Small Business and the Economic Stimulus: What to Know to Get Help Now

Many – if not most -small businesses that are still in business are hanging on by a thread. Caught between a rock and a hard place, most small businesses are faced with finding enough cash to stay afloat and servicing existing customers while still trying to attract new business.

It is such a unique balancing act, even the greatest circus performers couldn’t pull it off. So what is it a small business person can do now? Where is the money? How does a small business owner make the stimulus package work for his or her business now?

Well, we’ve taken the time to do some investigative work and received some real answers designed to help the small business owner get a hold on what is really going on with the Economic Stimulus Package.

First of all, banks are lending! There are banks who have continued to lend during this entire economic crisis. Where are they? Well, start by contacting your local SBA office. We recommend you contact them by phone and ask which banks or financial institutions in your area are making loans. Outside of the traditional banks, there are SBA financial lending partners like community banks and non-profits such as credit unions that may be easier to borrow from.

Next, there are some key criteria you must be aware of when seeking a loan. Because you are a small business, you are more than your credit score. Many non-traditional financial lending institutions are willing to consider you even after you have been turned down by a traditional bank. There are lending institutions that are making loans to business owners with credit scores in the low 600’s and high 500’s with documented unique circumstances that can be explained. They will even make loans to a person with a bankruptcy – with a viable explanation. Usually, these loans are micro-loans ranging from $10,000 to $25,000. For many business owners, this is all they need to get through the next 6-8 months.

Also, update and revise your business plan and/or marketing plan. Demonstrate new, creative and innovative ways your business is generating new customers and/or a plan to attract new sales in this highly competitive, technological and ever-changing economic climate. Show what you’ve done to stay in business this long and what you are willing to do to make your business work for the long run.

SBA even has a new loan program that will help businesses catch up on past due payments.

Under the stimulus package, the SBA is now waiving applicant fees and guaranteeing up to 90% of the loan amount under such programs like 7(a). They are even entertaining start-ups.

Yet, in still, there are people who are not getting loans. Who cannot get a loan?

 Those with credit scores of 398 – 520. If you can’t pay or manage your personal credit, chances are you won’t pay or manage your business credit.

 Those who cannot offer or know someone who is willing to offer a personal guarantee to pay back the loan.

The types of businesses most difficult to get funding for are:

-restaurants
-transportation (i.e., limo companies)
-hotels
-small construction firms (primarily doing residential work)
-spas

Did you know the most popular type of business to fund is any business that is related to “green” technology and is creating energy efficient jobs.

For more information, check out http://sba.gov/recovery/index.html.

To receive technical assistance (i.e., financial statement creation, filling out loan applications, etc.) in applying for SBA funding and/or understanding the tax implications for accessing financing under the new SBA guidelines, contact Optimum Tax and Accounting Services at 336-854-7083 ext. 303 or visit our web site at http://optimumtaxandacc.com/.

Obama Announces Steps to Aid Small Businesses

WASHINGTON (Reuters) - U.S. President Barack Obama will announce steps on Monday to make it easier for small business owners to borrow money, using $730 million in stimulus funds to cut lending fees, boost loan guarantees and expand other programs, officials said.

"We know that small businesses are the engine of growth in the economy," said Christina Romer, chair of the White House Council of Economic Advisers. "We absolutely want to do things to help them."

Romer, speaking on the NBC program "Meet the Press" on Sunday, said the government would pump "a significant amount" of money into encouraging small business lending but did not give a total figure.

Lawrence Summers, head of the White House National Economic Council, told ABC's "This Week" the small businesses plan was part of the president's overall effort to "put in place a program that addresses the crucial problems and permits (economic) stability to be regained."

The Obama administration believes small businesses, which accounted for about 70 percent of new job growth over the past 10 years, will ultimately drive the recovery from the current recession, one of worst in decades, a U.S. official said.

The programs being announced on Monday build on the $730 million for small businesses included in the $787 billion economic stimulus package approved by Congress last month.

"There are already a lot of things to help them in the recovery package," Romer told NBC. "Some of what will be coming out are things that were in the recovery package -- increasing the SBA (Small Business Administration) loan guarantees, lowering fees."

For more, visit Reuters.com.

What the New Economic Stimulus Package May Do for You

President Obama Addresses the Recent Passage of the Economic Stimulus Package

Today President Obama is celebrating the passage of the American Recovery and Reinvestment Act as a "major milestone on our road to recovery," while still emphasizing that we have many miles yet to go.

"This historic step won't be the end of what we do to turn our economy around, but the beginning," he says in his weekly address. To get us there, he invokes President Kennedy, who said, "Do not pray for easy lives. Pray to be stronger men. Do not pray for tasks equal to your powers. Pray for powers equal to your tasks."

President Obama acknowledges that some people are skeptical about the plan given how Washington has performed in the past, which is why he's encouraging people to check back at Recovery.gov -- the site where, once the plan is in action, you'll be able to track the funds.

"Utlimately, this is your money, and you deserve to know where it's going and how it's spent," he says.