Posted By John Chwat, ESA director of government relations,
Monday, August 10, 2015
We are well aware over the past several years that federal government policies and federal agencies can impact your
business operations in many ways, mostly in ways adverse to your interests. We hear about the IRS, OSHA, Department of Labor and many others. One federal agency, however, that could have a positive impact is the Small Business Administration (SBA).
Many times overlooked in trillion-dollar federal budget fights, the SBA oversees a number of important loans and capital programs including the 7(a) Loan Program, which provides loans to small businesses in order to help a business start or grow. The SBA also has other loan programs to help provide capital to businesses.
Access to capital is the lifeline of most small businesses and has continued to be one of the biggest issues hindering small businesses today. Since the recession, banks have not been lending money to small businesses at the same pace as before the recession. Even with the stimulus money Congress appropriated to banks, the availability of capital is not what it was in the early 2000’s. Reports have come out that a majority of business will seek capital from a bank in the next six months, yet many will not be able to get the loan they need to support their organization. ESA members, many of whom are small business owners, have a resource in the SBA.
The 7(a) Loan Program through the SBA guarantees loans made for general business purposes. Loans for $150,000 or less receive a maximum guaranty of 85% and loans greater than $150,000 receive a guaranty of 75%. These loans can be used to start a new business or to assist in the operations or acquisition of an existing business, including purchasing inventory, acquiring land, expanding or constructing a new building, and financing working capital.
The Certified Development Company (CDC)/504 loan program assists small businesses in financing the purchase of commercial real estate or equipment. Loans include three parts: 50% from a commercial lender, 10% from a borrower contribution, and 40% from a non-profit CDC. SBA guarantees 100% of the CDC’s portion of the loan, whereas SBA’s interest is secured by a second lien on the financed property. The 504/CDC loans are limited to the purchasing of fixed assets, such as land, machinery, or equipment.
The SBA website (www.SBA.gov) provides a long list of loans and resources to help small businesses. The administration was created over 50 years ago to aid, counsel, assist and protect the interest of small business concerns. Understanding the resources on the website would help you next time you are trying to secure a loan for your business.
Also, the House and Senate have made SBA and other small business issues a priority in Congress. In the House, Congressman Steve Chabot (R-OH), the Chairman of the House Small Business Committee, has introduced a bill HR 3191 that would increase SBA funding from 18.75 billion to 23.5 billion a year. He also introduced HR. 1023 which would amend the Small Business Investment Act of 1958 to increase from $225 million to $350 million. The House Small Business Committee held a hearing on How Tax Compliance Obligations Hinder Small Business Growth.
The Senate Small Business Committee also has pushed for an aggressive Small Business Administration agenda. Sen. David Vitter (R-LA), the chairman of the committee, introduced S. 999, the Small Business Development Centers Improvement Act 2015. The bill amends the Small Business Act with respect to the authority of the SBA to use certain SBA programs, including the small business development center (SBDC) program, to provide grants, financial assistance, loans, export assistance, and subcontracting opportunities on federal contracts to specified small businesses, organizations, state governments, universities, companies, and other entities that assist smaller enterprises. Sen. James Risch (R-ID) introduced S. 1000 the SCORE for Small Business Act which would amend SBA to reauthorize the Service Corps of Retired Executives program for Fiscal Year 2015 to Fiscal Year 2018, for grants or cooperative agreements to provide advice or counseling to people starting, expanding, managing, and selling a business at no cost. Also, Sen. Jeanne Shaheen (D-NH), the Ranking Democrat on the Senate Small Business Committee, introduced the S. 967, the CLEAR SBA ACT or the Communicating Lender Activity Report to make public a user-friendly database of information relating to lenders making loans under such ACT or the Small Business Investment Act of 1958.
Over the past year, Congress has pushed for a very aggressive agenda surrounding small business issues. There have been hundreds of bills relating to taxes, access to capital, entrepreneurial development programs, and labor issues. The SBA has made available more loans and resources available to help small business owners. If you are in need of additional financing options and resources be sure to look into what the SBA offers and put these programs to work for your business.
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