People often misuse the term “catch-22.” (Almost as often as pizza parlors misuse the term “extra large.”) So, you ask, what exactly is a catch-22? According to Webster’s, a catch-22 is “a problematic situation for which the only solution is denied by a circumstance inherent in the problem.” Here’s an example. At a time when many small businesses are seeing an upturn and considering new hires, they can’t afford it. It’s because they fear state governments are poised to jack up their taxes in 2010. Why? State governments need money to replenish their dwindling unemployment-insurance funds. And that’s your definitive catch-22. To solve it, the feds are mulling a tax credit for small businesses that hire new people. We’re all for it. (Maybe our local pizza parlor will hire a chef who knows the meaning of “extra large.”)
SBA: the big and small of it. The Small Business Administration gets a lot of flak for dishing out “small business” contracts to businesses that aren’t so small. Does the SBA care? It doesn’t look like it. The SBA recently released its 2008 list of small business contractors and at the top of the heap are VSE Corp. (annual revenue of $1 billion) and AAI Corp., a division of Textron Inc. (annual revenue of $14.2 billion). So what if you’re an authentic small business owner hoping the SBA will break you off a little something in the near future? Don’t count on it.
Clock ticking on Recovery Act loans.
The SBA is doing a little better on another of its jobs: helping small businesses get loans. The agency has so far deployed over half of the $375 million allotted to it under the American Recovery and Reinvestment Act. The SBA is using the money to erase fees for small businesses that take out a loan from a bank, and it’s guaranteeing the bank a 90 percent payback if the small business borrower defaults. Sound good? Better hurry. The program will run out by the end of November or December. To small business owners, who are typically focused on what’s going to happen tomorrow, that might seem like plenty of time. But SBA approval can take as long as three months. So jump on it. And check out The Wall Street Journal’s article on six ways to accelerate the SBA process.