Rubber Product Manufacturing 1 $238,900 General Freight Trucking, Local 1 $150,000 2018 16 $2,450,100 General Freight Trucking, Local 5 $312,700 Limited-Service Restaurants 2 $62,400 All Other Plastics Product Manufacturing 2 $755,000 Offices of Physicians (except Mental Health Specialists) 1 $25,000 Pharmacies and Drug Stores 1 $600,000 Other Industrial Machinery Manufacturing 1 $365,000 Plumbing, Heating, and Air-Conditioning Contractors 1 $120,000 Automotive Parts and Accessories Stores 1 $50,000 Drycleaning and Laundry Services (except Coin-Operated) 1 $145,000 Janitorial Services 1 $15,000 Grand Total 27 $3,244,800

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What: Two Major Lending Programs

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SBA provides a guarantee of select small business loans made by lender participants

7(a)

Supports job creation and economic development through guaranteed debentures

504

Equipment Working Capital Accounts Receivable and Inventory Leasehold Improvements Certain Refinancing

• f Debt

Real Estate and Buildings Financing Change of Ownership

Two Two flags flagship bus hip busines iness l s loan

• an guaran

guarantee tee programs programs he help sta lp start rt-up up business businesses es lau launc nch and existing busine h and existing business ss expan expand: d:

Equipment Real Estate and Buildings

What if the Borrower Isn’t a Good Fit For Us?

➢SBA’s Network of Counseling Partners

• SCORE
• Small Business Development Centers
• Women’s Business Center
• Veteran’s Business Outreach Center

➢SBA Microloan –

Small working capital loans for applicants with higher risk profiles than will be contemplated by a bank.

• Loans up to $50,000
• Maximum term 6 years
• Interest rates set by Micro Lender
• Pre and Post loan technical assistance

➢USDA B&I Guarantee Program (see following slides)

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USDA and SBA Guaranteed Loans, Compare and Contrast

Requirements: USDA B&I Loan: SBA Loan Guaranty Program (7a):

Business location Local area population less than 50,000 Anywhere in the U.S. Loans to non-profits allowed? Yes No Size of business standards NOT required to meet size standards Must meet size standard for its industry

• r alternative size standard, $5MM PAT

and $15MM tangible net worth Loan amount $1 - $25 million $0 to $5 million Minimum Project Size? No Minimum, but need to weigh benefit of program and/or use of SBA. $5,000? Percent guaranteed 80 percent for loans up to $5 million 70 percent from $5 - 10 million 60 percent for larger loans 85 percent for loans up to $150,000 75 percent for larger loans Program Guarantee fees 3.0% plus annual 0.5% servicing fee 2% to about 3.75% + 0.55% servicing Lender’s fees No limit, but must be similar to other non-guaranteed loans. $2,500 packaging fee

USDA and SBA Guaranteed Loans, Compare and Contrast

Requirements: USDA B&I Loan: SBA Loan Guaranty Program (7a):

Maximum loan maturity 7 years working capital 15 years machinery 30 years real estate No agricultural production unless

• peration is vertically integrated

10 years working capital 10 years or life, machinery 25 year real estate Farm Enterprises: 15 years on equipment, 20 years on real estate Line of Credit permitted? No Yes (SBA Express or Capline) RE purchase occupancy requirement? No Yes: 51% on existing structures, 60-80% on new structures Business investment Startups must have a minimum of 20 percent tangible balance sheet equity Startups must have 10% injection into the project (except for Express) Refinance existing debt? Yes Only if on unreasonable terms Usually requires 10% improvement in D/S Cash Flow Coverage Must be sufficient to cover debt Small Loans: Lender determines Large loans: 1.15x enterprise, 1.0x global Collateral Coverage Loan must be fully collateralized based upon the discounted values. “All available collateral” concept Shortfalls accepted

To Do:

How can we engage with you to help solve challenges faced by rural businesses?

✓Entrepreneurial workshops ✓Expand your Business Workshops ✓Lender panels ✓SBA Day at a bank branch or chamber ✓USDA/SBA Compare and Contrast ✓Individual meetings ✓Merchant associations ✓Surety Bonds ✓Webinars

Contact SBA and USDA

Raymond Graves SBA Cleveland District Office 1350 Euclid Ave., Suite 211 Cleveland OH 44115 216.522.4192 raymond.graves@sba.gov

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Christie Hooks USDA Rural Development 200 N. High St., Room 507 Columbus, OH 43215 614.255.2563 christie.hooks@oh.usda.gov