Business Information for Entrepreneurs by an Entrepreneur

Are you a small business owner struggling in the flailing economy? You, like many other small business owners, can get help as a result from the Small Business Financing and Investment Act of 2009.

Also known as the “Small Business Bailout Act,” this much-needed funding was a welcome relief to many business owners who watched as corporate giants such as AIG, JP Morgan, and dozens of national banks received billions in bailout funds. Now, $44 billion has become available for small business owners like you to help keep your business afloat and sustainable for the future.

How does this money help?

• Loan Guarantees – You can apply for business loans with a guarantee from the Small Business Administration. With loan guarantees, you are more likely to get approval for loans from your bank or financing company. Get startup loans, micro-loans, and other low-interest loans that will put much-needed cash capital back into your business.

• Save jobs – You now have access to capital to keep your business going without laying off workers. In times of economic trouble, companies tend to lay off employees in order to reduce expenses. However, how can your business grow when you have fewer workers? Keep your employees and help the unemployment rate through the funding allocated in the new act.

• Government Grants – Apply for government grants that you do not have to pay back at all. Grants are available for your business to convert to “green” technology and sustainability, to make improvements to your community, for research, or even to hire and train new employees.

The new bailout for small business is about choices. The money set aside for this bill is a way for business owners to have better options of staying alive and fruitful in a troubled economy. The small business bailout money is expected to create or save 1.3 million jobs each year.

Don’t let your small business dwindle and fail due to the recession. Now small business owners have options. Get the financial help you need by talking to your local chapter of the SBA and applying for loans and grants that will sustain your business.

Since the global recession officially began in December of 2007, thousands of small businesses have filed for bankruptcy. Indeed, economic times have been tough, and sometimes the only resort for small business owners is to shutter their doors.

However, there is good news on the horizon! Small business bankruptcy analysis performed in September 2009 by Equifax is showing that there are locations in American where bankruptcy is fast receding.

East Coast Recovering Faster than the West

While western states are still having a tough time and bankruptcies continue to rise, more and more eastern cities are showing improvement. From the second fiscal quarter to the end of the third fiscal quarter of 2009, Charlotte, NC saw a 69 percent drop in bankruptcies. Other cities with dramatic decreases were White Plains, NY with 49 percent and Atlanta, GA with 44 percent.

In addition, Equifax reported the top 15 cities with the fewest bankruptcies. All but two cities were located in Eastern states, such as New York, New Jersey, Massachusetts, Pennsylvania, Virginia, West Virginia, North Carolina, Georgia, Ohio, Michigan, and Florida.

The Future of Bankruptcies across the Country

The study and statistics included small businesses defined as commercial entities with less than 100 employees. It is estimated that more than 25 million small businesses operate in the United States. Of those 25 million, 9,361 filed for bankruptcy in September of 2009 alone, which is up 27 percent from 7,386 in September 2008.

However, the recovery effort is underway. In addition, with the Small Business Bailout passed by Congress, small business owners are finding ways to keep afloat. Small business loans, micro-loans, grants, and other financial aid are available to help business owners remain viable while the economy continues to try to improve. Over $60 billion has been set aside for small business owners.

The government is hoping that the bailout will help save or create 1.3 million jobs per year. Although bankruptcies continue to rise today, the hope is to help reduce the number of bankruptcies quarter after quarter. If you own a small business that is on the verge of bankruptcy, don’t become a statistic. Get help from your local SBA today and find out how you can prevent bankruptcy.

According to the 2009 National Small Business Cybersecurity Study, you are most likely not adequately prepared for internet security. The study was co-sponsored by the National Cyber Security Alliance (NCSA) and Symantec and included responses from over 1,500 small business owners from around the United States.

The statistics show that most small businesses do consider internet information security a priority, even though 65 percent of respondents said that internet and internet communication was critical to their success. Here is a sample of the valuable information handled and stored via the internet:

• Customer data 65%
• Financial records 43%
• Credit Card info 33%
• Intellectual property 20%

Yet, surprisingly few small business owners do anything about cyber security. Only 28 percent of American small businesses have any type of internet security policy in place. Only 35 percent of small businesses even provide training to their employees about internet security and safety. And an astounding 86 percent of small businesses do not have an employee dedicated and focused on Information Technology security.

These numbers are startling – especially considering that there are over 20 million small businesses operating in the United States. A breach in internet security can lead to extreme losses of vital customer and company data.

How can you improve your internet security policies? Here’s a start:

• Check for viruses and malware at least once a week. 9 out of 10 small business owners thought they were safe from viruses, but only 53 percent checked their computers on a weekly basis. Check that your spyware and anti-virus software is updated at least once a week.

• Back up files. This cannot be stressed enough. Always back up your important data. Good business practice means backing up your critical data on a daily basis.

• Use strong passwords. Internet hackers are surprisingly resourceful. Make sure that all your passwords are changed frequently, and use authentication technology. Passwords should be at least eight characters and include both letters and numbers or symbols.

Don’t let your business become a security risk for your customers or your important business data. Make sure you employ strong cyber security policies that ensure the integrity of your computer data and reduce your risk of becoming a cyber target.

Does your geographic location impact your success as a small business? CCN Money just announced their newest list of the 50 best places to launch a small business. From strong housing markets to stable economies and large pools of qualified workers, the cities chosen by CNNMoney.com have one thing in common: they are the place to be for entrepreneurs who want to succeed in starting new small businesses:

Here are the cities that made the Top 10, according to CNN Money:

1. Oklahoma City, OK

Oklahoma received top honors as the number-one place in which to start a new business for a number of reasons. From the second lowest foreclosure rate among metro areas in the nation to the second lowest median rent price in the country, Oklahoma City has proven itself, time and time again, to be a diverse, progressive city with growth in a number of industries, including medical research, energy, education and government.

2. Pittsburgh, PA

Long gone are the days of steel mills and dirty skies. In fact, Pittsburgh, PA has made a new name for itself through its top-notch universities and its prominence in all things technology, including robotics and artificial intelligence. And, of course, Pittsburgh has become a world renowned city for its leading healthcare.

3. Raleigh, NC

Raleigh, NC first draws entrepreneurs in with its epicenter of technology, Research Triangle Park. Located just a few hours from both the coast and the Appalachian Mountains, Raleigh attracts a wide variety of tourists. Homes are quite affordable here, and the technology markets are highly competitive, making this city a popular destination for young professionals.

4. Houston, TX

Houston has seen increases in its economy over the last decade because it has diversified its economy and committed a great deal of capital to improvements, including the public transportation system and the Texas Emerging Technology Fund. The Texas Emerging Technology Fund has targeted the energy, aerospace, information technology, nanotechnology, biotech and medical industries. Houston now has some of the best healthcare in the country, including the world’s largest medical center.

5. Hartford, CT

Hartford, CT is an historic city with a rich background. From specialty manufacturing and technology firms to a plethora of cultural amenities and public parks, Hartford is a low-cost alternative to the nearby cities of Boston and New York City.

6. Washington, D.C.

From politicians, lobbyists, lawyers and highly educated professionals, Washington, D.C. still remains a highly popular place in which to start a small business. Although rent is high, many business owners are still drawn to Washington, D.C. because of the unsurpassed opportunities found here.

7. Charlotte, NC

Known as a leader in manufacturing, Charlotte, N.C. now enjoys more than 1,900 manufacturers, from computer electronics to bio-medical companies. This city also boasts the second largest financial sector in the nation, trailing only New York City. As a result, Charlotte is home to several Fortune 500 companies. With a steady growth in population and a low unemployment rate, Charlotte continues to attract new talent and entrepreneurs.

8. Austin, TX

Start-up businesses thrive in Austin, TX. Known for its appealing tax structure, which includes no state personal income tax, business development is alive and well in this southern city.

9. New York, NY

With all of the people, jobs and services found here, it’s no wonder that New York City is still the place to be for business start-ups. Although this city is known for its high rents and wages, entrepreneurs come here, time and time again, because of the abundant opportunities.

10. Baltimore, MD

Baltimore offers plenty to small business, including the Emerging Tech Center, which helps tech startups, and the Baltimore Development Corporation, which offers low-interest loans to small businesses. This area is also known for its biotech startups, mainly because of the wide availability of research grants.

Do you think your small business is protected against predatory lending and unscrupulous financial practices? Think again. Many small businesses are being caught in an unfair Catch-22, and the government is not taking action to protect you. If your small business has debt, then the laws that protect consumers from predatory practices may not apply to your company.

Is it a Personal or Business Loan?

It is important to first understand that most lenders see small businesses merely through the individuals who own them. In other words, your ability to obtain a loan as a small business will likely be directly related to your personal credit.

Most lenders expect small business owners to secure their own debt, and rates and terms of small business loans are directly influenced by the business owner’s personal credit and financial situation.

Where is the Protection for Small Businesses?

One would assume that small businesses would be granted the same protection as consumers when it comes to predatory financial practices. Unfortunately, however, this just isn’t the case. In fact, the Truth in Lending Act and the Fair Debt Collection Practices Act, both of which are designed to protect consumers from predatory lenders, do not cover business to business transactions!

A fine example of this is the new credit card legislation, which is set to go into effect in February 2010. Although the law is designed to protect consumers from unfair credit card practices, small business cards are not included.

Therefore, small businesses are left out of important legislation that could protect them from questionable credit card practices. One would think that a small business owner would be afforded the same protection as a consumer, but this just isn’t the case.

The line between consumers and small businesses have become so blurred that small business owners have been essentially caught in the middle and left without adequate protection, merely because no one can decide whether to treat them as a business or as an individual.

While we hope that the legislation will change to protect small businesses with the minimum rights that consumers enjoy, in the interim, it is important to consistently stay ahead of the fine print in your loans and credit card debt.

Have you begun planning your tax strategies for 2009? Better yet, have you even begun thinking about them? If not, then perhaps you may want to put tax planning on the top of your to-do list – saving you from scrambling to implement your tax-saving strategies at the last minute.

Planning for Tax Savings in Advance

It is important to devote some time now to implementing your tax-saving strategies so that your tax liability will be reduced when it comes time to paying taxes. It is also important to remember that there are a number of tax provisions which are set to expire this year. Take advantage of them now to decrease your business’ tax liability.

For many businesses, 2009 has proven to be quite challenging, to say the least. Therefore, for many companies, the standard race to accelerate deductions and defer income at the end of the year may not work so well this year.

Special 2009 Tax Strategies

For example, in a typical year, small businesses may choose to record income when it is received, not when an order is made, in an effort to defer income at the end of the year. However, those businesses that struggled to make a profit in 2009 may find that this is not the best course of action, as they are hoping that next year will be more profitable than this year.

• One of the tax benefits set to expire this year includes a research tax credit and a provision that allows for a 15-year amortization on any leasehold, retail or restaurant improvements.

• Another deduction involves the $250,000 Sect. 179 deduction, which gives businesses the opportunity to write off up to $250,000 worth of qualified machinery and equipment purchases; this deduction has a few provisions, however, including the fact that the equipment and machinery must be up and running before the end of the year. Both of the above deductions may be extended.

• Don’t forget, of course, about making a charitable contribution before year’s end. Corporations can claim a deduction of up to 10 percent of their taxable income for charitable contributions.

• Finally, get your employee bonuses in order before January 1, but pay them out in the early part of next year, before March 15. If you have a business trip scheduled for the early part of next year, consider rescheduling it to take full advantage of your business travel deductions.

As the end of the year approaches, make sure all your tax ducks are in order to enjoy the most benefits before April 2010 arrives.

Technology has certainly changed the way we do business. From social networking sites to email and websites, the Internet has allowed us to market our businesses far beyond physical boundaries. The internet has opened so many doors for business owners who were once limited to their hometown.

How Small Businesses are Benefiting Online

The latest statistics on Internet use among small business, which was recently released by Citibank Small Business, shows just how much businesses have come to rely on the power of the Internet to market and sell their businesses.

For example, the survey – which was conducted over the phone with 500 small business executives (of less than 100 employees) across the country from August 20 through August 27 – showed that nearly 42 percent of small business have used their company’s website as a way to generate business leads and sales.

In addition, the survey showed that 28 percent of small businesses were employing email marketing, and nearly 25 percent of the businesses were using online advertising as a way of increasing their business sales and leads.

Social Media Sites still not Taking off Among Small Businesses

However, what came as a bit of a surprise is that social media sites, such as Facebook, LinkedIn and Twitter, are not being used very often for business use. In fact, the survey by Citibank Small Business showed that just one quarter of businesses have used these social media sites to market their business.

Many small business executives saw these sites as not being very helpful when it comes to generating business leads or expanding business.

The number of social networking sites used by small businesses to seek business advice or information was also very small, as more than 86 percent of the small businesses surveyed said they have not used social networking sites for this purpose. Only ten percent of business owners surveyed actually sought out business advice on social sites and blogs.

With the popularity of social media sites taking off over this past year, it came as quite a bit of a surprise to learn that few small companies used them. However, when given the state of the economy and the difficulty that many businesses have faced over the last year, it becomes clear that many businesses were simply too focused on running their businesses and managing their cash flow to capitalize on social media sites.

In the battle over healthcare reform, it seems like small businesses are caught in the middle – again.

Earlier in the year, Congress proposed a set of reforms that would heavily fine small businesses if they didn’t provide healthcare for their employees, sparing only those companies with a few employees. After small business advocates cried foul on these proposals and stated that the burden on small business owners would just be too great, the measure was dropped.

However, in its place came a new set of proposed reforms. The Senate Finance Committee decided to introduce a new healthcare reform bill that essentially rewards those small businesses that provide healthcare to their employees.

The main proponent of this bill, Senator Max Baucus (D) of Montana, is interested in creating nonprofit insurance exchanges, which will be offered to small businesses with less than 100 employees.

This current piece of healthcare reform has many aspects, much of which will greatly affect small business owners regarding how they pay for their employees’ healthcare:

• Tax credits will be rewarded to small businesses that provide health insurance to their employees, although only those employers with 25 or fewer employees will qualify for these tax credits. It is important to note, however, that more than 92 percent of small businesses have less than 25 employees. In addition, this new bill will only apply to small businesses whose average employee makes less than $40,000 per year.

• Small businesses with 50 or more employees will likely be fined if they don’t offer health insurance to their employees. It is also important to note than just four percent of small businesses have more than 50 employees. Employers with more than 50 employees will have to pay fines for each employee under this bill if they don’t provide health insurance, thereby imposing hefty fines on these employers.

• More taxes will be imposed on insurance policies with premiums above $8,000 for an individual and more than $21,000 for a family. These new taxes could be ultimately passed onto employers’ health insurance plans, thereby resulting in higher premiums. For many employers, these taxes could result in simply too much financial burden.

While the bill has yet to be finalized, the relationship between small businesses and healthcare will certainly change in the upcoming legislative sessions.

You start a small business and need easy access to short-term credit. Of course, you set your sights on a small business credit card, right?

Not so fast!

Many small business owners are quickly learning that a credit card labeled as a “small business “ credit card may not be what it seems. In fact, many experts point out that credit cards specifically designed and marketed for small business may come with extra liability – which small business owners may not want to take on.

Why Small Business Credit Cards May Not be Ideal

Although the Credit Card Holder Bill of Rights, which was signed into law by President Obama over the summer and is expected to go into full effect in February 2010, is designed to protect credit card holders, there are still ways for creditors to get around these reforms and tack another level of liability onto small business owners through their small business credit cards.

In fact, there is no specific offer of protection from the Credit Card Holder Bill of Rights for small business owners, leaving them quite vulnerable to the ploys of credit card companies.

This extra level of liability makes sure that BOTH the company and the cardholder remain responsible for the credit card debt. In other words, if your business is unable to pay the business credit card debt, the credit card company has the right to go after you, as an individual, for the repayment of the debt.

Better Financing Options

Subsequently, many industry experts have recommended that small business owners, in lieu of securing a small business credit card, simply secure a personal credit card for business expenses and pay the expenses from their business accounts.

Although many creditors offer small business credit cards to entrepreneurs and tout them as more convenient and practical than standard personal credit cards, the reality is that you may be able to use a personal credit for your business just as easily as you can with a business credit card.

There are many special features that creditors offer to small businesses through small business credit cards, but the reality is that you often find these features on personal credit cards as well – without double the liability.

Despite the government’s efforts and stimulus, lending programs are suffering, and small business lending programs are no exception.

The Real Small Business Lending Numbers

The numbers are quite grim and indicative of the state of the recession and of the economy as a whole: small business lenders secured 25,000 fewer loans to small business entrepreneurs in 2009 than they did in 2008.

The Small Business Administration recently ended its 2009 fiscal year, and the numbers were sadly staggering: the Small Business Administration backed just 44,221 small business loans through banks, which was 36 percent less than the number of backed loans just a year prior.

Dollar volume for SBA-backed loans also fell sharply, as loans from the fiscal year 2009 totaled $9.3 billion, which was a 27 percent decrease from last year’s $12.7 billion.

SBA Loans and the Future

Even though the SBA backs small business loans, it is important to note that they back only a certain percentage of the loan – meaning that if the borrower defaults on his or her small business loan, the SBA pays the bank back just a portion of the loan amount. This is exactly why banks still need to be assured that they have secured a trustworthy borrower, even though the loan is backed through the SBA.

These numbers come at a time when the SBA and the Congress are taking steps to ensure that loans continue to circulate for small business owners. In fact, Congress allocated nearly $730 million of February’s stimulus package to the SBA to encourage new incentives, including waiving fees and increasing its guarantee to banks regarding the backed loans. Although this move helped more than 1,200 lenders get up and running again, it clearly didn’t solve the problem as a whole.

Throughout all of this grim news, however, is optimism that the worst is over. In fact, many lenders have begun to see numbers slowly growing again. Loan programs hit an all-time low in January, when loan amounts fell nearly 48 percent from the prior year. However, when the Recovery Act provisions began in April, the volume on small business loans began to immediately increase. By September, loan volumes, as reported by the SBA, were the highest they were all year, with nearly $1.3 billion loaned to business owners.