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.

Getting the Job Done — or Not?

Disagreements in Washington are nothing new. But this time the topic is a little different. The following comes from the Small Business & Entrepreneurship Council:

SBA recently celebrated the federal government’s achievement in exceeding contracting goals with small businesses, but members of Congress are disputing the claim.  An SBA communications piece says that Administrator Maria Contreras-Sweet has worked “tirelessly” to hit the goal since she took over SBA’s helm.  SBA reported that 24.99% of federal contracting dollars went to small businesses in 2014, thus exceeding the 23% goal. SBA says this is the highest percentage ever reached since the goal was established in 1997.

House Small Business Committee Chairman Steve Chabot (R-OH) called the report “flawed” because (according to a media release) “the SBA continues to exclude nearly $78 billion in federal contract dollars reported into the federal procurement data system, plus at least $6 billion to $10 billion that the Department of Veterans Affairs (VA) illegally excluded from the database. These are dollars spent by the federal government that should be subject to small business contracting goals.

Moreover, the SBA scorecard focuses intensely on just one factor — prime contract dollars. While this is certainly an indicator, it does not represent a holistic–and more accurate–depiction of the industrial base. For example, there are 100,000 fewer contractors today than there were four years ago and the number of contract actions being awarded to small businesses has fallen by nearly 60 percent. Furthermore, the Administration is still not meeting its subcontracting goal, even though SBA lowered the goal last year.”

Senate Small Business Committee Chairman David Vitter (R-LA) has also focused on the issue of flawed reporting in small business procurement.  On May 19, Chairman Vitter sent a letter to the SBA Administrator requesting detailed information about their reporting following an IG report, which found that contracts being counted towards the small business goal went to bigger businesses.

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.”

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.

SBA: Businesses Should Beware of Stimulus Scam Letters

A press release from the Small Business Administration:

WASHINGTON – The U.S. Small Business Administration issued a scam alert (Feb. 18) to small businesses, warning them not to respond to letters falsely claiming to have been sent by the SBA asking for bank account information in order to qualify them for federal tax rebates. 

The fraudulent letters were sent out with what appears to be an SBA letterhead to small businesses across the country, advising recipients that they may be eligible for a tax rebate under the Economic Stimulus Act, and that SBA is assessing their eligibility for such a rebate.  The letter asks the small business to provide the name of its bank and account number. 

These letters have not been sent by or authorized by the SBA, and all small businesses are strongly advised not to respond to them.

The scheme is similar in many ways to e-mail scams often referred to as “phishing” that seek personal data and financial account information that enables another party to access (an) individual’s bank accounts or to engage in identity theft.

The SBA is working with the SBA Office of Inspector General to investigate this matter. The Office of Inspector General asks that anyone who receives such a letter report it to the OIG Fraud Line at 1 (800) 767-0385, or e-mail at [email protected].

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?

Give SBA Credit for Honesty

The Small Business Administration released an annual report on the amount of federal contract dollars that go to small firms. The 2007 fiscal year total was $83.2 billion (a record dollar amount, but a decrease from the year before and short of its goals).

The honesty part comes in agency administrators admitting large gaps still exist in data accuracy. They say significant progress is being made, but that upward of $10 billion a year in errors results from miscoded contracts.

The Governing Executive story notes that with six million annual contract actions, a 1% error rate would result in 60,000 mistakes. Read the story here.

All we can say is let’s try and accelerate that improvement. Those are some big numbers to be making mistakes with.