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August 17 A Standard $1,500 Deduction For Home Offices?Yeah, I know, these days there doesn't seem to be much to give small business owners hope. News reports say there are signs of recovery but we have yet to see any confirmation of this on our bottom line.
There are, however, some signs that this bad economy might lead to even more positive changes in the tax code. According to today's featured article from CNN Small Business, there is a bill circulating in Congress that would allow the owners of home businesses ("nearly half of America's firms") to opt for a standard $1,500 deduction for their expenses. Anyone who has calculated this deductions based on "measuring the office as a percentage of home size and multiplying relevant expenses by that fraction" will understand why most business owners find it easier to bypass this process and forego any associated tax benefits.
Well, according to the featured article this new standard $1,500 deduction for home offices is gaining support in Congress. So, full steam ahead people - it's time to contact your representatives!
A bill circulating through Congress aims to ease the process of writing off expenses for a home office.
By Ian Mount
August 14, 2009: 1:32 PM ET
The deduction process -- which involves measuring the office as a percentage of home size and multiplying relevant expenses by that fraction -- is just too complicated, the survey found.
To ease the process, Reps. John McHug, R-N.Y., and Kurt Schrader, D-Ore., introduced the Home Office Deduction Simplification Act last spring. The bill would create a standard $1,500 deduction, which owners could opt for over the messier version. It would translate into a tax savings of about $500 for those who aren't currently taking the deduction, says Keith Hall, tax adviser for the National Association for the Self-Employed. August 11 Obama's Small Biz Report CardI'm BACK!! What a month it has been! Let's hope I don't find myself in a similar position anytime soon...
Today's featured article comes from CNN SmallBusiness and it focuses on the steps the President Obama has undertaken to assist the small business community. Though the author does not provide letter grades (A, B, C, etc.), she does a pretty good job of comparing and contrasting the steps the President has taken versus the promises he made. In so doing, the author focuses on the issues that are of deepest concern to small business owners. These include: (i) the credit crunch; (ii) health care; (iii) taxes; and (iv) job loss.
It is clear that this economy is still in a deep recession. However, the President did campaign on "Change" and since inauguration, he has taken some steps to alleviate some of the problems small businesses are facing. Now that we are six months into his presidency, we can now judge the effectiveness of the President's policies.
Credit Crunch: the President promised a bailout of "Main Street" and though the stimulus bill provided incentives for banks to issue loans to small businesses (See February 18th post), banks are still wary of participating in these government programs because, despite the government guarantee, they "still see small business loans as a huge risk."
Health Care: The President promised to diminish health care costs by providing a 50% tax credit on health care premiums paid by small businesses. However, healthcare is still being hotly debated in Congress with multiple bills in the house and the senate. As such we cannot make a determination as to whether or not the President is following through on his promise until we have a clearer picture of the final health care bill.
Taxes: the President promised not to raise taxes on small businesses that make under $250,000 per year. So far, it seems that he is following through on his promise. The stimulus bill provided tax breaks (by allowing businesses to carryback losses for five years). The President also froze the 2009 estate tax at 45%. However, unless Congress intervenes, the Bush estate tax will expire in 2010 and will revert to 55% in 2011.
Job Losses: The President planned to extend credit and reduce taxes to small businesses in an attempt to encourage job creation. However, given the banks' reticence to extend loans, small businesses do not have the access to credit they need for growth. As such, there is very little job creation going on at the present time. On the brighter side, reports do show a slow down in the rate of job loss - partially due to companies that benefitted from government contracts issued under the stimulus plan.
So yes, the economic outlook is still very grim. And, many days it seems as if things are not changing - but they are. These first steps are miniscule but at least they show that we are finally moving in the right direction.
Small biz promises: Where Obama standsPresident Obama has pledged to help Main Street where it is hurting the most. Here's a look at where he's followed through -- and where he hasn't.Aug 07 2009 By Emily Maltby July 10 Overview of the Kennedy-Dodd Public Healthcare PlanYes, I am still EXTREMELY busy. However, after I discovered today's featured article from BusinessWeek, I knew I had to take the time to write this post.
As I stated in my April 14th post, I am passionate about healthcare reform. I think it's safe to say that most Americans agree that we need to find a way to reign in the prohibitively high cost of premiums individuals and businesses face. Despite the national consensus regarding the need for reform, there is a big divide over whether or not it should include a government-controlled health insurance agency a.k.a. the "public option". The detractors of the "public option" fear that the private insurance companies would not be able to successfully compete with the government (because of the government's access to unlimited funds). Further, there are additional concerns regarding goverment in the role of government in the doctor-patient relationship, reduction in the quality of health care that provided, the increase in deficit spending if the "public option" was enacted and fear that most employers would use the public option (insead of using private heath insurance) to provide heathcare for workers.
Though there a few proposals floating around, the featured article focuses on the healthcare plan co-sponsored by Senators Kennedy and Dodd. Though this plan includes a "public option" it will cost less than $600 billion and would cover 97% of Americans. ("By contrast, an earlier, incomplete proposal carried a price tag of roughly $1 trillion and would have left millions uninsured..."). The author of the featured article also offered insight into how this plan would work via comparison with the government mandated health insurance plan currently in place in the Commonwealth of Massachusets. (See April 14th post an overview of the Massacushtts plan).
I know that closely monitoring health reform is not at the top of your agenda at the moment. But, we should not be short-sighted about this. You and I both know that the annual double-digit percentage increase in healthcare premium is unsustainble. How can business people turn a profit when this expense is so incredibly high? So please, take a stand. Now is the time to make your voices heard. I know that I will do everything in my power to see change in this area. I am encoraging you to join me in this effort.
New Dem health plan has public option, lower costBy DAVID ESPO, The Associated Press July 2, 2009, 12:29AM ET The plan carries a 10-year price tag of slightly over $600 billion, and would lead toward an estimated 97 percent of all Americans having coverage, according to the Congressional Budget Office, Sens. Edward M. Kennedy and Chris Dodd said in a letter to other members of the Senate Health, Education, Labor and Pensions Committee. The AP obtained a copy. By contrast, an earlier, incomplete proposal carried a price tag of roughly $1 trillion and would have left millions uninsured, CBO analysts said in mid-June. June 24 Is The President Fulfilling Your Expectations?So, once again the day job is intruding on my ability to post as frequently as I'd like BUT
I couldn't resist posting this article from BusinessWeek that discusses the results of a poll of small business owners conducted earlier this year. The questions were centered around entrepreneurs' reaction to the President's policies relating to:
Again, I don't have time to go into much detail but I really thought the responses were really interesting and it also allows you to view the president's policies from different perspectives - and that's always a good thing. NB: That this is a second in a two part series by this author. If you follow the link to the "first column" in the Editor's Note, you will get more information regarding the credit crunch and the details of the poll discussed. What Small Business Owners Want from ObamaAn end to the credit crunch, less talk of tax increases, and health-care reform without coverage mandates top entrepreneurs' listsSmart Answers June 23, 2009 Editor's note: This is the second of a two-part series about small business owners' reactions to the Obama Administration's policies. The first column and its accompanying slide show were published on June 19. Along with resentment about billions in government bailouts to large corporations deemed too big to fail, the issues most commonly mentioned as troubling for small business owners as they contemplate life under the new Obama Administration are the persistent credit crunch, the Administration's plans for health-care reform, and the possibility of tax increases on top-tier income brackets, experts say. June 09 Loan Guidelines For Small Biz Emergency LoansBack on May 8th, I featued an article that gave an overview of the Small Business Emergency Loan (aka "America's Recovery Capital" or "ARC") that was authorized under the economic stimulus bill enacted earlier this year. On May 19th, I featured a follow up article regarding the availability of these loans on June 15th. Well, thanks to CNN Money - Small Business, I am able to feature a piece that gives a relatively detailed summary of the SBA guidelines for these loans. Though I would normally give synipsis of the featured article in my post, I am quite limited on time. So, for those of you interested in applying for one of these loans, this piece is a MUST read. Good Luck!
Government readies emergency small biz loansStarting next week, struggling companies will be able to apply for up to $35,000 in debt-relief loans through a new stimulus program.By Emily Maltby, CNNMoney.com staff writer
Last Updated: June 8, 2009: 6:13 PM ET
NEW YORK (CNNMoney.com) -- One week before its emergency loan program is slated to launch, the Small Business Administration issued guidelines for banks and borrowers on how the new loans will work. Called "America's Recovery Capital," ARC loans are designed to make up to $35,000 available to struggling small business owners to temporarily help them keep up with payments on existing loans, including credit card debt. Authorized as part of February's stimulus bill, the program has been under development for four months. Many banks were waiting for the SBA's procedural guidance, released Monday, before deciding whether or not to participate. Here's a primer on how the emergency loans will work. May 19 Small Biz Emergency Loans Available in JuneHello! I am still in the middle of a much needed two week break (I'll have regular blog posts starting the Tuesday after Memorial Day). However, I had to post this follow-up to my last post on the small business emergency loan.
In my May 8th post, I featured an article from CNNSmall Business that provided detailed information on the small business emergency loan that the government is providing to small businesses to cover short term cash shortfall caused by the economic downturn. Quoting from the May 8th post, the small business emergency loan (aka "America's Recovery Capital" or "ARC") has a limit of "$35,000 and you don't have to worry about making payments for an entire year. In addition, "businesses will have up to 5 years to fully repay them." As the goal of this loan is to help you pay off outstanding debts, you might be wondering what qualifies? Well, according to the piece, a Congressional staffer is quoted as saying,"[p]rivate loans made for any legitimate business purpose -- including credit card debts, bank loans and real-estate loans -- would be eligible for the program.""
Though these ARC loans were authorized in the February Stimulus Bill, there has been delay in making the much needed cash available to small business owners. Well, good news! Per today's featured article from CNNSmall Business, the Small Business Administration ("SBA"), "plans to release guidance to banks by June 8 and will be ready to accept lender loan packages by June 15. Business owners will need to apply directly to banks for the loans, but the SBA will offer those banks a 100% guarantee on the ARC loans they make."
Now that you will soon be able to apply for these small business emergency loans, preparation is key. As such, read the article, find out the loan guidelines from your local SBA, and start putting your paper work in order. As the article states, even with all the government incentives, banks are still wary of making loans to small business owners. As the saying goes, "the early bird gets the worm". Seeing that one can anticipate that there will be high demand for the ARC loans, you want to be first in line.
Emergency small business loans coming in JuneTo kick off National Small Business Week, the government announced its timetable for a hotly awaited assistance program.By Sharon McLoone, CNNMoney.com contributing writer
Last Updated: May 18, 2009: 4:47 PM ET
WASHINGTON (CNNMoney.com) -- An emergency loan program designed to shore up struggling-but-viable small businesses will open for applications in mid-June, the Small Business Administration announced Monday. The news came during a speech by SBA head Karen Mills kicking off the SBA's annual National Small Business Week program of publicity and networking activities. Known as America's Recovery Capital (ARC), the emergency loans were authorized in February's stimulus bill. The SBA has been working since then to pull together guidance for the new program, which will back short-term loans of up to $35,000 that business owners can use to temporarily cover their payments on existing debt. No repayment on the ARC loans will be due for 12 months, and owners will have up to five years to repay them. May 08 Need $$$ Now? The SBA Emergency Loan Might Be The AnswerYesterday I was talking to a fellow small business owner who was bemoaning his business' lack of funds (as most of his revenue sources have dried up). In my effort to be helpful I asked, "Why don't you just take advantage of that SBA emergency loan Obama provided in the Stimulus Package. You can get $35,000 interest free - that can keep you floating until something pops up." His response: "What loan?" Of course I was surprised by this answer - I mean, didn't I feature information on this loan in one of my past posts?
Well, a quick review of the archives show that, I only discussed this loan program in passing in my February 18th post titled, Breakdown Of Your Cut Of The Final Stimulus Bill. Now it's almost three months later and though the SBA has a new chief and the credit market is thawing slowly, commerce in this country is still not where it should be. Given the economic uncertainty, the demand for most goods and services is almost nil. But who know what the next few months will bring? So far things seem to be going in the right direction. Why not focus on keeping your business afloat until the market picks up?
With this in mind, I decided to feature an article from CNNSmall Business that provides indept details on the Emergency Small Business Loan. As previously stated, the limit on this loan is $35,000 and you don't have to worry about making payments for an entire year. In addition, "businesses will have up to 5 years to fully repay them." As the goal of this loan is to help you pay off outstanding debts, you might be wondering what qualifies? Well, according to the piece, a Congressional staffer is quoted as saying,"[p]rivate loans made for any legitimate business purpose -- including credit card debts, bank loans and real-estate loans -- would be eligible for the program."
As with any loan program, there is always the "fine print". So, if you think you might need this infusion of cash, please take the time to read the featured article to see if you would qualify. Then,the next step is obvious - pick up the phone and call your local SBA office.
Emergency biz loans: What qualifiesThe SBA's forthcoming loan-relief program can't be used to pay down existing SBA loans -- but past borrowers will still be eligible for help with other debts.By Stacy Cowley, CNNMoney.com small business editor
Last Updated: March 20, 2009: 4:49 PM ET
The upcoming program, tentatively dubbed the "America's Recovery Capital" (ARC) loan program, is a measure mandated by last month's stimulus bill. The bill requires the SBA to create a new "business stabilization" program to back loans of up to $35,000 to small businesses "experiencing immediate financial hardship." The loans are intended to be used to make interest and principal payments on a "qualifying small business loan" for up to six months.
April 24 The Roadmap To Getting a Govt. ContractAs President Obama has noted on many occasions, given the depth and breadth of this recession, the government is the only game in town right now. The vast majority of that government spending is being funneled to private enterprise via Obama Stimulus Bill that became law this past February. In order to get your stake in this government spending boon, you must first be in a position to get a government contract - and that is where the problem lies.
As I’ve stated in my January 18th post, I’ve worked directly with the SBA in my effort to help my father’s company, Beckmang Consulting, become 8(a) certified. In that post, I described my experience working with the SBA as follows: “There is just a general sense at the agency that the employees are just going through the motion; that they have very little interest in actually being a resource for the many small business owners that seek their assistance.” Well, now that we have a new SBA Chief, one can only hope that this problem will be rectified.
But, as today’s featured article from Fortune Small Business shows, there is still a matter of the “logistical challenges and loopholes” in the small business programs themselves. This piece gives an overview of the SBA preferential contracting programs and a short history of their effectiveness. From experience, I know that it is difficult for a small business to get into any of these programs. As such, nothing is worse than the disappointment people feel when they realize that the system is, in some ways, rigged against them. That is why I believe this article is so important - it’s like a roadmap in that it shows you how to navigate the system. By knowing what to expect going in, it reduces the probability that you will become discouraged by the many pitfalls you will encounter along the way. Hopefully, this will give you the perseverance you will need to achieve your goals.
If you are interested in procuring government contracts - this article is a must read for you. Good Luck! - Trust me, you will need it.
Preferential contracting made easy Preferential contracting is a policy rife with logistical challenges and loopholes - but for some small firms, it's also a lifeline.
By Lenora Chu Last Updated: March 17, 2008: 11:08 AM EDT
(FORTUNE Small Business)
Back in 1953, when Congress established the SBA with passage of the Small Business Act, legislators aimed to drive more government contracts to small companies. The current Congressional target calls for 23% of all federal procurement contracts to go to small firms, an increase from 1997's 20% goal.
One tool Congress authorized to help make this happen? Set aside programs for small businesses, which were created by a 1977 law. These programs allow government agencies to limit competition for certain contracts to small-business bids only. April 14 National HealthcareToday, we’re going to be discussing a topic that is very close to my heart - healthcare. For small business owners, this is one of the biggest burdens we have to carry. Yes, we recognize our moral duty to do right by our employees, but with the prohibitively high cost of healthcare in this country, it feels as if we are sacrificing our business to do this. Given the enormity of this problem, some states have tried to mitigate the cost to small business owners. In New York, the government allows businesses with 2 - 11 employees to participate in the “Healthy New York” Program. Thus, business owners who qualify are able to buy health insurance from the regular insurance companies at half price. Unfortunately, Healthy New York does not extend coverage to sole proprietors. As such, the premium for a barebones HMO policy from the cheapest health insurance company (HIP): $700 / month. No, I did not mistype - the premium is really $700 per month.
That is why most of us entrepreneurs are excited that the President has decided to keep his campaign promise to reform our current healthcare (with an eye toward drastically reducing the cost of the insurance). Though the President has outlined a few principles (thankfully emphasizing the urgency of passing this legislation), it is up to Congress to decide on a model. One of the leading voices on healthcare issues in the senate is Sen. Teddy Kennedy. And, in 2006, his home state, the Commonwealth of Massachusetts passed legislature that mandated health insurance for all of its residents. Wow!! State mandated healthcare - that is good news, right?! Well according to today’s featured article from BusinessWeek, not necessarily. This Massachusetts law “requires individuals to have health insurance and businesses with 11 or more full-time employees (or full-time equivalents) to offer it.” Unfortunately, when the legislature was contemplating the model for their healthcare system, they decided to, "'first…get universal coverage and then bear down on costs,'" This decision has proven to be disastrous for small business owners financially. According to one entrepreneur, her healthcare cost increased by 25% last year alone! Obviously, using the Massachusetts plan as a model for our new national healthcare system would not be feasible for us. Given the potential impact of this new program, we have to become more engaged in the decision-making process. That is why we really need to be knowledgeable about the different models that Congress might use as a template for the national system. As such, review the featured piece, and use the information to provide feedback to the President (via his virtual town halls) and your congressional representatives. As I’ve said countless times before, “knowledge is power” - come on people, let’s start taking our power back! Take a Deep BreathIf Obama's health plan borrows heavily from Massachusetts' model, how will small business cope? BWSmallBiz -- Health Care April 3, 2009
By It's too soon to call Massachusetts' three-year-old health-care reform a success or failure…
But questions about the state's experience linger, not least because President Barack Obama is expected to take a nod from the Massachusetts plan in developing his own model. Will employers continue to pay for benefits in a full-blown recession? How can anyone manage skyrocketing costs? Are stingy benefits better than none at all? And, most of all, how well can a single wealthy state—especialy one that, before the reforms, had only a 10% uninsured rate—inform the national debate?
April 03 The SBA Gets A New Chief!In the January 26th post, I encouraged the Senate to quickly confirm Karen Gordon Mills as Chief of the U.S. Small Business Administration (hereafter “SBA”). Well, I am happy to announce that this wish has been granted - Ms. Mills was unanimously confirmed yesterday.I know, from my personal experience working with the SBA, that the Agency does not currently have the means to effectively assist small business owners. As such, I had great interest in whether or not Ms. Mills would bring much needed change to the SBA. After analyzing her education and track record in the January 26th post,I concluded that, Ms. Mills, “is the closest thing to a concrete remedy that we [small business owners] can expect from the government in the near future.”Well, based on her comments during and immediately, after her confirmation, it seems as if my conclusions about Ms. Mills were spot on. According to today’s featured post from CNNMoney her ideas about ways to improve the SBA highlight her track-record of developing innovative problem solving solutions. Some of which are as follows: To help small business owners get government contracts: “Mills suggested increasing the number of procurement representatives at the agency and providing them with more training. In addition, she highlighted a suggestion from Michael Enzi, R-Wyo., to sponsor networking events to help match prime contractors with small businesses.” To help small business owners manage the cost of healthcare: “She'll explore options such pooling business together to lower their costs and offering tax relief for businesses that pay to insure their employees.” To get more resources for the SBA, she will seek to: “Coordinate with other government agencies whose programs affect small businesses, including the Commerce, Labor and Energy departments.“ In addition to this, Ms. Mills also emphasized her plan to immediately work on efficiently dispersing the resources available to small business owners via the Obama Stimulus Plan. My response: finally! Maybe, just maybe we have hit the bottom and are now on our way up. (One can only hope!)
New small biz chief pledges to get aid moving
In her Senate confirmation hearing, Karen Gordon Mills acknowledges the Small Business Administration's troubled history, but says the problems are fixable. By Mills was confirmed Wednesday evening in a unanimous vote.
In her hearing earlier in the day, Mills said that the SBA's first priority should be rolling out the provisions in March 19 The President’s New Small Biz Plan To Unfreeze Credit Markets
In Monday’s post, I discussed the President’s forthcoming speech on his small business initiatives (See post March 16th post - Obama To Give Speech on Small Biz Assistance Today). As of Monday, the President had already launched programs to help provide relief to entrepreneurs via: (i) the stimulus bill (February 18th post titled, Breakdown Of Your Cut Of The Final Stimulus Bill) and (ii) TALF (See March 9th post titled, Can TALF Make It Easier For You To Get A Loan?). Well, during his speech, the President launched a third program – one in which the government will provide liquidity to the credit markets by purchasing SBA-backed loans directly from the banks.
Today’s featured article from Forbes provides the details of this new plan: “$15 billion, coming from the U.S. Treasury Department, will be used to purchase securities backed by the SBA-guaranteed loans in an attempt to jump-start the secondary credit market for small businesses. Banks that offer SBA-guaranteed loans have hit a lending wall in recent months, as the secondary market is frozen, so banks can't get the old loans off their balance sheets to free up capital for new loans.” In the March 9th post, I discussed the government’s use of TALF to provide cheap loans to private investors who choose to purchase SBA-backed securities. However, under this new initiative, the government itself will step into the private investor’s role. As such, one can only infer that TALF program is not performing as anticipated.
Despite this setback, small business owners are beginning to feel as if they (finally!) have the President’s attention. And, the featured article does a good job of showing how all the pieces of the different plans fit together. As Chip Mayan, CEO of Wilmington, N.C.-based Live Oaks Bank said, “…[T]his is a different world than the one we were in the day before…” . As such, it’s time to “seize the moment”! My advice: review the Forbes piece and take the time to highlight all ways in which the increased government guarantees and temporary waiver of lending fees can benefit you. Then, quite simply, pick up your phone and call your bank.
Small Business Loves Obama's Plan Entrepreneurs and small-business owners who groaned about corporate government bailouts bit their tongues Monday when President Obama announced a plan to inject $15 billion into the small-business loan market. While there were pockets of hope for small businesses in the American Recovery and Reinvestment Act--government grants for eco-friendly renovations, tax deductions for capital expenditures and research grants for technology development--for the most part entrepreneurs argued that those potential opportunities still paled in comparison to the billions of dollars flowing to big corporations. (See "Where's The Stimulus For Small Business?") "For us, this is a different world than the one we were in the day before yesterday," says Chip Mayan, CEO of Wilmington, N.C.-based Live Oaks Bank, which lends primarily to veterinary businesses. "I absolutely applaud the decision to buy up [the Small Business Administration-guaranteed] loans. The main difference is in the philosophy of the SBA, which used to be that it would pay for itself. But if you want to stimulate the economy like this administration is attempting to do, you have to try something different." March 16 Obama To Give Speech on Small Biz Assistance TodayLet me apologize for the sparse number of posts last week. I am still overwhelmed with work from the "day job”. Hopefully, things will slow down soon. Now let's move on to today's post. Since the economy crashed last October, many small business owners have been feeling the pinch of the frozen credit markets. However, while GM, Chrysler and the bankrupt (or so called Zombie) banks get billions of dollars in bailout money from the government, no similar actions were taken to directly alleviate the plight of small businesses. For the general public, this reeks of unfairness – after all, the banks that are getting all the help are the ones that caused the economic crash in the first place! In addition, despite the massive infusion of cash from the federal government, these banks are still refusing to extend loans to most business owners. As a result, many small business owners are frustrated with the government response to this crisis. However, in absolute fairness to the Obama administration, the stimulus bill did specifically divert money toward assisting small business owners. (See the February 18th post titled, Breakdown Of Your Cut Of The Final Stimulus Bill).Though this was nowhere near the scale of the aid provided to the financial institutions on Wall Street, we can all agree that it was a step in the right direction. Well, according to the featured article from CNNMoney, we have even more reason to hope. This is because today, President Obama will give a give a speech that “will announce administration plans to make lending to small businesses more attractive.” At this point, it is not clear whether the President will reveal new initiatives in the speech or simply highlight policies that are already in place via the stimulus bill and TALF. (See March 9th post titled, Can TALF Make It Easier For You To Get A Loan?). Whatever the content, one can only hope that today, the President will put forth a plan that is both cogent and comprehensive. If you want to watch the President’s speech , check out your local television listings for details. Or, in the alternative, do what I do – keep your television locked on one of the cable news channel. I can guarantee that they will all be broadcasting the speech in its entirety in real time.
Help is coming for small businesses
President Obama will announce details of plan encouraging loans to small businesses. By Suzanne Malveaux, CNN White House correspondent March 15, 2009: 10:10 PM ET WASHINGTON (CNN) -- President Barack Obama and Treasury Secretary Tim Geithner on Monday will announce administration plans to make lending to small businesses more attractive, two senior administration officials confirmed. Many small businesses, drowning from dried up coffers and unpaid bills, are having a tough time getting loans from lenders. Christina Romer, who heads the Council of Economic Advisers, said Sunday the government would pump "a significant amount" of money into boosting small business lending, but she did not reveal a total figure. February 18 Breakdown Of Your Cut Of The Final Stimulus BillSo did you hear? Yesterday, President Obama signed the most sweeping piece of legislature since FDR’s New Deal. This bill has many components – some of the most highlighted features include aid to the states and personal tax cuts for 90% of all taxpayers. But, this is a small business blog, so let me get on to the featured piece from CNNMoney that breaks down how this stimulus bill will help your business survive the recession. A quick review of the featured article shows that the stimulus bill is primarily geared toward helping small business owners in the following ways: (i) Increase your access to credit; (ii) Implement changes in the tax code that will offset losses, encourage you to increase your capital expenditure and give you incentives to hire “disadvantaged workers”; and (iii) make it more lucrative for investors to provide funding for your business. So, how exactly is it going to do this? Here is the breakdown: 1. Increase Access To Credit · Make it easier for you to get loans by: (i) reducing fees for those participating in SBA loan programs and (ii) increasing government guarantee of all SBA loans. · Helps you pay off existing loans by providing you with “small business stabilizing financing” of up to $35,000. · Unfreeze the credit market by providing $3 Billion of government guarantees to private investors who buy debt securitized by SBA loans. · Provides an additional $6 million for microloans.
2. Changes in the Tax Code · Reduce your current tax liability by carrying back operating losses incurred in 2008. It also allows you to carry this loss forward for up to 20 years. · Deduct up to $800,000 of the cost of some equipment as an expense. · $2400 credit for each high school dropout or unemployed military vet you hire.
3. Encourage Investment in Small Businesses · Anyone who buys stock in your business after yesterday, and holds it for at least 5 years before selling, will be allowed to exclude 75% of any capital gain from taxation. Though I have given you an outline of the benefits that will accrue to you from this bill, I strongly recommend that you get the full details behind each of these measures by reading the featured piece from CNNMoney. In addition to reading the article, you should also print a hard copy, take it to your accountant and start working on a strategy that will allow your business to capitalize on all that was offered in this bill. Yes, I know – what we got is miniscule compared to the bailout of the Wall Street players, but something is better than nothing right?
Stimulus: What's in it for small biz?
Emergency bridge loans and reduced fees for SBA-backed loans are some of the stimulus bill's steps to help small businesses struggling to survive the recession.
By Stacy Cowley
February 17, 2009: 10:19 AM ET
NEW YORK (CNNMoney.com) -- The number of small business loans banks issue has cratered since the recession took root last year. Rebuilding that number is the focus of the small business provisions in the economic recovery bill that President Obama is expected to sign into law on Tuesday.
The bill authorizes the Small Business Administration to temporarily eliminate or reduce fees for participation in its flagship loan-guarantee programs, which insure banks against default by small business borrowers. The stimulus bill also increases to 90% the percentage of qualifying loans that the SBA can guarantee.
February 09 How About A Small Business Bailout?So, it’s another week and another government-related post regarding the Economic Stimulus Package. Trust me - I am tired of writing about this Bill too. However, our thoughts on whether or not this is the right path to economic solvency is immaterial. The point is, this Stimulus Bill has already passed the House, there is a deal for passage pending in the Senate, and President Obama is personally “selling” it to the American People in the areas that are hardest hit by the present economy (today in Indiana and it tomorrow in Florida). So, despite stiff opposition from the minority Republican Party, it seems the Obama plan will be law within the next few weeks. As you all know, I have already posted articles that provided an overview of the highlights of this Stimulus Bill (on February 3rd and January 20th). However, of all these, I believe today’s featured piece gives a more direct response to the questions on the minds of most entrepreneurs. It is written in a “Dear Abby” sort of format on MSNBC wherein viewers write in questions and members of the MSNBC Staff provide answers. The featured question is from an entrepreneur who writes, “What's in this bailout for my small business?” The answer, which I thought was insightful and informative, is as follows: What's in this bailout for my small business? Also: Does Uncle Sam accept donations to pay down the national debt?
By John W. Schoen Senior producer msnbc.com updated 10:17 a.m. ET, Mon., Feb. 2, 2009
With the government committing hundreds of billions of dollars to help get the economy moving again, small business owners are wondering: Is there anything in this bailout that's going to help me? Can my small business get in on the bailout? If so, how? If you mean: “Is the government handing out cash to small businesses the way it’s showering money on the banking industry?” the answer is no. To get any of the $700 billion Congress has approved so far for the Troubled Asset Relief program, you pretty much have to be a bank that’s in deep trouble because it made loans to people who couldn’t pay them back. Were you as impressed with the answer given as I was? Feel free to share your thoughts by clicking comments below. February 03 Conscise Overview of Where The Stimulus Bill StandsIn last week’s government-related post, I expressed my frustration with the partisan squabbling in Washington – and this was before all the Republicans in the House of Representatives voted “no” on the Economic Stimulus Bill! Hey, I understand; this Bill is not perfect. If I had a voice, this piece of legislation would be very different structurally. However, regardless of where we are on the political spectrum, we are all in this together. As such, I was very disheartened by the results of last week’s vote. That being said, given the significant Democratic majority, the Stimulus Bill easily passed the House. Though I would like to ignore all politics on this issue for a while, this piece of legislation has really far-reaching consequences. Unlike the $750 billion bailout last October, aka the “Wall Street Free For All” (the latest examples of abuse being Bank of America spending $10 million to sponsor a 5 day carnival at the Super Bowl, and Morgan Stanley’s recent client retreat at a 5 star resort in Palm Beach), this new $819 billion package affects us all. It will cover things like infrastructure spending, safety net (i.e. unemployment, food stamp, COBRA) reform, tax cuts (for individuals and businesses) and relief for almost bankrupt State programs (like Medicare). However, despite its passage by the House last week, this Bill is still very much a work-in-progress. And, it is currently being reviewed and amended by the members of the Senate. This is where the featured article from CNNMoney comes in. It provides: (i) a very concise outline of the major programs the Bill will tackle, (ii) the Obama Administration’s stated goals, (iii) the political arguments both for and against these objectives, and (iv) the likely outcomes in the Senate. Because I believe it is so vital for you to actually read this piece, I have refrained from writing a summary of the highlights of the article. As I stated in yesterday’s post, it is once again time for us all to become informed adults. We can no longer simply have faith that our representatives will do right by us (look where that got us after last year’s Wall Street bailout!). As the old cliché says, “knowledge is power” – it is now time for us to start taking our power back.
Stimulus: What you need to know The plan by Obama and congressional Democrats to revive the economy is taking shape. Here's what we know so far. By David Goldman, CNNMoney.com staff writer Last Updated: February 2, 2009: 3:17 PM ET NEW YORK (CNNMoney.com) -- The House passed its $819 billion version of the economic stimulus package last week. Now it's the Senate's turn. The near-$900 billion package the Senate will debate and likely vote on this week is very similar to the House bill. There are a few key differences: The Senate bill adds $70 billion in Alternative Minimum Tax relief for working families and $17 billion to provide a $300 payment to seniors, disabled people and others who can't work. It also would suspend taxes on unemployment benefits. And those are just some of the differences between the Senate and House bills, and their number is likely to increase as the the Senate takes up numerous amendments, including proposals to expand infrastructure spending, lock in low mortgage rates and expand a homebuyers' tax credit. What are some of the headline proposals, and what is the debate all about? The legislation is a work in progress, but here is an overview.
January 26 A Closer Look At The New SBA ChiefIn the immediate aftermath of last week’s presidential inauguration, all the pundits on TV were asking if maybe, just maybe, we had entered a new era of bipartisanship in Washington. Yeah, right. Over the ensuing two or three days, all we saw were politicians squabbling over every single provision of the proposed economic stimulus package. One would think that with a democrat in the White House, and significant democratic majorities in both houses of Congress, we would have a break from this kind of partisan rancor. But, no such luck. Everything relating to this rescue package is still very much in flux.
In an effort to gain a clearer insight into what we can expect from the Obama Administration in the coming months, I decided to turn my attention back to the U.S. Small Business Administration (SBA). About a week ago, I wrote a post discussing the decline of the SBA over the past 8 years and Obama’s appointment of Karen Mills (as Agency Chief) to help fix that problem. Ms. Mills has not spoken publicly about her plans for the SBA since her appointment because she is not yet confirmed by the Senate. However, in my last post on this topic, I tried to glean some indication of her goals for the agency by analyzing my limited knowledge of her career. Thankfully, the featured article from the BusinessWeek does the same thing – only they had access to a LOT more information. As such, I invite you to join me in taking a closer look at how exactly “Obama’s Chief May Change The Agency”.
There is no doubt that Ms. Mills has stellar academic credentials (she is an alumna of Harvard University for both B.A. and MBA). What is more impressive, however, is the breadth of her practical “real world” experience. As mentioned in the previous post, Ms. Mills is currently a venture capitalist. Along with this financier's background, we know that she has a thorough understanding of what it takes to get start-ups off the ground. Additionally, as Ms. Mills has worked as a product manager for General Foods and served on numerous boards of directors, one would expect her to have a lot of insight into the needs of established businesses. For female entrepreneurs, it seems the cavalry is here. Ms. Mills has an impressive track record of being mindful of the needs of the nation’s women-owned businesses. Let's hope she can convert that mindfullness into ensuring that the SBA finally fulfills its federal mandate to reserve 5% of all government contracts for women-owned small businesses. Just in case you still had some concerns about her ability to run the SBA, “Super Mills” metaphorically “pulled another rabbit out of her hat”. In the past, she not only conducted research that promotes innovation by small businesses, she also had the temerity to personally lobby the Maine legislature to get them to pass a $50 million research and development bond to implement her findings.
By any standards, it is clear that this woman is a force. And, the potential for her effectiveness as SBA Chief is only enhanced by the fact that she is widely viewed as being non-partisan. During an interview with BusinessWeek in October 2008 (before her appointment) Ms. Mills expressed her belief that the SBA needs "a strategy that puts small business at the center, that differentiates between the high-impact, high-growth small businesses who have these needs for more long-term equity capital vs. the Main Street businesses which today need reinstatement of their short-term credit.” A closer look at the research she conducted at the Brookings Institute shows that she is also committed to ensuring that U.S. small businesses are are more competitive globally. My response: it cannot happen soon enough. It is time to shift the balance of trade back in our favor. As stated in previous posts, my Dad and I have been working closely with the SBA over the past year. Saying we are frustrated by this experience is an understatement. At this point, I can only hope that the partisans down in Washington can pause their arguing long enough to get “Super Mills” confirmed. Right now, it appears that she is the closest thing to a concrete remedy that we can expect from the government in the near future. Let me know if you agree or disagree with my analysis. Click the comment button below to share your thoughts.
How Obama's SBA Chief May Change the Agency
As the President's pick to head the Small Business Administration, Karen Mills could transform the agency's approach to funding
President Barack Obama's Dream Team is packed with so many high-caliber picks, it might be easy to overlook Karen Gordon Mills, his choice to head up the Small Business Administration. But she is no exception…
Recognizing the Diverse Needs of Small Businesses
What will the SBA under Mills' direction look like? Those who know her say she will balance a financier's background with extensive hands-on experience using government to promote small business needs. And she is likely to do so in a nonpartisan fashion. She's also likely to focus particularly on the needs of women-owned small businesses and to help foster a more global role for American entrepreneurs. "I have worked with Karen over the years and she is an exceptionally capable individual who always has the interests of our nation's small businesses in mind," says Senator Olympia Snowe (R-Me.), ranking member of the Senate Committee on Small Business & Entrepreneurship, who recommended Mills for the post. Snowe says she hopes President Obama will make the administratorship a cabinet-level position.
January 20 Your Piece Of The New Economic Stimulus PackageIt is Inauguration Day and I’m writing the final in my series of posts on the Obama Administration’s effect on small business. So, I am sitting here, trying to be rational – only focusing on the issues just like they taught me in law school. But then, I turn on the TV and I’m completely blown away by the inauguration fever permeating the country! There is only one word for it – WOW! Immediately, I’m reminded of the fact that I am actually experiencing history! Positive, world-changing history! As such, I think on this very historically significant Inauguration Day, we should all take a moment to remind ourselves that regardless of where we are in our personal lives right now, we can also achieve new heights. All we have to do is plan, put in the hard work and remind ourselves periodically that, “Yes We Can!” Now back to reality and another kind of history – one of the biggest economic stimulus packages ever! I’m a centrist, and that means I am always a bit concerned when I hear proposals of big government programs. I am not against government intervention on principle; I just want to know how the money will be spent and who will be administering the funds. Like Obama, however, I don’t believe that you can ask people to “pull themselves up by their bootstrap” if they don’t have any boots. (Paraphrasing from his acceptance speech at the 2008 Democratic Convention). And, that is why I am very happy that part of this stimulus package will be directed toward small business owners like you. Today, I have featured two news pieces dealing with this topic. The first is from Kiplinger and it gives an overview of the incoming President’s economic stimulus package. Conceptually, this article is similar to the one featured yesterday. However, different authors frame the same issues in different ways. As such, I am going to ask that you take a quick look. Despite this recommendation, I have to admit that I am more fascinated by the second news piece featured. This is a letter from the National Small Business Association (NSBA) to House Speaker, Nancy Pelosi, urging her to take steps to directly assist the small business sector of the economy. NSBA is an advocacy group based in Washington (our very own lobby – who knew?!) and they have outlined 12 measures they would like to see Congress include in the new economic stimulus package. Almost half of the proposals deal with ensuring that SBA loans become cheaper and more accessible. In addition, there is a request for a mandate that 23% of all infrastructure stimulus funds be contacted out to small business owners. Finally, there are proposals for changes in the tax code that will minimize expenses like healthcare. We all know that politicians are always extolling the virtues of small businesses. However, when problems arise, they are more likely to bail out the large industrial giants they deem, “too big to fail”. That is why I think it is important for us to review the proposals submitted to Congress by the NSBA. While it is highly unlikely that all of these measures will be included in the economic stimulus package, we need to know just how responsive this new government will be to our advocates. Though all the news so far indicate they will be, until these new policies are actually signed into law, all we can do on this Inauguration Day is hope. Economic Rescue Is Job No. 1, 2 and 3 for Obama in White House
NASB’s December 2008 Small Business Stimulus Proposal Letter To Congress
January 19 The Obama Administration and YouThere is no doubt that President-Elect Obama made a lot of promises to small business owners during the campaign season. (Remember his conversation with Joe The Plumber anyone?!) However, now that he is about to be sworn into office, these plans have to be tempered by political and fiscal realities. I mean, our country is broke! And, in addition to the worldwide economic crisis, we have two ongoing wars and a crumbling infrastructure. Yesterday, I discussed Obama’s selection of Karen Mills to head the Small Business Association (SBA). While this is a good first step, as small business owners, we still need a lot more assistance. The featured article from Inc. gives us an overview of Obama’s plans for us in the areas of taxes, health care, financial regulation, labor, energy and the environment. Additionally, and most importantly, the author analyzes the obstacles that will impede the implementation of each. For me, health care is a major issue and I was very excited that Obama seems committed to making it a priority. However, from the information gathered in this article, it seems as if I am probably going to have to wait at least 2 years before I see any major changes. For those of you in the highest tax brackets, it appears that increasing your taxes is at the top of the President-Elect’s agenda. Fortunately, if you are an entrepreneur, there will be many more built in tax breaks that will serve to offset the increased liability. As they say, “fore-warned is fore-armed”. Read the article and start adjusting your plans accordingly. Because as of Tuesday, there will be a new sheriff in town and his mantra is “Change”.
The Obama Administration: Now What?, By: Robb Mandelbaum, Published January 8, 2009
Barack Obama campaigned on an agenda of change -- from increased financial oversight to health-care reform. But with an economic crisis that shows no signs of letting up and a Democratic Congress that has its own set of priorities, how will the first year of his administration actually shape up?
So what's next?
January 18 A More Effective SBADuring the campaign season, President-Elect Obama promised strong support for small businesses. And, in December of last year, Obama took his first step toward fulfilling this promise when he selected Karen Mills, a former venture capitalist, to head the U.S. Small Business Association (SBA). As I discussed in yesterday’s post, the SBA serves the small business community in many ways. Some of its more important functions include: (i) free counseling and training, (ii) business loans at “friendlier rates” and (iii) providing support to women and other entrepreneurs from “disadvantaged” backgrounds. However, according to House Small Business Chairwoman Nydia Velazquez (D-N.Y.), "Through budgets cuts and mismanagement during the last eight years, the SBA has become nothing more than a shell of the agency it used to be. Reversing this course is essential." Recently, I have had to work with the individuals at the SBA who are tasked with advising and guiding entrepreneurs admitted to their 8(a) Program. From my experience, Ms. Velasquez’ views are on point. There is just a general sense at the agency that the employees are just going through the motion; that they have very little interest in actually being a resource for the many small business owners that seek their assistance. That is why I am so pleased with Obama’s selection of Karen Mills. Her background shows a track record of success. And, as a former venture capitalist, she understands what it takes to support and grow small enterprises. Also, it is clear from her experience that this is a person who is willing to embrace innovation, fresh ideas and change. Though she has not yet disclosed her specific plans for the agency, I truly hope that Ms. Mills will use her skills and talents to shift the paradigm at the SBA. Because, let’s be honest, there will be no recovery for us unless we have the aid and support of a revitalized and effective SBA.
Obama Taps Venture Capitalist to Head Small Business Administration
washingtonpost.com Staff Writer President-elect Barack Obama this afternoon nominated venture capital expert Karen Gordon Mills to head the Small Business Administration.
"We must strengthen the small businesses that are the backbone" of the American economy, Obama said at a Chicago press conference. "With Karen Mills as administrator, America's small businesses will have a partner in Washington" who will help them create jobs and understand the challenges they face.
Mills, who has been part of the president-elect's SBA transition team, is president of MMP Group, a private equity investor and adviser since 1993. From 1999 to 2007 she was founding partner and managing director of Solera Capital, a New York based venture capital firm. She is also lead director of Scotts Miracle-Gro. Her husband is president of Bowdoin College in Maine.
January 17 Public Programs For YouAs of next Tuesday, January 20th, the United States of America will have a new president. Though many are focused on the historic nature of this inauguration (we can all be proud!), the main question on my mind is, “What exactly is the Obama Administration going to do to help small businesses?” This is a question that I will explore in all the blog posts from Sunday through inauguration day. But before I do, I think it is important for us to take a look at the public resources that are already available to us – to get the “lay of the land” so to speak. The featured article from Forbes allows us to do just that. First, it takes us through some of the programs offered by the U.S. Small Business Association (SBA). For those in need of an influx of cash, the SBA offers loans to small business owners at “friendlier rates” than your local bank. If you need advice, the SBA provides free counseling and training through their business development centers, women’s business centers and SCORE. In addition to the SBA, the article also discusses other public sources that most people don’t normally think about. Some of those mentioned include the local Chambers of Commerce, Angel Investors, and grants and other programs offered by local city and state governments. As entrepreneurs it is natural for us to look to the private sector to find solutions to our problems. But, as smart business people, we have to explore all of the options available to us – even those offered by the government. Just remember, small businesses employ 70% of the U.S. workforce. And, with our current economy in this crisis, we have to do everything we can to survive. Right now, that’s the patriotic thing go do. Forbes Entrepreneurs Recession-racked entrepreneurs need all the help they can get. The good news is that there are myriad affordable resources--facilitating everything from raising money to finding talented help--and many are just a few mouse-clicks away. The key is knowing where to look.
Of course, culling all those options is still a daunting task. Start with the usual suspects. The Small Business Administration offers a host of services, though many entrepreneurs don't know what's on the menu. Most importantly, the SBA guarantees loans under its 7(a) loan program, allowing entrepreneurs to borrow at friendlier rates, and its so-called 504 loans help fund real estate and machinery purchases.
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