When Big Business Squashes Small Business

The Huffington Post often offers provocative ideas. I ran across one recently about how small businesses are getting ripped off by big business the small business loan programs. This has been going on for as long as the SBA has existed. Big business has continually found ways of nosing its own way in, and pushing small business out.

The idea is not new. And the poster, Lloyd Chapman, is obviously promoting the American Small Business League. But look past the advertising, and you see facts that are hard to dispute.

It is so very tragic. Especially now, when Main Street needs help so desperately. If I have a complaint against the Obama administration (and I am very cautious criticizing this administration -- he's a sharp cookie), it is that insufficient safeguards were put in place in the bank bailout program to ensure that the money would actually reach small business, one of its original major goals.

Yes, the President is "aware of it". At least his spokespeople have said so. But I don't see the action that is really going to make a difference. I am confident that somehow we are going to turn out being a better nation because of this muddle. But it was big business that got us in this muddle. We need to turn to small business to get us out of it.

Trading Up, Trading Out

Another great way to demonstrate your creativity and resourcefulness in this economy is to establish business trading. You need a bunch of printing, and the printer needs your services. So you trade. While these transactions are taxable, the pricing is a bit more flexible than in currency exchanges. And, speaking of currency -- you don't need any.

Trading clubs, both formal and informal, are part of the fabric of modern commerce.

So how do you go about finding these transactions? Try asking. You may be short on cash, but you are long on your inventory. So who needs your inventory? and which of those businesses has something to offer you in return?

This is down and dirty street smarts at work. And it is the hallmark of successful entrepreneurs everywhere.

Alternative Financing In Your Business Plan

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Alternative Financing for Small Business

Lenders and investors of all ilk like to see creativity in business plans. For most rather mundane presentations, this is a real challenge. To get their attention, demonstrate how you have worked to cut costs and reach higher quality of work. For example:

USE OUTSIDE CONTRACTORS AND EMPLOYEES, especially those that work from home. Keeping your overhead as low as possible while having access to top talent is a skill that many entrepreneurs still haven't learned. All too often "the office" is the core of the group. With online phone/meeting services so available, and so inexpensive, there is no reason that many contractors and employees cannot work from home. What would it do to your bottom line to be able to cut your space requirements by 30%? If you can cut your on site staff by that much, you can do it.

And it is not just space requirements. It is the phone on every desk, the computer on every desk, the high speed printers sprinkled everywhere, the filing cabinets, the heating bill, the janitorial -- everything. Make it a real goal to cut everything by 30%. At a bare minimum, you will see more money in your pocket, and it just might impress a lender/investor sufficiently so that you see a lot more money coming your way.

Patriot Expres SBA Loans Are For More Than Veterans

Business Plans for Veterans

Veterans have been polishing up their business plans lately. Two years ago the SBA began its Patriot Express Pilot Loan Program. The goal was to assist military veterans and their spouses start or expand small businesses. The program recently surpassed the milestone of $300 million in money lent. It has gove to 3,750 veterans and their spouses.

First of all, who is eligible? Patriot Express loans are available to:

• Veterans;
• Active-duty service members eligible for the military's Transition Assistance Program;
• Reservists and National Guard members;
• Current spouses of any of the above; and
• The widowed spouse of a service member or veteran who died during service or of a service-connected disability.

I am glad that reservists and spouses are included in the program. They have given a great deal to our country as well.

The loans are not confined to existing businesses. The loans can be used to start up a small business, or can also go toward most business purposes, such as business expansion, working capital, or the purchase of equipment, inventory, or business occupied real estate.

While as much as $500,000 can be borrowed, the average loan amount is $85,000. Loans above $350,000 require the borrower to put up all available collateral.

Interest on the loans matches the interest on SBA 7(a) loans -- prime plus 2.25% if the loan matures in less than 7 years, or prime plus 2.75% if it mature in 7 or more years. Interest rates can be slightly higher if the loan amount is under $50,000.

Like all SBA loans, Patriot Express loans are made through participating private lenders. According to the SBA, April and May were record months for the program. The American Recovery and Assistance Act (ARRA) likely contributed by boosting the SBA backing for these loans to 90%.

The SBA also touts these loans, a streamlined version of its Express Loan program with better terms, the quickest loans for the SBA to turn around. Once the SBA gets an application from a lender, it purportedly turns it around within 24 hours.

The hitch in the whole program is that some banks just don't want the paperwork connected with the Patriot Loans. We still get messages from vets, especially those looking for smaller loans, who have having a great deal of trouble. My advice now is what it was when the problems first surfaced: contact your US Representative and Senator. Give them names/ dates/ experiences. Get them on your site. Few people are as well equipped to help out veterans than our representatives in Congress.

Jobs Is The Key To SBA 504 Loans

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Business plans for SBA

The Small Business Administration's 504 loan program has been around for nearly 30 years, and it can now be used to refinance your existing commercial real estate while it also funds your expansion.

The 504 program allows you to borrow up to 90 percent of your cost to build, buy or expand a commercial real estate building. The funds can also be used for capital equipment, furnishings, fixtures and fees incidental to the transaction. Examples of suitable real estate include owner-occupied, commercial condominiums, offices, warehouses, franchises, restaurants, car washes, bowling alleys and skating rinks. Investor-owned properties do not qualify.

But the reason for its existence is not to create commercial real estate. Its real reason for existence is job creation.

Traditionally, "for every $50,000 guaranteed by the SBA, (the borrowers) must be able to demonstrate that they are creating or retaining at least one job," says Karen Mills, SBA's administrator.

Right now, as part of the federal stimulus initiative, job creation has temporarily been relaxed to one job per $65,000.

The program is administered by about 270 certified development companies in a partnership with the commercial lenders and the SBA.

As with most new programs, the dibbuk is in the details. Accordingly, lenders and CDCs will be poring over SBA's procedural notice to understand the critical essentials.

Meanwhile, stay in touch with your banker, NADCO and its members for up-to-date information as the refinancing enhancement unfolds. See nadco.org for NADCO members and more about 504.

For more information, see the SBA website.