David Kirkpatrick

March 5, 2010

Small business loan relief courtesy of Congress

Finally.

From the link:

Added incentives for banks to make Small Business Administration-backed loans will continue through the end of March, thanks to a fresh funding infusion authorized by Congress as part of Tuesday’s bill extending unemployment benefits.

Since early last year, the SBA has waived its fees and offered banks guarantees of up to 90% on the small business loans the agency backs. Created as part of the Recovery Act, the deal sweeteners helped SBA-backed lending rebound from its near collapse in late 2008, in the wake of the financial crisis.

Congress initially authorized the incentives to continue through September of this year, but the measures proved so popular that their funding was quickly exhausted. The SBA has been relying since late November on temporary extensions to keep the incentives running.

The unemployment benefits extension bill — passed by the Senate and signed by President Obama late Tuesday after Sen. Jim Bunning, R-Ky., dropped his objection — allocates $60 million to fund the program’s subsidies for another month.

Just this issue alone illustrates how Bunning’s so-called “principled” roadblock tactic put real short-term hurt on Main Street. Over 100,000 federal employees missed a paycheck because of that asshat’s grandstanding. How would you like to make a mortgage, or other bill, payment late because one Senator wanted to make an inane point about federal spending? Particularly a Senator who offered no fiscal backbone for eight years of profligate federal spending with zero attempt to pay for the outlay under the previous administration.

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November 27, 2009

That SBA stimulus cash loan program? Gone

Well, more correctly out of money.

From the link:

The stimulus cash that helped boost small business lending this year just ran out.

The Small Business Administration said Monday that it has run through all of the $375 million Congress allocated to temporarily waive fees and boost guarantees on loans backed by the SBA’s lending programs. Businesses still hoping for a slice of the pie can get in line, cross their fingers and wait.

November 24, 2009

Small business are getting bigger

Filed under: Business, Politics — Tags: , , , , — David Kirkpatrick @ 2:20 pm

At least in the eyes and definition of the Small Business Administration. Both small- and mid-sized businesses can use all the help they can get right now, but these moves seem to always open a back door for the very large structures in the corporate world to get hold of some unneeded “free” money through subsidiaries that are big, but just enough not so to qualify.

From the link:

The Small Business Administration will redefine what “small” means for firms in hundreds of industriesby revamping size standards over the next two years. The result: More businesses will qualify for all types of SBA financial aid, such as the flagship 7(a) loan guarantee program.

The SBA hasn’t taken a hard look at its size standards for more than 25 years, although it periodically makes inflation adjustments, as it did last year. There’s no doubt that in the last quarter-century, changes in industry structure, market conditions and business models have changed the definition of “small” for all sorts of businesses. The SBA’s effort will involve reviewing the standards for businesses in about 900 industries and adjusting them upward — or, in a few cases, downward — as needed.

Also from the link:

In the first round of this size standard revamp, SBA is looking at 138 industries and proposing to change the standards for 71 of them. For example, SBA wants to raise the cap on annual receipts for jewelry stores from $7 million to $25 million, which would allow a lot more stores to qualify for aid. The cap for nurseries and garden centers is proposed go from $27 million to $30 million.

October 21, 2009

TARP banks not lending to Main Street

I’ve already blogged on the upside of this issue — that is, the Obama administration is helping Main Street through expanding the lending capacity of the Small Business Administration and letting smaller banks in on some TARP action. The downside of this issue is eight of the top ten TARP recipient banks have cut small business loans since May. And that is disgusting.

From the second link:

The TARP program was set up to recapitalize banks so that they would bolster their lending to consumers and small businesses. In March, as the administration and the SBA took steps to stimulate small business lending, Treasury Secretary Tim Geithner ordered the top TARP recipients to begin sending the Treasury monthly reports on their small business lending activity.

“We need every bank in the country to do everything in their power to provide the credit that small businesses need to operate, expand and add jobs,” Geithner said as he announced the new requirements. “Given the role many banks played in causing this crisis, you bear a special responsibility for helping America get out of it.”

But in the five months they’ve been sending in those reports, the 22 biggest TARP recipients haven’t increased their small business lending. Instead, they’ve cut their outstanding balances by $8 billion. As of Aug. 31, the 22 reporting banks held a collective small business loan balance of $261.3 billion, down 3% from when they began reporting in April.

Check out this list of shame:

chart_sm_biz_lend.gif

October 20, 2009

Small business stimulus

The stimulus plan finally comes to Main Street. This is something that should have happened months ago. Better late than never, I guess.

From the link:

President Obama will visit a Maryland business on Wednesday afternoon to announce initiatives to encourage lending to small businesses. According to an administration official, the proposal will increase the caps for existing Small Business Administration loans and give smaller banks better access to funds from the Troubled Assets Relief Program.

An industry official involved in S.B.A. lending said the White House would propose raising the cap on the agency’s flagship 7(a) loan from $2 million to $5 million. But other programs are likely to see increases, too, including the 504 program.

There is one caveat, though:

Changing S.B.A. programs would be subject to Congressional approval.

October 7, 2009

Not all small businesses are created equal

And some small business government contractors aren’t all that small. This type of system rigging ought to be more of a public outrage than it ever is. The economic realities, and the government’s response to such, over the last 18 months or so really let Main Street know where small business stood in the overall picture — on the bottom and practically forgotten.

From the link:

In August the Small Business Administration released its annual scorecard tallying federal dollars awarded to small business contractors last year.

The good news? Federal agencies claim they spent $93.3 billion. That’s $10 billion more than the year before.

The bad news? It’s fuzzy math. Billions of dollars reportedly allocated to small contractors are still flowing to corporate giants. The SBA’s top two “small business contractors” for 2008 — VSE Corp. ($1 billion in annual revenues) and AAI Corp., a division of Textron Inc. (TXTFortune 500) ($14.2 billion in annual revenues) — weren’t small at all. They alone accounted for $1.6 billion in federal “small business” spending.

Joe Jordan, SBA associate administrator for government contracting, says his agency has been trying to weed out impostors. To get to the $93.3 billion total from the original $107 billion reported to it, he says, the SBA scrubbed out some $6 billion in contracts incorrectly attributed to small businesses, plus more than $7 billion worth of contracts that were awarded and performed overseas or fell under other exemptions.

Small business cybersecurity guide from NIST

Cybersecurity is important at all levels of business, and is often a place where small business looks to cut corners and save money.

The release:

New computer security guide can help safeguard your small business

Just in time for October’s Cyber Security Awareness Month, the National Institute of Standards and Technology (NIST) has published a guide to help small businesses and organizations understand how to provide basic security for their information, systems and networks. NIST has also created a video that explores the reasons small businesses need to secure their data.

The guide, Small Business Information Security: The Fundamentals, was authored by Richard Kissel, who spends much of his time on the road teaching computer security to groups of small business owners ranging from tow truck operators to managers of hospitals, small manufacturers and nonprofit organizations. The 20-page guide uses simple and clear language to walk small business owners through the important steps necessary to secure their computer systems and data.

Small businesses make up more than 95 percent of the nation’s businesses, are responsible for about 50 percent of the Gross National Product and create about 50 percent of the country’s new jobs, according to a 2009 Small Business Administration report. Yet these organizations rarely have the information technology resources to protect their sensitive information that larger corporations do.

Consequently, they could be seen as easy marks by hackers and cyber criminals, who could easily focus more of their unwanted attention on small businesses. And just like big companies, the computers at small businesses hold sensitive information on customers, employees and business partners that needs to be guarded, Kissel says. He adds that regulatory agencies have requirements to protect some health, financial and other information.

“There’s a very small set of actions that a small business can do to avoid being an easy target, but they have to be done and done consistently,” Kissel says.

In the guide Kissel provides 10 “absolutely necessary steps” to secure information, which includes such basics as installing firewalls, patching operating systems and applications and backing up business data, as well as controlling physical access to network components and training employees in basic security principles.

He also provides 10 potential security trouble spots to be aware of such as e-mail, social media, online banking, Web surfing and downloading software from the Internet, as well as security planning considerations. The guide’s appendices provide assistance on identifying and prioritizing an organization’s information types, recognizing the protection an organization needs for its priority information types and estimating the potential costs of bad things happening to important business information.

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NIST works with the Small Business Administration and the Federal Bureau of Investigation in this outreach to educate small businesses.

Small Business Information Security: The Fundamentals can be downloaded from the Small Business Corner Web site athttp://www.csrc.nist.gov/groups/SMA/sbc/.

The related video, “Information Technology Security for Small Business. It’s not just good business. It’s essential business,” features experts from NIST and the Small Business Administration. The video is available on You Tube and the Small Business Corner of the NIST Computer Security Web pages.

June 18, 2009

SBA’s America’s Recovery Capital loans

This Small Business Administration program looks like a boon for Main Street (remember way back when small to mid-sized business was called “Main Street?” Oh yeah, that was just a few months ago … ) as long as banks decide to play nice.

I understand banking’s fear of becoming over leveraged, and the pressures being put on banks by regulators to keep adequate cash reserves. At the same time the stimulus money was injected into the market to, you know, stimulate. Cash on bank balance sheets is stimulating nothing other than possibly some bank managers’ pants.

The program is there, the cash is there so here’s some advice to the banking world — get with it and start stimulating.

From the link:

Struggling small business owners can begin applying next week for an interest-free debt-relief loan through a new Small Business Administration program — if, that is, they can find a bank to process their application.The new “America’s Recovery Capital” (ARC) loan program, authorized by February’s stimulus bill and slated to launch on June 15 after four months of planning, aims to make small, government-backed loans available to viable companies laid low by the recession. (For full details on ARC eligibility and loan terms, click here.) But the loans will be made and managed by SBA lenders, and so far, few have jumped on board.

Before the details of the program were released on Monday, lenders were hesitant to commit, concerned that there wasn’t enough economic incentive for them. Now, with key details about how the program will work finally available from the SBA, many haven’t retreated from their initial wariness.

“While we have received a few requests from our customers, we are still leaning against it,” says John Handmaker, president of Quadrant Financial, a small business lender based in Louisville. “The guidance from the SBA indicated rates and terms, which have provided some clarity, but we’re not 100% certain about what we need to be careful of. We don’t feel we have a solid grasp of the standard operating procedures and rules, and we’re not going to jump in until we really understand it.”

April 2, 2009

Credit crunch continues to hurt small business

Filed under: Business — Tags: , , — David Kirkpatrick @ 2:51 pm

This seems like an area ripe for stimulus. Main Street and all that

From the link:

Business brokers, who bring buyers and sellers together, say there are a growing number of people who want to buy, including many who have lost their jobs over the past year and need to make a living. And there are plenty who want to sell, including baby boomers hankering for retirement.

Getting financing for deals is still tough, although the government has taken steps to make Small Business Administration loans easier to obtain. The brokers say banks are not only uneasy about borrowers, they’re also questioning the health of the companies up for sale.

“Even with those changes, we feel that it seems as if the money may never reach the small business owner,” said Jeff Hoops, senior vice president of The Haley Group in Paso Robles, Calif.

Small businesses have found it hard to borrow from banks for years, long before the recession; a neophyte owner or company has been too risky for many banks to take on. The recession and banks’ unwillingness to lend in general over the past six months have made it that much harder.

August 13, 2008

Blackwater facing auditor questions

Filed under: Business, Politics — Tags: , , , , — David Kirkpatrick @ 4:38 pm

Embattled Iraq civilian contractor, Blackwater (read about its misdeeds here) is facing some serious auditing questions after apparently obtaining federal contracts meant for small businesses through creative employee designations. The total of the contracts in dispute is over $100 million.

From the AccountantsWorld (second) link:

The companies could have skirted small business size criteria because they counted many workers as independent contractors, not employees, which allowed them to exceed the 1,500-employee ceiling set in some contracts, according to the auditors.

The inspector general’s office found that Blackwater and the other companies’ sizes and revenues may have ”involved misrepresentations,” and suggested that the agency may want to ”determine whether it is appropriate for Blackwater affiliates to continue receiving small business set-aside contracts.”

When rival firms had challenged the 2006 contract for helicopter services to Presidential Airways on grounds that the company was too large, the airline provided data that 28 Blackwater-affiliated entities had a total of only 715 employees.

But the inspector general found that Blackwater had hired more than a thousand independent contractors and treated them as if they were regular employees, with scheduled shifts, for example, which called the size determination into question. The report also said the Small Business Administration should have ”attempted to reconcile discrepancies” in the data Blackwater provided.