It’s not surprising that taking on debt is out of vogue these days. What is surprising that it’s not just on the lender side; small businesses are shying away from loans as well. Is this because that debt is bad in uncertain times, or is there another reason?

The number of SBA’s number one secured loan, the 7(a) loan, dropped 30% since last fiscal year. An obvious reason is that lenders are less comfortable to give out money, even SBA backed money. Another is small businesses are finding it more and more difficult to navigate the loan process.

The SBA doesn’t actually give out the money, but rather backs a percentage of the loan. As a result, they only have guidelines when it comes to collateral and other terms needed to protect the lender. Small business owners are discovering that in order to get a loan these days, they must put up personal items as collateral; items such as their house, cars, or other property to cover the remaining risk.

Using homes as collateral is a long-time, tried-and-true method, but one that is no longer that effective. Because of the credit crunch, house values have plummeted making their usefulness as collateral shrink. This makes the small business owner less credit-worthy, and less likely to get a loan, or at least a manageable one.

The SBA isn’t just there to help with your business crises. In response to Hurricane Gustav, the SBA sent more than 125 customer service representatives to Louisiana. They will work with the Louisiana Economic Development Department to take care of Louisiana’s small business needs.

Among the help provided will be the creation of five Business Assistance Centers, workshops, and access to computers. The Business Assistance Centers will concentrate on issuing loan applications, answer questions about the disaster loan program, and help facilitate the application process.

For disaster relief, businesses can borrow up to two million to repair or replace real estate, machinery, equipment, inventory, and other assets. For homeowners and renters, there are loans available to borrow up to $200,000 for real estate, and up to $40,000 for personal property.

Because of the disaster status of the region, the SBA is working with State and local officials and organizations to offer these loans to homeowners, renters, non-profits, and businesses of all sizes. If you need assistance, you can speak with a SBA counselor at a Customer Assistance center at 800-659-2955.

We are very sorry to report that in 2006 and 2007, several companies and organizations that were not small businesses received funds that had been earmarked for small businesses. This mistakenly given money amounted to some $5.7 million in contracts, according to the Department of the Interior.

Among those companies who received money that was intended for small businesses were: Starwood Hotels, Home Depot, Dell, Xerox, Waste Management Inc. and Sherwin Williams.

Some of the blame for awarding small business funds to big business was placed on absent-minded contract workers who were not mindful about data entry. As you can imagine, this is little comfort to hopeful small businesses. The report from the Department of the Interior did not indicate whether or not this money would have to be returned.

While this is not cheerful news, the good news is that this mistake in now way hampers your ability to get a small business loan. Visit sba.gov to learn how you can apply for a small business loan. And review all of your documents carefully.

The U.S. Small Business Association is a veritable gold mine of information on small business issues. Recently, they unveiled an updated online course list that is available to everyone . . . and it’s free.

Located at SBA.gov, the courses cover topics such as starting a business, business planning, business management, finance and accounting, marketing and advertising, government contracting (a very good place to look for lucrative contracts), small business retirement, e-commerce, international trade, and federal tax training. Among the classes offered are some specialized classes from Trump University (yes, that Trump), and a guide to winning specialized classes from the government. (I’m definitely going to take these government contracts classes after reading this past week about how our government awarded lucrative contracts to Dell, John Deere, and other large companies in a snafu that has independent auditors chomping at the bit; if changes are coming in the field of government contracts, I am so there. See here and here.)

The U.S. Small Business Association (SBA) is a government-sponsored agency created in 1953 to “aid, counsel, assist and protect the interests of small business concerns, to preserve free competitive enterprise and to maintain and strengthen the overall economy of our nation.” The SBA “recognizes that small business is critical to our economic recovery and strength, to building America’s future, and to helping the United States compete in today’s global marketplace.”

In a nutshell, the SBA “helps Americans start, build and grow businesses. . . . There are those who argue that big businesses, profiting from ‘economies of scale,’ can produce far more efficiently than small businesses.  But small business is where the innovations take place.  Swifter, more flexible and often more daring than big businesses, small firms produce the items that line the shelves of America’s museums, shops and homes.  They keep intact the heritage of ingenuity and enterprise and they help keep the ‘American Dream’ within the reach of millions of Americans.  Every step of the way, SBA is there to help them.” 

If you’re wondering if there are any other programs out there for small business owners that are either free or low-cost, there are. Check with an employment services agency (contract or temp) about HR issues, check with your credit union or bank for classes or seminars available on finance issues, and inquire at the community college or learning centers in your area on classes about business plans or marketing courses. Even if you don’t learn from the SBA, make sure you find out about the scope of their services. It may save you a lot of time and heartache in the long run.

Business owners are crying foul over the state of California’s plan to offer an electric car maker a sweet deal as an incentive to keep business in that state.

Tesla will not have to pay state sales tax on the machinery it will use to build its Model S car. With this tax break, the company will be able to save 7 to 9 percent for each piece of equipment it buys for making the Model S.

Naturally other small businesses are not pleased that the state of California is giving Tesla this type of break. They feel as if this kind of tax should be offered across the board.

According to one state government official, California can offer specific incentives to certain companies. This official offered some insight into just how complex these decisions can be: the government must weigh many factors such as whether or not the incentive will take away from important public programs and whether or not they are rewarding a company for something they would have done anyway.

In the case of Tesla, it seems as if the state government was very concerned that the manufacturer would take their business to another state. So they put forth a serious effort to keep them in California.

Many small businesses are in crisis when it comes to funding their employee’s health care policies. The continued rising costs have out-priced many companies from being able to provide insurance for their staff. It is not surprising that sixty percent of Americans, who do not have insurance, come from a family where the head of household is self employed.

Last week on Capital Hill, a bipartisan coalition of House members introduced a new bill (HR 6210). This bill would allow small businesses to form statewide or nationwide pools of companies to jointly purchase health insurance coverage. Companies would then be able to find more affordable options for health insurance.

Another benefit to passing this law would be the tax credits that would then lower the cost of coverage for each company. This new measure would provide small business owners with a per employee annual tax credit of up to $1000, or up to $2000 per family. The company must contribute more than 60% of the insurance premiums in order to receive a tax credit. If this measure were to pass, insurers will be prohibited from raising rates if workers become ill or file more claims.

There is a similar bill currently in the Senate. Now is the time to call your representatives and tell them that you want them to support (HR 6210).

Fires, tornados, earthquakes, floods and hurricanes can be a real threat to everyone’s personal life as well as the operation of small businesses. Restoring your business to normal operations after a disaster is important for the recovery process in every community around the country.

Businesses that have a plan in place before a disaster typically have less loss, downtime and financial damage afterwards. Disaster preparations should be a normal part of every business planning, according to the federal and state governments.

A good disaster plan should include several elements. Businesses need to protect their data and inventory, physical property and most importantly their staff. Your plan should include provisions on what to do immediately after your business is destroyed. Businesses should have a plan in place to retrieve records on customers, vendors and employees. Businesses should decide in advance, which key employees it will need to maintain in the event of a disaster.

The Small Business Administration website has a list of preparation tips and topics for business owners to take into consideration when planning for a disaster. Visit www.sba.gov and search for “disaster preparedness” for more information. The Department of Homeland Security has disaster information available at www.ready.gov/business. FEMA also has disaster information on their website which provides step-by-step information for businesses of all sizes. Visit www.fema.gov for more information.

The old adage…”It’s better to be safe than sorry.” is a good one to follow under these circumstances.

The 2008 Economic Stimulus Package has been the talk of the town for many months. Taxpayers have been eagerly waiting the $600 (or more) checks to come from the federal government. Many people have already decided how to spend the money or if they are going to save it. Sadly, most small businesses did not know that there was something in it for them as well.

There has been some very important, little publicized, benefit information that was built into the Stimulus Package especially for small businesses. A portion of the goal of the Stimulus Package was to encourage small businesses toinvest and expand. The Small Business Administration has created on online tax-savings resource center at www.sba.gov/stimulus so that business operators can take full advantage of the benefits that they are entitled to.

You will find a fact sheet, a depreciation calculator and on online seminar on the SBA’s website. It is easy to navigate through and provides very resourceful information.

The incentives, contained in the economic stimulus package that were signed into law earlier this year, include a 50 percent “bonus” depreciation allowance on equipment purchased and placed into service this year.

Businesses are encouraged to contact their tax advisor to see how this program will benefit their company.

Exceptions and additional requirements do apply. The new legislation is intended to help small businesses and boost

the entire nation in the process.

I have written previously about the allegations that federal contracts that were intended for small businesses have been diverted instead to large corporations both in the United States and in Europe. A judge recently ordered the SBA to release information to the American Small Business League under the Freedom of Information Act. Today that information was released. As suspected, quite a bit of contract money has indeed been given to large businesses. The 10,000 pages that were released come from the fiscal years 2005-2006.

In the past, the Bush administration has denied that these contracts (totally over $100 billion per year) were given to larger businesses. They have conducted a significant public relations campaign to deny the findings, even findings by federal investigators.

Now that the information has been made public, it will be hard for the SBA to not make changes that will benefit small businesses. Today, a senior official at the Small Business Administration said that the first of the redefined standards that define small businesses for federal contracting purposes may be final by the end of fiscal year 2008. Once approved by the SBA officials, the draft goes to the Office of Management and Budget for review. Then it will be published in the Federal Register. This certainly is good news for small businesses.

There is approximately $300 million in capital projects that is available from the Maryland Department of the Environment (MDE). In the past, most of these projects have been awarded to non-women, non-minority based, and non-small business types of companies. Times are changing in Maryland, and definitely for the good. Governor Martin O’Malley signed legislation this week, to extend encouragement of the inclusion of small, minority owned, and women-owned companies in their contact awards.

The new bill requires that good faith efforts become standard practice with the Maryland Department of the Environment. They intend to divide project components into smaller tasks, with reasonable schedules, so that minority; small and women-owned business can complete the projects. Businesses should also see more advisements in the media that will be intended to encourage these types of companies that would normally not bid on certain contracts. They will also develop a solicitation list that includes qualified companies, who will be notified of what projects are due to be available.

According to reports, this new legislation “will make full use of state and other resources such as the Maryland Department of Transportation, U.S. Small Business Administration; the Minority Business Development Agency; and the U.S. Department of Commerce lists, to identify qualified minority and small business enterprises.”

If all states would implement these policies as standard practices, small businesses would continue to thrive around the country.