Small Business Administration Makes Disaster Loans Available in Indiana

In case your company was impacted by the excessive rains in Indiana this summer, there may be some relief available. The U.S. Small Business Administration (SBA) has issued the release below.

Note: Disaster relief is only available for selected counties, which are mentioned:

The SBA announced today that federal Economic Injury Disaster Loans are available to small businesses, small agricultural cooperatives, small businesses engaged in aquaculture and private nonprofit organizations located in Indiana as a result of excessive rain and flooding beginning on June 1, 2015.

The disaster declaration includes the following counties: Benton, Gibson, Knox, Lake, Newton, Posey, Sullivan, Vermillion, Vigo and Warren in Indiana.

“These counties are eligible because they are contiguous to one or more primary counties in Illinois. The Small Business Administration recognizes that disasters do not usually stop at county or state lines. For that reason, counties adjacent to primary counties named in the declaration are included,” said Frank Skaggs, director of SBA’s Field Operations Center East in Atlanta.

Under this declaration, the SBA’s Economic Injury Disaster Loan program is available to eligible farm-related and nonfarm-related entities that suffered financial losses as a direct result of this disaster. With the exception of aquaculture enterprises, SBA cannot provide disaster loans to agricultural producers, farmers, or ranchers.

The loan amount can be up to $2 million with interest rates of 2.625 percent for private nonprofit organizations and 4 percent for small businesses, with terms up to 30 years. The SBA determines eligibility based on the size of the applicant, type of activity and its financial resources. Loan amounts and terms are set by the SBA and are based on each applicant’s financial condition. These working capital loans may be used to pay fixed debts, payroll, accounts payable, and other bills that could have been paid had the disaster not occurred. The loans are not intended to replace lost sales or profits.

Applicants may apply online using the Electronic Loan Application (ELA) via SBA’s secure website.

Disaster loan information and application forms may also be obtained by calling the SBA’s Customer Service Center at 800-659-2955 (800-877-8339 for the deaf and hard-of-hearing) or by sending an email to [email protected] Loan applications can be downloaded from the SBA’s website at www.sba.gov/disaster. Completed applications should be mailed to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155.

Completed loan applications must be returned to SBA no later than April 12, 2016.

Job Creation: Obama Turns Eye Toward Start-ups

Job creation remains a key challenge for American legislators, as well as for President Obama. In an announcement on Tuesday, he contended not enough emphasis is being put on helping start-ups thrive in America. He also promoted his $2 billion Startup America program. What do you think? Beneficial or just government meddling?

President Obama on Tuesday proclaimed November 2011 to be National Entrepreneurship Month, a benign and routine ritual that stroked a favored cause, but nevertheless a timely nod to the heart of the economy’s job creation dilemma.

The president focused his two-page proclamation on business startups (that is, businesses less than a year old) rather than on the innovations of all small businesses, or even the savvy entrepreneurship displayed by the largest, established companies (big companies employ the lion’s share of workers). Why? Because the administration has looked at new studies showing that while small businesses are indeed important for job growth — a canon among politicians — it’s really the startups that are key…

In public policy debates about small businesses and the creation of net new jobs, the question continues to be asked: What works? To spur more startups, does the economy need greater confidence, more capital, more consumers willing to spend, new and innovative ideas, a risk-averse (i.e., younger) population? Yes to all of the above, experts say. But which policies really nurture the dynamics that lead to a net addition of jobs? So far, there are more theories than firm conclusions, and lots of experimentation.

“The world is messy and the data are imperfect, so when you’re trying to create a model . . . there’s so much I can’t control for,” said Brian Headd, a Small Business Administration economist who authored a study in 2010 about hiring and small businesses for the data-centered SBA Office of Advocacy.

“We’re at a point where businesses aren’t expanding at the rate they used to be and startups aren’t occurring at the rate they used to be,” Headd said in an interview. “So some people will say, policy-wise, ‘We need to focus on one or the other — we’ll get a bigger bang for the buck — one or the other.’ I don’t have that answer. I just take the view that we need both, but I don’t know whether throwing $1 billion or $1 million, policy-wise, at one group or another is going to have a big effect. I just don’t know.”

Obama’s proclamation Tuesday listed some of the policies he supports to spur infant businesses, including his $2 billion Startup America program, which he launched in February, designed to improve access to capital, cut paperwork and regulatory burdens, expand business mentoring, and increase information and educational opportunities for entrepreneurs in markets designated as priorities by the government. He also mentioned Startup America collaborations with the private sector and international partners. In Obama’s view, the entire U.S. economy must “become more dynamic and flexible.”

Obama Wants More Money Loaned to Small Businesses

President Obama has called for a $30 billion loan initiative for American small businesses, a plan he announced this week at a town hall in New Hampshire. Other initiatives he’s proposing to aid businesses include providing a $5,000 tax credit to employers for each new worker they add to their payrolls this year, cutting capital gains taxes on investments in small businesses to zero and expanding loan guarantees provided by the Small Business Administration. The Christian Science Monitor has more:

President Obama has proposed a small-business lending initiative designed to help shift America’s job-creation engines out of reverse gear.

The idea addresses the problem, in effect, by going back to Square 1 – the financial crisis and the health of banks.

At a town-hall meeting Tuesday in New Hampshire, Mr. Obama called for congressional approval to invest up to $30 billion in small banks – the ones most likely to make loans to small employers. The money, to be taken by banks that voluntarily opt in, would provide capital as seed money for new loans.

A shortage of capital is just one of the obstacles for the economy’s flow of credit. The weak economy means that many banks are wary of lending, and many businesses don’t even want to borrow. But more capital could help to revive lending, at least to a modest degree, economists say.

"Jobs will be our No. 1 focus in 2010. And we’re going to start where most new jobs do – with small businesses," Obama said at the event in Nashua, N.H. "Bank lending standards have tightened, and many small businesses are struggling to get loans."

To give banks an incentive to make loans with the money, the Treasury would ask for smaller dividends on the capital from the banks that make the most loans. Dividends would start at a 5 percent annual rate but fall to as low as 1 percent if a participating bank were to expand its lending by 10 percent this year.

UPDATE: The Small Business & Entrepreneurship Council contends the President’s agenda may sound like a boon for small businesses, but it’s more about rhetoric than truly aiding commerce. What do you think?

SBA Has New Approach, New Critics

W. Todd Roberson of the Indiana University Kelley School of Business wrote a guest column for our BizVoice magazine analyzing the new look of the Small Business Administration. Here’s a taste, but he explains the reasons some are for and some are against new measures in the full column:

The American Recovery and Reinvestment Act of 2008 (the “stimulus bill”) authorizes significant changes in the way the 338 federally sanctioned Small Business Investment Companies (SBICs) can support small enterprises. In a nutshell, firms supported by venture capital (VC) now qualify for SBA guaranteed loans, grants and assistance. In other words, VC firms can now tap into federally guaranteed funds double the base of capital they have to invest in emerging enterprises.

The SBA also has raised the amount that VC firms can invest in any one business to 30% of the total capital under management. For favored small business owners this translates into less time pounding the pavement to find financing – a great advantage in a period of severe credit contraction. Time, after all, even in a new age, is money.

Note the word “favored” above. Herein lies the rub. Critics note that truly “small” firms generally do not interface with venture capital. (The current definition of “small” at the SBA is $18 million or less in net worth.) One direct and immediately observable effect of the SBA’s foray into working with VC firms is the increase in the lobbying outlays by the National Venture Capital Association (NVCA): from $500,000 in 2005 to over $2 million in 2008.

Critics suggest an alternative: simply lower business taxes on the nation’s entrepreneurs. In fact, studies by the Ewing Marion Kauffman Foundation (a think tank associated with American entrepreneurship) find no correlation between long-term job creation and early-stage association with venture capital. The correlation, however, is striking between VC involvement and government and university (read: quasi-government) grants.

SBA Seeks Nominations for Small Business Week 2010

From the U.S. Small Business Administration:

The U.S. Small Business Administration is seeking nominations for awards in celebration of the 47th National Small Business Week. Indiana Small Business Week awardees will be recognized in Indiana in the spring. There are various awards for the small business community along with advocate awards for those that support or promote small businesses.

Award categories include Small Business Person of the Year, Small Business Exporter of the Year, SBA Young Entrepreneur of the Year, Jeffrey Butland Family-Owned Business of the Year, Community Rural Lender of the Year and Entrepreneurial Success Award.

Champion awards include Financial Services Champion of the Year, Home-Based Business Champion of the Year, Minority Small Business Champion of the Year, Small Business Journalist of the Year, Veteran Small Business Champion of the Year and Women in Business Champion of the Year

Nominations must be received at the SBA Indiana office or postmarked by November 13. For a nomination package or for more information, contact Sharon Murff at (317) 226-7272 ext. 123.

Stimulus: Anything Here for Small Businesses?

The soon-to-pass stimulus bill has, as expected, created a litany of policy debates among supporters and detractors. And while many free-marketers have criticized the American Recovery and Reinvestment Act of 2009, one wonders if American businesses should seriously expect much benefit from it. CNN.com posted an article about the impact on small businesses today that is worth mentioning:

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.

For companies in need of quick relief, the bill offers a "small business stabilization financing," which gives them money to pay off existing loans. Under the program, the SBA can issue or back loans of up to $35,000; businesses can then use the money to make up to six months of payments on previous loans. Interest on stabilization loans will be fully subsidized, and the loans won’t have any payments due for the first year. Borrowers must repay them within five years.

The SBA has a limited window of time and cash to fund these emergency measures. Congress allocated $630 million to fund loan subsidies and modifications, and authorized them to continue through September 2010. If the cash starts to run out, borrowers will have priority over lenders – and small banks will have priority over larger ones – for receiving fee discounts and waivers.

Other measures designed to help small business include (see the article for details):

  • Unfreezing the loan market
  • Loss accounting
  • Equipment expensing
  • Hiring incentives
  • Capital gains tax breaks for those who invest in small businesses

Your thoughts? Will this actually help small businesses? Or is it just an example of bureaucracy being bureaucracy?