Business Information for Entrepreneurs by an Entrepreneur

In an attempt to stimulate the economy and create new opportunities for business owners, the Small Business Association (SBA) has recently loosened some of its requirements for 504 loans. This move by the SBA is designed to help generate some much-needed revenue in the small business community. 504 loans are among the least expensive options available to small business owners. But is a 504 for loan for everyone?

The Terms

The down payment for 504 loans is also very affordable at 10%. There are 10 and 20-year repayment options. However, a 504 loan has some very specific stipulations. The loan must be used to expand a business, meaning that it must create or sustain a certain number of jobs. Small business owners must use the funds by purchasing fixed assets, such as a building or new equipment.

The Changes

Recent changes in policies have made it more affordable for small businesses to obtain a 504 loan. A number of fees have temporarily been eliminated, lowering the overall cost of the loan and making it possible for small businesses to thrive. Other changes include the allotment of a limited amount of debt refinancing with a 504 loan.

The Catch

The SBA 504 loans feature a tricky set of terms given the current economic conditions. Very few small businesses are looking at expansion during these times of financial uncertainty. As the market continues to shift, small business owners are becoming more and more conservative with spending, development and expansion projects. The recent changes to the loans make it easier and more affordable for small business owners to take out a 504 loan; however, these loans are basically restricted to expansion-based projects. The money absolutely can't be used to cover existing debt or the cost of overhead.

The Bottom Line

While the financing options and repayment terms are enticing, the restrictions on what the money can be used for make it a risky solution for small business owners. For the right business with a well-laid plan and signs of sustainability, a 504 loan might be a wise solution. The bottom line is that a 504 loan might not be the solution every small business owner is looking for, but it may meet the needs of certain types of business in key industries.

Managing the day-to-day operations of a small business can be tiresome. From serving customers to placing orders and fulfilling payroll, there just aren't enough hours in a day to get everything done. If you are a small business owner who struggles to get it all done, outsourcing may provide a unique solution. Here are some questions you can ask yourself to determine whether or not outsourcing is right for your small business:

What kind of financial position is my business in?

Outsourcing has the potential to save a lot of money for various reasons. You can call upon a virtual assistant or virtual worker when you need them, which eliminates the need for full or part-time employees. In addition, there is no need to outfit a virtual assistant with office space, supplies or a computer. If you are looking for a cost effective way to complete the little tasks that take up so much time, then outsourcing work to a virtual employee or firm might be the right solution.

Does the volume and nature of your business change from time to time?

Small businesses often experience fluctuations in volume of work. There may be peak seasons when extra help is necessary, as well as down time when too many hands are on deck. If you operate a business that experiences volume changes like this, then outsourcing is a good way to manage overflow work during the busy times, while not paying extra for labor costs during the slow season.

Is there a degree of flexibility when it comes to the work I am outsourcing?

Certain tasks that need to be completed are more flexible than others. For example, data entry must be done, but it is not necessarily a high-priority item on a to-do list. Placing phone calls is sometimes necessary too, but the hours and deadlines for completion are usually somewhat flexible. If the tasks you need assistance with completing are somewhat flexible, then outsourcing work to a virtual employee or firm is a logical choice.

Outsourcing provides unique financial solutions and flexibility for small business owners. The decision to hire a regular full or part-time employee should only be made when there is ongoing work available that is essential to the operation of the business. Look to outsourcing for "non-essential" tasks that are not ongoing to meet small business needs.

Cash in hand is important in any small business endeavor. It takes not only a savvy entrepreneur, but one with the financing and management skills to put the money to good use. The rumor mill is constantly running regarding grant money and small businesses. Is there really cash available for aspiring entrepreneurs?

The truth is that the government isn't giving away free funds to any type of small business owner. If you are an average business owner with a coffee shop, clothing boutique or auto detailing business in mind, then chances are slim that you may secure a government grant. On the other hand, there are some special circumstances that might qualify your small business for a government grant:

Community Development. The government often awards grants to nonprofit organizations that are striving to start businesses or complete projects that will benefit communities as a whole. For example, a general contractor might be able to get a grant for a downtown redevelopment project. Special interest groups are often times the recipients of grants that enhance communities in other ways, such as offering community healthcare education programs or substance abuse treatment programs.

Cutting-Edge Research. Another leading area that the government channels grant money into is research. The government only supports specialized small businesses that are dedicated to a unique cause, usually in fields related to science and medicine. Typically, grants given for research are applied to develop new and exciting technologies.

Veteran & Disabled Preference. For veterans of the armed forces and persons with certain types of disabilities, the government sets aside a certain amount of money to be issued in the form of grants. Monies obtained through this method can be used by veterans or disabled persons to purchase equipment that is necessary to start a business, or perhaps attend college or vocational classes to learn a new skill.

Economic Stimulus. If you happen to live in a part of the country that is under distress for some reason, your business may qualify for a grant. This might include a region that is struggling as a result of a natural disaster, such as a hurricane or flood.

This is the bottom line on government sponsored grants: There is no such thing as "free money" and the government only supports specific initiatives that are aimed at specific outcomes. However, if you fall within the ranks of endeavors the government sponsors, you can access helpful funds that are essentially "free."