President Obama is urging Congress to move fast to pass new tax breaks and lending incentives that would open up lines of credit for small businesses.

“Historically, small businesses have created roughly two out of every three new jobs in our country,” Obama said after meeting with small-business owners and workers at the White House. “To replace the millions of jobs lost in the recession, we’re going to need to make sure small companies are able to open up, to expand, and add names of their payrolls.”

He said that small businesses lost 2.4 million jobs between mid-2007 and the end of 2008, and it’s been difficult for them to begin to expand again because banks have shrunk lending.

“That’s why I’m urging Congress to swiftly approve a set of tax breaks and lending incentives to spur hiring and growth at small businesses,” Obama said. ” This legislation would eliminate capital gains taxes for investment in small firms, which will help move capital to these companies across America. And it would provide tax relief to small startups to encourage folks to open up businesses, too.”

He went on: “In addition, to foster more credit, this package would create the small business lending fund I proposed in my State of the Union address to help underwrite loans through community banks. And we’d create a new state small business credit initiative, because states facing budget shortfalls have had to scale back lending to small firms and manufacturers working President Obama is urging Congress to move fast to pass new tax breaks and lending incentives that would open up lines of credit for small businesses.

“Historically, small businesses have created roughly two out of every three new jobs in our country,” Obama said after meeting with small-business owners and workers at the White House. “To replace the millions of jobs lost in the recession, we’re going to need to make sure small companies are able to open up, to expand, and add names of their payrolls.”

He said that small businesses lost 2.4 million jobs between mid-2007 and the end of 2008, and it’s been difficult for them to begin to expand again because banks have shrunk lending.

“That’s why I’m urging Congress to swiftly approve a set of tax breaks and lending incentives to spur hiring and growth at small businesses,” Obama said. ” This legislation would eliminate capital gains taxes for investment in small firms, which will help move capital to these companies across America. And it would provide tax relief to small startups to encourage folks to open up businesses, too.”

He went on: “In addition, to foster more credit, this package would create the small business lending fund I proposed in my State of the Union address to help underwrite loans through community banks. And we’d create a new state small business credit initiative, because states facing budget shortfalls have had to scale back lending to small firms and manufacturers working against our recovery. I’m also urging Congress to expand and extend successful SBA (Small Business Administration) programs by increasing loan limits, for example something that could benefit people like Bobby and Steve.”

Bobby Pancake and Steve Wheat - “their real names,” Obama joked - are the owners of five Buffalo Wild Wings Grill & Bar franchises in Delaware and one in Maryland. According to the White House, they would like to add another location in Delaware that would create up to 100 new jobs but are tapped out on SBA loans and concerned they won’t be able to get the financing they need.

Obama said he hopes the House will pass the tax breaks and credit incentives next week and the Senate will follow up soon.

(Posted by Mimi Hall)

]]> http://www.smallbusinessmole.com/?feed=rss2&p=1023 http://www.smallbusinessmole.com/?p=1004 http://www.smallbusinessmole.com/?p=1004#comments Sun, 06 Jun 2010 17:54:35 +0000 admin http://www.smallbusinessmole.com/?p=1004

By: Don McDaniel VP - Discovery Bay Group L.L.C.

No doubt that last couple of years have been a big economic challenge for all businesses. The one thing for sure to remember about the economic downturn is that you, as a small business owner, will get no bailouts if you get into trouble. Although the economy is a little better we still have some challenging times ahead  in the future. My guess is that we will be digging out for the next couple of years minimum. So What should we do to protect our portion of the marketplace. Here are some basic ideas that I know you already are acquainted with but maybe need to reconsider:

1. Review, update and work even harder to retain the customers you already have by making sure your pricing, customer service strategies, and product delivery efforts are over the top. Don’t just think about it!!! Get your staff together to review and develop new strategies going forward. Your customers are having economic problems also so make sure you give them every reason to spend their limited funds on your products.

2. There are few small business quotes that had more impact on me then, “Innovate or Die” did. Look for new ways to stay in and grow your market. Look for new product lines, new marketing strategies to grow the business,  more efficient delivery systems,  and ways to improve on service.

3. Do a current break even analysis and do a product pricing review to make sure that you are staying up with your competition. Make long term pricing strategy changes where necessary and take a look at short term pricing strategies that will help boost your identity within your target customer group.

4. Do an organizational review of contractors, staff, and all associated expenses,and make adjustments where possible. This is one area you should be looking at each time you do a quarterly review of your business.

5. In a small business relationships are important both for long and short term success. Create a plan to involve you and your staff in areas that will create added credibility and loyalty within the community where you are doing business.

I’m sure there are a lot of other good ideas but we have used these as our first tier objectives in efforts to improve our revenue stream and grow our business long term.

DonMcDaniel -  VP Discovery Bay Group L.L.C.

The Business Mole

It’s a truly a great little program that does wonders for the flight simulator experience. I recently had to re-format my hard drive on my computer to make way for Windows 7. In the process my original key code used to re-install the program showed as ” no longer valid”. I went to the site and posted on the support forum and also sent a separate email asking for a new code and giving my original purchase information. Well folks it has been since May and after many emails and postings still no code. The site admins tell me that the owner is very busy and will get to it when he can. The forums are filled with discontented customers like myself with the same issue. Now new potential customers are becoming concerned about even purchasing this product. This is a sure way to kill your market place potential for good even if your product is a good one. My recommendation is make sure you maintain enough resources to assist folks who need your help and handle them as quickly as possible. Once the word gets out that your support and customer service is flaky you will fail even if your product is a good one.

Opinions vary about efforts to make it easier to get an SBA-backed loan, but certain entrepreneurs should still apply, says Tom Taulli.

The Business Mole

Article By: Tom Taulli
Small Biz
http://www.bizequity.com/

* The Pros and Cons of Easing Access to Credit
* The Right People vs. Getting the People Right
* Tax Advice from a Former IRS Auditor
* After Layoffs, Starting a Business from Scratch
* Self-Help for Startups

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President Barack Obama and Treasury Secretary Timothy Geithner recently announced sweeping changes for the Small Business Administration’s loan programs. Are these changes simply smart public relations or will they benefit small business owners whose access to credit has dried up? Opinions vary within the business community, but entrepreneurs should still consider applying for these loans—as long as they meet certain criteria. Bear in mind: The SBA doesn’t make loans directly to business owners; it guarantees them to commercial and nonprofit lenders that participate in its programs.

Before I explain the specific changes, let’s step back and review the relevant parts of the announcement: Obama plans to commit up to $15 billion to make direct purchases of SBA-backed loan securities in the secondary markets. Keep in mind that lenders often sell their loans to Wall Street, which frees up capital to make even more loans. But in September this market froze as the financial system went into cardiac arrest. The Obama Administration is now committing the money in hopes that by supporting the secondary market, lenders will gain their confidence back and make new loans.

The plan will also require that the largest 21 banks—that received federal bailout money—will now have to detail their small business loans on a monthly basis. Additional banks may be required to do this quarterly. In other words, this measure is meant to pressure lenders to make more loans.
Encouraging Lending

Another change is a boost in the loan guarantees, to a maximum of 90% on 7(a) loans (see below for more on these). To encourage these loans, which are generally considered riskier than most by lenders, the SBA is increasing the amount of its guarantee, which helps to encourage lending. While this increase sounds small, it is important. “Lenders are concerned about default rates on loans,” says Scott Gabehart, a business appraiser who operates TheNewSBARules.com. “But an extra 5% of coverage may be enough to provide comfort for lenders.”

The Obama plan also has important changes for different types of loans. To understand them, here’s a rundown on the main loan programs. You can find a list of preferred SBA lenders—lenders that don’t need to consult the SBA on each loan application—at the bottom of this page on the SBA’s Web site.

7(a) loans Up to $2 million. The purpose for the capital is broad (expansion, acquisitions, startups, franchises, equipment, and even partner buyouts).

504 loans Up to $12 million. The main focus is on construction, renovation, or purchase of commercial property.

Microloans Up to $35,000. Typically for working capital needs—that is, cash to pay for short-term needs such as payroll and vendors.

The changes also mean the government will eliminate SBA fees you would normally pay your lender on 7(a) and 504 loans (to the extent of the guarantee). Generally, the fees will range from 2% to 3.7% on 7(a) loans and 1.5% for 504 loans. That means, for example, you could save $6,600 on a $200,000 7(a) loan and $3,000 on a 504 loan (assuming a 90% guarantee).

When you account for the new depreciation regulations, eliminating those fees makes these loans attractive, right? The Obama plan allows for up to $250,000 in deductions for business expenses for one year. For example, if you use an SBA-backed loan to purchase a business or property, you can take larger depreciation expenses, and these tax benefits will help to boost cash flow. Another favorable factor: The valuations for businesses and land are much lower now than in the recent past.

Still, the fact remains that banks will likely focus on what they deem the safest customers—at least at first. So a borrower will need a strong business plan and detailed financials to be considered. Moreover, the owner should have a background in the industry. Even if you meet this criteria, expect much scrutiny. The banking industry is in the process of healing. So it will take some time to warm up to more risk-taking. “Lenders will look for skin in the game,” says Chris Reilly, president of CIT Small Business Lending (CIT), the country’s largest 7(a) lender. “This means providing a personal guarantee or collateral.”

During downturns, great opportunities arise. And this time is no different. If anything, the federal government is willing to make substantive changes to spur lending to small business. If you can demonstrate that extra funding will lead to growth, then an SBA loan is certainly a worthy option.

Tom Taulli is a noted finance author and blogger.

Small-business groups had rallied for an economic-stimulus plan packed with generous new tax breaks and other relief measures making it easier for businesses to grow and hire employees in this tough economy. Well, they aren’t too pleased with the outcome.

“There’s not a lot in the stimulus plan that will put cash in the hands of people who will deliver it to the front door in the form of sales,” William Dunkelberg, chief economist with the National Federation of Independent Business, told the AP. Rather, he and others said the compromise plan finalized yesterday seems to focus on padding consumers’ pockets, with the assumption that the money will eventually trickle down to businesses.

NFIB and other small-business advocacy groups had pushed for measures such as a six-month payroll tax holiday, doubling the tax deduction for start-up companies to $10,000 from the current $5,000, and exempting an entrepreneur’s first $30,000 in net earnings from tax. While it’s still unclear what will be in the final compromise, it seems the business-focused measures were limited to ones that many business owners felt were less-than-adequate, including extending loss carrybacks to five years (now limited to just small businesses) and and continuing an expansion of Section 179 deductions to $250,000 on purchases of equipment such as computers, furniture, machinery and vehicles.

What’s more, some groups fear the compromise stacks extra, new burdens onto entrepreneurs that will make life harder than before. The Small Business and Entrepreneurship Council yesterday sent out a last-minute plea to strip the bill of the “Buy American” provision that will force the government to purchase all material goods used for public-works projects – claiming the international backlash created by such a measure will hurt small exporters. That provision was softened in the final compromise to say that the U.S. must comply with World Trade Organization rules, but critics still think it will have negative repercussions. The group also asked Congress to remove new rules that would force businesses to extend health insurance to laid-off workers with 10 years of service, and to get rid of verification and wage rules it says will make it difficult for small businesses to vie for government contracts.

“I think we clearly need a different type of package,” Raymond Keating, chief economist for the Small Business and Entrepreneurship Council, told the AP. “We need incentives in the private sector for people to take risks and expand business. Unfortunately, there’s very little of that in this package.”

This article was posted on the following website: http://blogs.wsj.com/independentstreet/2009/02/12/small-business-groups-critical-of-stimulus-plan/. There is a comment blog there so if you have any comments we encourage you to visit the site and make a comment.

Our feeling is that if the credit market loosens, investor confidence in the banking system improves,  things will get a lot better for small businesses like ours hopefully this year. No doubt that we are all getting a red rash out of having to bail out big banks and wall street but I’m willing to swallow a little sour milk for the honey later. Sure hope we get some of that honey soon.

The Business Mole

Tax season is not a time any taxpayer particularly relishes, and small-business owners are no exception. However, entrepreneurs who play their cards right can ensure tax time is a little less burdensome.

Here are seven ways to reduce your small-business tax burden:

1. Hire Family Members:

Uncle Sam is especially friendly to family businesses when it comes to wages. You won’t need to pay federal unemployment taxes if you hire your spouse or parents, and you may not have to withhold income taxes and Social Security if your children work for you. You must still follow child labor laws, pay reasonable wages and make sure that the work benefits your company to qualify for these exemptions.

2. Hire Independent Contractors:

By hiring independent contractors, you won’t need to withhold federal or state income taxes from their earnings, nor will you have to pay the employer’s share of Social Security and Medicare taxes or provide unemployment benefits. Just make sure that the IRS doesn’t consider your contractor an employee, or you’ll have to pay back taxes and fines. Seek the advice of a tax professional before you classify someone as an independent contractor.

3. Maximize Deductions:

Two ways of maximizing deductions are keeping excellent records and receipts and relying on a tax professional for guidance. Here are some key categories to consider for write-offs: start-up costs; office expenses; furniture; education; travel; insurance; memberships; and conferences.

4. Pay Your Bills by Year’s End:

If your business-related bills (rent, phone, electricity, etc.) are due in early January but cover expenses incurred in the previous year, pull out the checkbook before the start of the New Year. All of those expenses can help reduce your tax burden in mid-April.

5. Purchase What You Need – Now:

You may be waiting for a tad more revenue to trickle in before you replace your old computer or subscribe to that impressive new industry magazine. But tax-wise, it’s smarter to invest in your business now rather than waiting for the New Year. Poor equipment in particular can cause headaches for small businesses: Help yourself by fixing or replacing worn-out products next week and get some of that investment back in deductions that could return you money next year.

6. Give to Charity:

That old computer you just replaced could aid a non-profit organization that can’t afford new equipment while reducing your small business’s tax burden. The IRS gives tax incentives for donations, so take advantage of them. Before making a donation, check to ensure that the charity is qualified and that donations are tax-deductible. The IRS also requires that you have written acknowledgment from the organization for contributions of or valued at upwards of $250.

7. Hire Katrina victims:

The “Work Opportunity Tax Credit” (WOTC) program, which incorporates the “Welfare-to-Work” federal tax credit, are incentives designed to encourage the hiring of individuals from certain groups that have an especially high unemployment rate or other special employment needs, such as veterans, ex-felons and high-risk youth. That credit has been expanded to include persons affected by Hurricane Katrina. Businesses that qualify to participate in the WOTC program can reduce their federal tax liability up to $2,400 per hire. The Welfare-to-Work tax credit provides an incentive to businesses to help individuals move from welfare to work, and companies that hire under this category of the WOTC can reduce their federal tax liability up to $9,000 over two years for each qualified new employee.

In a nutsell, the book suggests that Barack won with the mantra: Be Cool, Be Social, Be The Change. That’s pretty good position for any small business.

By Rosemary Peavler, About.com Guide to Business Finance

1. Begin with a statement of purpose. You should be able to explain your business in 25 words or less.
2. Tell how your business will work and why it will be successful. List the owners.
3. Fill in the business details. Describe its products or services, the customers,the market and the competition. List the managers and their credentials.
4. Supply three years of projected financial statements. Include income, loss, and cash-flow projections.
5. Provide supporting documents, such as references from creditors and potential clients and suppliers, evidence of insurance and the like.

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