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Since H.R.1, aka the Stimulus Bill, was signed I have been wading through its 407 pages searching for information that pertains to small businesses and credit. Because budget-focused bills of this magnitude are organized by government departments, this legislative detective work ranges between ‘pull my hair out’ exasperation and ‘pay dirt’ elation.
When I read that Scott Wilder, the general manager of Intuit’s Online Communities, was hosting a live, interactive Web panel to discuss the impact of the Stimulus Bill on small business, I was ready to discover that others had gleaned all the pearls of wisdom I’d been searching for. Unfortunately, I learned the panel members – Ray Keating, chief economist with the Small Business and Entrepreneurship Council; Anita Campbell, founder and CEO of Small Business Trends; and Kelly Spors, small business reporter for the Wall Street Journal – shared my frustration regarding the challenges of the unwieldy budget document.
In addition to commentary on the bill, economist Ray Keating offered a dire summary of economic trends to illustrate that we’re now in the sixteenth month of a recession, which is not likely to improve until sometime in 2010, at the earliest. Here are key economic indicators he shared from the fourth quarter of 2008:
- Gross domestic product (GDP) declined by 6.2%
- Consumer spending declined by 4%
- Private investment declined by 21%
- Exports declined by 24%
- Imports have declined for 5 consecutive quarters
And 4.4 million jobs have been lost since December 2007.
All the panelists agreed that small business assistance within the Stimulus Bill falls into three basic categories:
1. Tax Advantages
There are several tax code changes to benefit small businesses. It’s important to meet with your CPA to plan spending which will allow you to maximize use of changes for expensing, depreciation, loss carrybacks, hiring credits, etc.
2. Greater Funding and more business-friendly Small Business Administration (SBA) policies are expected to help the agency come closer to fulfilling its potential as a service organization.
- Eliminate all fees for SBA loans
- Raise government guarantees to 90 percent of the value of most loans
- Provide funding to re-staff the SBA after it was gutted during the Bush Administration (See my column, Stimulus Bill Bolsters SBA Loans)
- Increase the total amount of money available for small businesses to borrow as micro loans (less than $35,000) and other loan products
3. Government Contracts in a breadth of industries
Because contracts will be issued by department, here’s my suggestion: Open the Stimulus Bill. Use ‘Find’ to search for keywords related to work you are qualified to perform. This is the only sane way to manage 407 pages of data. Try several possibilities. The Administration is strongly emphasizing some industries, such as green technologies, plus a breadth of infrastructure projects expected to break ground across the country. When you find a project you’re interested in, visit the website of the department or agency managing its funds to find contract bidding information.
Intuit panel members believe small business funding has become much more difficult during the past year, with many companies seeing their lines of credit significantly reduced or cancelled while credit card limits have been cut and interest rates raised in spite of excellent credit histories. There’s a widespread sense of upset by small business owners. Kelly Spors discussed a recent Wall Street Journal article focused on small business loan opportunities with credit unions. And there was consensus around the preference for working with my long-time favorites, community banks; most have continued to lend to small businessses throughout the recession. For business loans at higher dollar levels, the SBA has elevated in importance since larger (mostly bailed-out) financial institutions are not lending directly to small businesses.
Anita Campbell, Small Business Trends, voiced the dashed dreams of many entrepreneurs when they heard there was a return to consideration for small business needs from this Administration: “The Bill won’t drop money into your coffers.”
In these challenging economic times, some businesses are thriving through innovation as they develop better ways to provide what people need. While a goose that lays golden eggs can be a delightful fantasy, we know long-term success comes from delivering a better product or service in ways that customers most want to receive it. Government commitment to small businesses has definitely improved with the Obama Administration although there’s still not an ideal understanding of what actually confronts entrepreneurs and small business owners day-to-day as we work to succeed.