If you own a defense-dependent small firm adversely affected by defense cuts, DELTA (Defense Loan and Technical Assistance Program) can help you diversify into the commercial market. The DELTA Program provides both financial and technical assistance. A joint effort of the SBA and the Department of Defense, it offers about $1 billion in gross lending authority. The SBA processes, guarantees and services DELTA loans through the regulations, forms and operating criteria of the 7(a) Program and the 504 Certified Development Company Program
Maximum Loan Amount
The maximum gross loan amount under 7(a) is $1.25 million for a DELTA loan. The maximum guaranty under 504 is $1 million. If both types of loans are used or if there is an existing SBA loan, the combined total may not exceed $1.25 million.
Collateral
DELTA loans may not be typical 7(a) or 504 loans and may require special handling because of complicated credit analyses. While you may have significant collateral, you may not be able to show the ability to repay based on past operations because of your firm's state of transition. New revisions to the law allow the SBA to resolve reasonable doubts in your favor.
Eligibility
If seeking a DELTA loan, you will be required to certify that your company meets DELTA eligibility standards as well as 7(a) criteria.
To be eligible, your business must:
- meet SBA size standards; and
- have derived at least 25 percent of total company revenues during the preceding fiscal year from DoD contracts, defense-related contracts with the Department of Energy, or subcontracts in support of defense-related prime contracts.
Additionally, your business must:
- be adversely impacted by reductions in defense spending and use the loan to retain jobs of defense workers; or
- be located in an adversely impacted community and create new economic activity and jobs; or
- modernize or expand your plant so it can diversify operations while remaining in the national technical and industrial base.
Technical Assistance
You may also require technical assistance to make the transition to the commercial market. This will be provided through small business development centers, the Service Corps of Retired Executives, other federal agencies, and other technical and management assistance providers.