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Many small business owners have been disappointed when their applications for small business loans were disapproved by banks under the Small Business Administration’s program for America’s Recovery Capital. According to an article written by Robb Mandelbaum in the August 12, 2009 edition of The New York Times Online, “the program is off to a slow start.” It seems that most banks are reluctant to approve applications for small business loans.

Mandelbaum reports that the Small Business Administration’s program has $255 million to give away, enough to give small businesses 10,000 loans reaching as much as $35,000 each. However, two months after the program was launched, there have only been 1,127 small business loans released, with a total of $36.8 million.

Sources are saying that banks are not very keen on participating in the Small Business Administration’s program because giving the small business loans would not be very profitable for them. Paul Merski,.chief economist of the trade association Independent Community Bankers of America, said, “There’s not a lot of profit motive in a $35,000 loan stretched over six years.” Bob Seiwert from the Center for Commercial Lending and Business Banking at the American Bankers Association reveals that, because of strict underwriting standards, servicing the small business loans becomes even more expensive.

The banks have also found more ways to restrict the approval of small business loans with the Congressional restrictions on loan eligibility. According to Congress, in order to qualify for the Small Business Administration loans, small businesses need to be both struggling and viable. That means the business should have had an “immediate financial hardship” such as a 20 percent decrease in revenue. However, the business must also be at least two years old with proof of positive cash flow in one of the previous two years. It should also submit a two year cash-flow projection proving that it will be able to afford loan payments.

Because of the Congressional restrictions, banks are more likely to approve small business loans from their existing clients. Merski said, “From a financial perspective, it really is a loan that makes sense for an existing customer. You’re not going to have to put out a lot of resources to do a very costly underwriting. You know the business.”

Those who are working in support of small businesses are very much disillusioned. An example is Alex Cooper who is a counselor at the Pima Community College Small Business Development Center in Tucson. He said he had assisted almost 30 small business owners with their loan applications but none of them had been approved. “It’s a disappointment. I thought the banks would be more interested in the community and try to help small businesses,” he said.

When the applications for small business loans are disapproved by banks under the Small Business Administration’s program for America’s Recovery Capital, small business owners still have another option. They can get the equivalent of small business loans from their credit card services.

Credit card services provide their clients with the ability to accept payments through credit cards or debit cards in person, online or through the phone. Clients who have established a certain minimum in average monthly credit card sales are qualified to apply for cash advances that are like small business loans. Payments are automatically deducted from future credit card sales.

If you are a small business owner, you do not have to go through the hassles of applying for small business loans with banks who are reluctant to participate in the Small Business Administration program. Get your trouble free small business loans from your credit card services instead.

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Running small business is no small feat, considering that one has to handle so many daunting tasks. From getting the business up and running, to planning, financing, marketing, managing employees and accounting, it adds up to a huge task. To top it all off, all of the responsibility falls on squarely on the lap of the small business owner.

Running a Small Business
Above all else, we need to answer two things: 1) Is running a small business for me and 2) why start my own business?

IS RUNNING A SMALL BUSINESS FOR ME?

Running a business is not for everybody, as it takes a special kind of character. Additionally, you can’t totally risk-proof your business, but you can improve through sound planning. Start by asking yourself following questions:

1. Are you a self-starter or do you need someone push you into action? If you can’t plan, organize and follow up by yourself you probably won’t make a good small business owner.

2. Are you a good decision-maker? You will need to make a lot of critical decisions quickly. You can’t depend on someone else in this area.

3. How good are your interpersonal skills? Since you probably can’t afford the luxury of a specialist (at least in the beginning), you will need to do all the talking with your customers and vendors and you will have to get along with them. Remember that your prime concern is the well-being of your business and you have to be able to deal with multiple personality types with the patience of a diplomat. Can you realistically do this?

4. Can you justify your business plan? If you can’t be pragmatic in assessing your plans and other business situations, you will be doing an injustice to your business. Being unbiased is crucial, even with yourself.

5. Can you handle extreme pressures? Pressures can potentially demotivate you to the point of quitting, if you don’t have the personality to handle them well. Remember that you will probably need to work around the clock, especially at the peak times for your business. Can you do this without being frustrated?

WHY START MY OWN BUSINESS?

Perhaps the first answer is to become your own boss. Hard work eventually pays off and you alone will reap the benefit. Your earning potential is unlimited. For some people, a new venture is exciting as they get variety in their work and thrive on challenge.

Planning and Starting a Business

Good planning means to get a workable business idea (one that suits you and your skills) and organizing key events to get the business started and running. You should plan through brainstorming, collecting information and analyzing it. Your options are franchising, buying an existing a business or starting one from scratch (risky for a beginner, but doable). Decide on the type of ownership at this stage. Getting an appropriate name and licensing through the government are the final steps.

RUNNING THE BUSINESS

Funding your venture is the major task. You can look into financing it through loans from Small Business Administration. SBA has a lot of programs suitable for small business owners.

Getting work is the next big task. The SBA helps in getting government contracts subject to qualifying factors. You will need to do your own marketing. Keenly observing the behavior of customers and competitors is key to helping your business succeed. Good services and incentives will help you to retain and expand your customer base.

Important Points

You can’t ignore the importance of legal aspects such as taxation, copyrights, employee relations, accounting principles and insurance among others. You may need to hire professionals for at least some of these. Of utmost importance are your financial obligations like monthly bills and loan repayments. At the very least, you will need the services of an account to handle your finances.

You can be successful in starting and running your own small business. It takes a lot of motivation and some risk tolerance. Running your own small business can be extremely gratifying. Knowing that you have what it takes to succeed is the first s

Technorati Tags: Businesses, Running, Small

Why Will the Government Offer Grants for Small Business?

Are you an entrepreneur that needs a business or small business grant? Are you motivated and skilled enough to begin your own small business? Do you need free money to start a small business but haven’t got a clue as to where to start? Look no further; there’s hope for your small business. As an enticement to small business owners, the government earmarks several million dollars in government grant money to assist small and personal businesses to flourish. There are millions that are unclaimed each year resulting from the lack of knowledge in regard to government grants. Thanks to Matthew Lesko, more knowledge has gotten out about how to get free government grants for small businesses, paying bills, college, etc. Matthew Lesko has written several books that educate individuals exactly like you on the way to receive a small business grant from the U.S. government. An average person may feel a little skeptical of any opportunity to get free money and may ask at least some of these questions: Is there really a catch to getting a small business grant? What exactly does the government get out of making an investment in small businesses? What can I do in order to obtain more general information and tips about small business grants?

It has been said that about 50% of all small businesses don’t make it beyond their first year. Why don’t small businesses succeed? Not enough funding and a lack of experience are a couple of the more customary reasons that small businesses aren’t going to make it beyond their first year. Why does the government give out small business grants to help entrepreneurs with startup costs if there is so much failure in small businesses? Why exactly does the government have such a high interest in small businesses? Small businesses likely represent ninety five percent of all employers in the United States. In addition, they contribute 50 percent of the gross domestic product of the country. Grants for small businesses are offered to business owners to promote economic improvement or growth. Three of four new American jobs are offered by small businesses.

The United States government doesn’t actually give out federal grant money to begin a small business. The Small Business Administration (SBA) is a Federal government agency that supports, protects the interests of, advocates, and provides resources small business concerns. The federal government has left it up to each individual state to appropriate funding by way of state grants to assist small businesses to thrive and grow. Small businesses are critical to the economic security of the U.S.. Keeping this in mind, the SBA has a mission to put money and time into helping entrepreneurs so they can start, grow, and develop their small businesses. Giving a support system to new businesses by awarding a small business grant is a small gesture when the economic development of the United States plays a role.

If you’re an entrepreneur, the U.S. government has small business grants so they can help your business to succeed. If you would like help finding more information about these small business grants, it would be a benefit to hear what Matthew Lesko has got to say about free money that might be available that could help your business to grow. His research shows that more than 1 million business owners receive small business grants each and every year. Grants like these may be available by way of the local government of your specific state. Keep in mind, that through assisting small businesses to develop and grow, the United States economy is going to grow and flourish as well. Small business grants are an incentive to business owners and to the economy of the nation as a whole. The more small businesses that are started, the more employment will also be created. In order to secure the advancement of small businesses, the government can help by providing small business grants as well as other resources that are necessary for small businesses to flourish.

About the Author: Find out about the best ways to get Small Business Grants! Matthew Lesko.com will show you ways to get available funding, regardless of your business’ income amount, credit rating or age! Look at this web site for a completely free preview: http://www.MatthewLesko.com now! For more information and tips about Small Business Grants, click here.

Technorati Tags: Business, Government, Grants, Small

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Small Business Branding – Do-it-Yourself Logo Design.

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As a new entrepreneur looking for capital, your first option will be the SBA, or to be exact, asking for an SBA-backed loan. SBA loan applications are made through a bank. In broad terms, the SBA guarantees a loan to the bank, so in case the borrower defaults, the bank is guaranteed a portion of the loan by the SBA. (You are still liable for the loan, so your obligation does not go away.) This makes it easier for banks to lend to budding entrepreneurs, but it does not mean that the bank can just lend indiscriminately. The bank will analyze the application to protect its interest as well as the SBA’s.

Banks will look at the relevant experience of the business owner, Owner’s Investment, Good Business Concept or Plan, Character, Capacity to Manage and Pay, Collateral and Guarantees when evaluating a loan.  If they feel that the project is too risky for the bank, they may ask for an extra guaranteel from the SBA.

SBA guaranteed Loans are one of the first financing options for start-up business, or businesses with short operational history.  Straight commercial loans are usually out of reach for those businesses (most banks require businesses to be in operations for 3 years to qualify)

The SBA does not lend directly to the business owner. It is important that the bank you are working with is knowledgeable about SBA loans, as it will initially process your application, not the SBA. The SBA will review the application once the bank approves it.

The SBA has very broad requirements, so most businesses can apply for a loan under this program. Remember, however, that the lenders have their own criteria that will be the decisive factor whether a business receives funding.

Technorati Tags: Administration, Business, Loans, Small

As a new entrepreneur looking for capital, one of your first options for a loan will be the SBA, or to be exact, asking for an SBA-backed loan. SBA loan applications are made through a bank. The SBA guarantees a loan to the bank, so in case the borrower defaults, the bank is guaranteed a portion of the loan by the SBA. (You are still liable for the loan, so your obligation does not go away) This makes it easier for banks to lend to budding entrepreneurs, but it does not mean that the bank can lend indiscriminately. The bank will analyze the application to protect its interest as well as the SBA’s.

The SBA does not lend directly to the business owner. It is important that the bank you are working with is knowledgeable about SBA loans, as it will initially process your application, not the SBA. The SBA will review the application once the bank approves it.

What will the bank look for in your application?

· Good Credit Score. This is a very important factor in the consideration for a loan, but not the only one. If your score is not good right now, work on improving it. Although good credit is a key factor for getting a loan, is not the only factor. If you don’t have perfect credit, you can mitigate it by providing a thorough business plan, collateral, a higher co-investment in the project, a cosigner, etc. You will have to explain any outstanding issues with your credit. Moreover, lenders have different appetite for risk (large commercial banks are usually more conservative), so you may be able to find a lender that will work with you.

· Collateral (security for loan). In some cases a good credit score and down payment are enough to secure a loan. However depending on the amount of the loan, you may also have to offer collateral. You can use your house, stocks, or any other major possession as collateral if the bank requires security in the event you cannot pay back the loan.

· Experience. The relevant experience of the business owner is an important factor for the loan package. Banks feel more confident in giving out a loan to business owners who have relevant experience in the business that they are starting, such as a dentist opening a private practice.

· Owner’s Investment. If you are forming a new business, be prepared to invest a certain portion of the start-up costs personally. Lenders rarely finance 100% of the business. They will expect you to raise 20 to 40% of the investment yourself. The higher your personal investment in the business, the better the loan application looks to the lender.

· Good Business Concept or Plan. A good business concept that is believable and relatively conservative. Lenders are conservative organizations that do not like to take large risks.

· Capacity to Manage and Pay. The business should be able to generate enough cash to pay back the loan installments.

· Guarantees. The lender will look at how the loan can be secured. He or she will give importance to the individual’s personal financial statement and see if the loan can be secured against personal or business assets.

When applying for a loan and writing a business plan, make sure your financial projections are correct. Do your research. Know your business. It is surprising to see the number of entrepreneurs who do not pay enough attention to the financial aspect of the business. Paying close attention to the financial details will determine whether your business will survive.

Although most banks want to help entrepreneurs fund and expand their businesses, their primary responsibility is to make money from the loans and minimize their risk. Just because you have a great idea and are motivated to see it through, you may not get a loan. In fact, banks are very careful with innovation; they are conservative institutions that tend to lend to “tried-and-true” businesses. Whenever you submit your business proposal, always ask yourself, “What would make this a good deal for the bank? What assurances (aside from my good credit and great idea) can I give to the bank so it will get its money back plus interest?”

Technorati Tags: Administration, Business, Loan, Small

Most first-time entrepreneurs are under the impression that SBA loans are an easy, viable route to funding any startup. While the SBA is an excellent government program to assist American small business, keep in mind that it is a government program, with all that distinction means – the process is slow, the restrictions are strict, and the hurdles to approval are high. Before you commit countless hours and effort to pursuing an SBA approval, be sure you understand the realities of the programs as well as your alternative opportunities for financing your startup.

The SBA is well-organized with distinctive programs to cover various sizes of businesses at various stages. The most common SBA program for entrepreneurs is the 7a Regular, which provides loan guarantees to approved businesses for startup or expansion needs including working capital, equipment purchases and the like. These guarantees are not actual loans but are intended to improve the chances of obtaining a formal bank loan. After all, if the federal government is promising to repay 75% or more of the loan if the borrower defaults then the banks should be clamoring to provide the loans, right? Not so much. In fact, banks are less and less inclined to service SBA-backed loans because of the requirements (read paperwork) set forth in the SBA guarantee regulations and the higher risk of helping out small business. Finding a bank to service an SBA loan is even more difficult if you are trying to fund a startup. The SBA requires a good personal credit score to even have a chance at a 7a guarantee, and the banks will require excellent credit plus your personal guarantee and collateral before they even think about lending the cash.

The 504 program provides cash directly to Certified Development Corporations, local area Not-For-Profits that are concerned with business development in disadvantaged communities. This program is intended to provide up to 40% of the needed capital for land and buildings for small businesses. The 504 money is borrowed from the CDC, and the rest must be secured through a formal bank loan. The requirements vary, but generally the company accepting the loan commits to job creation at a certain level, such as one new job for every 50k in SBA dollars or other specific economic development or public policy goal, such as minority business ownership. Again, good personal credit, collateral (usually the long-term assets purchased with the money), and the owners’ personal guarantee are required. The Microloan Direct program is probably the most viable option for most startups. The SBA distributes around 20M per year to intermediaries such as economic development NFPs throughout the country so they can provide loans up to 35k to businesses in their areas. The NFPs set their own approval processes with some guidance from the SBA. The average microloan is around 13k and most intermediaries also require collateral and a personal guarantee.

The recent Stimulus Plan includes incentives for banks to make more SBA-backed loans including reduced fees and increased guarantees to 90% of the total loan amount. Still, reports indicate that the banks aren’t particularly swayed by these incentives and loans to small businesses, and especially startups, remain limited. The primary reasons are the high risk (one report indicates a failure rate of nearly 12% in 2008), the high cost of servicing SBA loans (even with the Stimulus Plan discount), and the little known fact that the SBA can back out of the guarantees even after the loan has been made.

The reality of securing an SBA loan is not as rosy as many startup gurus would have you believe, nor is it necessarily an entrepreneur’s best bet. At best, these loans should be a backup plan if startup cash cannot be found elsewhere. SBA deals are expensive — even the microloan interest rates are between at least 8% and 13% – it is time-consuming and tedious to qualify, and you will be required to support your application with your personal guarantee anyway. This means that your assets become fair game for the bank if the business doesn’t work out for any reason. In addition, the chances of approval are much slimmer than most people think. Last year, just under 70,000 SBA 7a loans were funded, most of which were likely for established companies. The Microloan program distributed over $20M last year, but with an average loan value of $13,000, only around 1500 small businesses (not all startups) enjoyed the fruits of this program. In considering these numbers, keep in mind that over 600,000 new businesses with employees are started each year. There are no reliable numbers on the number of solo businesses that are also launched, but the estimates are that the total is significantly over 1,000,000 startups each year. Add to that the number of businesses seeking capital to grow and expand and the odds that any one startup will be funded through an SBA program are pretty low.

If you are looking to start your own business, don’t make the SBA loan your first choice for startup financing. Determine how much you can get done out-of-pocket and look to family and friends investors to round out the funding. Financing your business yourself and through people who know you and want you to succeed provides you far more control and can be a stronger incentive to watch the pennies throughout the life of your venture. However you decide to fund your business, the first step is to develop a detailed plan, including financials, so you know exactly how much you need and when. If the total is more than you can finance yourself, the work you have put in to the planning can be easily organized into a formal business plan to entice investors, including the SBA.

Technorati Tags: Administration, Business, Small, Startups

President-elect Barack Obama this afternoon nominated venture capital expert Karen Gordon Mills to head the Small Business Administration.

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“We must strengthen the small businesses that are the backbone” of the American economy, Obama said at a Chicago press conference. “With Karen Mills as administrator, America’s small businesses will have a partner in Washington” who will help them create jobs and understand the challenges they face. Mills, who has been part of the president-elect’s SBA transition team, is president of MMP Group, a private equity investor and adviser since 1993. From 1999 to 2007 she was founding partner and managing director of Solera Capital, a New York based venture capital firm. She is also lead director of Scotts Miracle-Gro. Her husband is president of Bowdoin College in Maine. During the announcement, Mills called small businesses “the heart” of the American economy and said businesses on Main Street or perhaps a “green energy startup” are what can help the nation create jobs and remain competitive.

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The National Small Business Association, an advocacy group, said it was not troubled that Mills does not come from a small-business background. “We’re not overly concerned by administrators without small-business experience or backgrounds — like former SBA chief Steven Preston — so long as they are clearly grounded and have experience with key business, economic and operational challenges… which Ms. Mills appears to have,” said Molly Brogan, the association’s vice president of public affairs. Acting SBA Administrator Sandy Baruah was also pleased with Obama’s nomination. “Karen Mills has been a friend and professional partner over the years in both my roles as the assistant secretary of Commerce and the head of the SBA. She is ideally suited to lead the agency,” he said. “Mills’ background is a combination of management, venture capital and public policy, three elements key to leading the agency successfully.”

Technorati Tags: Administration, Business, Capital, Gordon, Karen, Mills, Obama, Small, Solera

Do You Have A Very Small Biz? Do You Do Your Own Marketing? Learn The Most Effective Ways To Market — That Cost Little Or Nothing — And You Can Do Yourself. Real Advice. Quality Advice. From A 20-year Pro.
Small Business Marketing, Low Cost Advertising Ideas.

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Small Business Administration or SBA is a United State government agency that works independently to protect the interests of small businesses and provide them a chance to receive fair percentage of all possible government contracts. The aim of this federal government organization is to assist small and unprivileged business owners in receiving different government programs and opportunities that ensure their potential business growth and success.

The Mission

The organization was found in July, 1953 largely as a response to the economic turmoil that emerged due to the Depression and World War II. Since its inception, the stated mission of the Small Business Administration or SBA 8a has been to: “Maintain and strengthen the nation’s economy by aiding, counseling, assisting and protecting the interests of small businesses and by helping families and businesses recover from national disasters.” Over time different contracts and initiatives have been included within the SBA programs to make it more affective and advantageous. Today, the SBA program includes facilities like advice, loans and government contracts for minorities, veterans and women.

How it Works

The structure of the SBA development program has been designed to provide support to small business owners by offering them loans, backing them with loans from other lenders and most importantly counseling them. These counseling sessions are carried out by the Administration with help from several resource partners, which includes Small Business Development Centers, the Service Corps of Retired Executives or SCORE, the Veterans’ Business Outreach Program, Women’s Business Centers and several other SBA lenders. Counseling, training programs and all other required resources are provided by the Small Business Administration in conjunction with these recourse partners.

SBA Programs

Depending on its objective and approach, SBA programs can be divided into several broad segments under which all specified sections are listed and maintained. The programs are classified as:

Technical Assistance
Financial Assistance
Contracting Assistance
Disaster Assistance Recovery
Special Interests
Advocacy, Laws & Regulations
Civil Rights Compliance or CRC

From the beginning till the turn of the century 8a Minority, 8a Set Aside Sba Set Aside has been successful in providing almost twenty million loans and other benefits to small business owners across the country. In its endeavor to provide complete assistance, SBA has even introduced online classes to train and guide small business owners and al least has one office in every state. With successful programs and millions of subscribers, Small Business Administration has established itself as one of the most cost efficient government agencies and the “largest single financial backer” in the country.

Technorati Tags: Administration, Business, Overview, Small