President’s Budget Overview Backs $28 Billion in Small Business Credit for FY 2010

President Barack Obama’s FY 2010 Budget Overview offers full support for the U.S. Small Business Administration’s credit programs, authorizing SBA to support loan guarantees of $28 billion to small businesses.

The FY 2010 Budget Overview provides a broad outline of the President’s budget priorities, including an appropriation for SBA of approximately $700 million. The full budget proposal with account level appropriation details is scheduled for release in April.

The spending cited in the broad proposal would be in addition to the $730 million funding provided for SBA credit programs in the recently enacted Recovery Act. That Act – for which most spending is targeted for use in 2009 and 2010 – authorizes SBA to raise guarantee percentages on some SBA loans to 90 percent, temporarily reduce fees on SBA-backed loans, expand funding for Microloans, and raise the maximum size of SBA-guaranteed surety bonds.

The bill outlines maximum authorization levels for SBA credit programs well above current demand for those programs. It sets a maximum of $17.5 billion for SBA’s 7(a) General Business Loan Guarantee program, $7.5 billion for the 504 Certified Development Company Loan program, $3 billion for the Small Business Investment Company debenture program and $25 million for the Microloan program.

The bill also provides for $1.1 billion in direct disaster loans and provides for the launch of a pilot program to test the use of SBA-guaranteed loans as part of the agency’s response to disaster declarations.

Aside from those credit provisions, the proposal:
• sustains funding for the agency’s technical assistance and training programs
• improves federal contracting data and continues reviews of small business size standards to help improve targeting of federal contracting opportunities for small businesses
• modernizes core agency information systems, streamlines loan processes and enhances human capital resources

The Budget Overview also includes the Obama Administration’s Small Business and Community Bank Lending Initiative to expand small business credit availability and affordability by unfreezing secondary markets for small business loans as part of the larger plan to revive the flow of credit in the economy.

SBAM in the News

The Detroit News published an article on April 20 called "Risky business: Metro area entrepreneurs launch start-ups despite tough economy."


Many entrepreneurs are digging into their savings, borrowing money from friends and family or teaming up with investors to start businesses. Auto workers who got hefty buyout checks are using those in combination with other forms of capital.

"The economy really stinks," said Mike Rogers, vice president of communications for the Small Business Association of Michigan. On the other hand, there's less competition. "If you can get credit, it's inexpensive right now. If someone has the drive to live their dream and be their own boss, they're not going to let the economy stop them."

Read the entire article here.

Win Federal Contracts with New Web-based Course

The U.S. Small Business Administration (SBA) launched its latest free online course, Business Opportunities: A Guide to Winning Federal Contracts. The instructional, self-paced guide is easy to follow and available on SBA’s Website at From the SBA’s training site, click on the menu of free online courses, and then select the first course listed under Government Contracting.

The Business Opportunities online course is designed for all small businesses, especially women entrepreneurs and small firms in underserved markets that have historically had difficulty in tapping into federal contract markets. The course is comprehensive and uses both script and audio to provide information about the $400 billion federal market, contract rules, and most importantly, where to find contract opportunities and how to sell to the government.

“Federal contracts offer many opportunities for small businesses and this training program will help prepare firms to benefit from federal buying markets,” said SBA Administrator Steve Preston.

The course module includes more than 40 links highlighting the best contracting resources and directly engages entrepreneurs in the contracting process. For example, the course encourages and leads participants to the Central Contractor Registration (CCR) – generally considered the first step in engaging in the federal market place. The course also includes several other practical “next steps,” all designed to engage business owners in the federal contracting space.

Once completing the 30-minute tutorial, business owners can earn a certificate of completion from the SBA.

This Business Opportunities online course is one of more than 24 online tutorials offered by the SBA. On a typical day, 700 to 1,500 customers register for online courses offered by SBA, through its virtual campus at the Small Business Training Network (

Small Businesses Are Encouraged to Plan Before Disaster Strikes

Recent floods in the Midwest and hurricanes/tropical storms in Texas and Florida have cost homeowners, renters and businesses millions of dollars in damages. These events serve as reminders to the public to have a disaster preparedness plan in place.

September is National Preparedness Month, sponsored by the U.S. Department of Homeland Security (DHS). It is designed to enhance the public’s awareness of the necessity of having an emergency plan in place to respond to a natural or man- made disaster. The U.S. Small Business Administration (SBA) is one of the many government and private sector coalition partners participating in this fifth annual National Preparedness Month.

“There’s a tendency – and it’s human nature – to think that a large-scale disaster is not going to happen where you live,” said SBA Acting Administrator Sandy K. Baruah. “Accepting the inevitability of an emergency, and then taking responsibility for your own recovery are the necessary first steps toward protecting your family, your assets, and your community.”

To prepare for disasters, SBA offers the following tips:

• Develop a solid emergency response plan. Find evacuation routes from the home or business and establish meeting places. Make sure everyone understands the plan beforehand. Keep emergency phone numbers handy.
Business owners should designate a contact person to communicate with other employees, customers and vendors. Individuals and business owners should ask an out-of-state friend, colleague or family member to be a “post-disaster”
point of contact, supporting the flow of information about short-term relocations, recovery, additional sources of assistance, etc.

• Make sure you have adequate insurance coverage. Disaster preparedness begins with having adequate insurance coverage – at least enough to rebuild your home or business. Homeowners and business owners should review their policies to see what is or isn’t covered. Businesses should consider “business interruption insurance,” which helps cover operating costs during the post- disaster shutdown period. Flood insurance is essential. To find out more about the National Flood Insurance Program, visit the Web site at

• Copy important records. It’s a good idea to back up vital records and information saved on computer hard drives, and store that information at a distant offsite location. Computer data should be backed up routinely. Copies of important documents and CDs should be stored in fire-proof safe deposit boxes.

• Create a “Disaster Survival Kit.” The kit should include a flashlight, a portable radio, extra batteries, a first-aid kit, non-perishable packaged and canned food, bottled water, a basic tool kit, plastic bags, cash, and a digital camera to take pictures of the property damage after the storm.

More preparedness tips for businesses, homeowners and renters are available on the SBA’s Web site at The Institute for Business and Home Safety ( also has information on protecting your home or business. To learn more about developing an emergency plan, visit the DHS’s Ready Campaign Web site at or call 1-800-BE-READY to receive free materials.

The SBA makes low-interest loans to homeowners, renters and non-farm businesses of all sizes. Homeowners may borrow up to $200,000 to repair or replace damaged real estate. Individuals may borrow up to $40,000 to cover losses to personal property.

Non-farm businesses and non-profit organizations of any size may apply for up to $2 million to repair or replace disaster

Do You Keep Credit and Debit Card Receipts? Could Lead to Court

The National Small Business Association, SBAM's national affiliate, reports that small-business owners who print receipts on credit and debit card purchases could find themselves the target of a lawsuit based on lack of specificity of a 2003 law. The Fair Credit Transactions Act (FACTA) took effect on Dec. 4, 2006 and restricts the allowable information that can be printed on electronically generated credit card receipts. These receipts are no longer allowed to include more than the last five digits of the card number or the expiration date.

Individuals who continue to print receipts that include such information, and do so “willfully” can be held liable to pay their customers economic damages of between $100 and $1,000, plus unlimited punitive damages and attorneys' fees. The aim of this bill was to protect consumers against identity theft.

Unfortunately, the bill was written in such a vague way that many businesses thought they were in compliance by printing only the last five digits of the card number and the expiration date. Since the date of enactment, myriad lawsuits have been filed by plaintiffs arguing that this was a violation of the law and that receipts could not display both the card's last five digits and expiration date. Creating further incentive to individuals and attorneys to sue, the law does not specify that only individuals harmed by the violation are allowed to file suit.

Some states have laws on the books addressing consumer identity protection, but not all do. It is still unclear how states plan to address possible preemption of their laws by FACTA. Ohio, for example, rejected a suit from a plaintiff who had filed various lawsuits against companies that printed the expiration date on their receipts. In their findings, the court cited that the individual wasn’t injured by a violation, using the Ohio state law over the federal law.

Legislation has recently been introduced in the House that would clarify the situation. Sponsored by Congressman Tim Mahoney (D-Fla.), the Credit and Debit Card Receipt Clarification Act (H.R. 4008) would protect businesses that printed an expiration date on any credit or debit card receipt provided to a consumer between Dec. 4, 2004 and the date of enactment of H.R. 4008, but otherwise complied with the requirements of the Fair Credit Reporting Act, from being considered in willful noncompliance.

SBAM recommends that small-business owners be aware of the information that is printed on credit and debit card receipts, and take steps to remove the expiration dates.

AT&T Survey Finds That 42% of Small Business Owners Would Have Difficulty Surviving Without Wireless Technologies

Wireless devices are indispensable for today’s small business owners, who rely heavily on wireless technology to stay connected to their business and customers while gaining flexibility and time away from the office, according to a survey conducted by AT&T Inc.

Currently, four in ten (42 percent) of small business owners surveyed said they could not survive — or it would be a major challenge to survive — without wireless technology. This trend will likely increase because more than half (51 percent) of the respondents said they rely on wireless technology more today than two years ago, and even more (55 percent) said they expect to depend on it even more two years from now.

“Wireless technology is a critical tool that allows small business owners to stay in touch with customers, suppliers and staff while on the go,” said Carrie MacGillivray, senior analyst, Mobile Enterprise Network Services, IDC. “It is not surprising that small businesses indicate that wireless communications capabilities play a critical role in business success.”

“Small business owners are more flexible and connected than ever before, and they need telecommunications solutions built for them by people who understand their needs,” said John Regan, vice president of Small Business, AT&T. “Our survey reveals that 72 percent of today’s small business owners have come to rely on broadband, and 67 percent on wireless services. Yet only 14 percent of respondents indicated that video or television service is very important to their business.”

The increased demands of a personal life and owning a small business mirrors the concurrent growth in small business owners’ reliance on wireless technology. Of the 41 percent of respondents who said they were very likely to conduct business while away from the office, more than half (53 percent) said the success of their business depends on wireless technologies, such as mobile phones, PDAs and PC data cards. Additionally, half (49 percent) said they are optimistic about wireless technology giving their business a competitive advantage, while only 16 percent of those polled disagreed with that statement.  “This study confirms for us the idea that wireless technologies are increasingly important to small business owners, who are using those technologies more now than they did two years ago,” said Regan. “It will no doubt be interesting to see how they’re going to use new technologies in the coming years as they become more familiar with IP-based solutions and managed services for security, hosting and storage."

Good Workers Are Always Difficult to Find

A new survey indicates that despite Michigan's high unemployment rate, many businesses are having trouble finding qualified workers. However, SBAM's recent Small Business Barometer surveys of small businesses finds that most small employers report that they feel positive about access to qualified personnel.

The survey by the Accident Fund Insurance Company of America found that 13 percent of small to mid-sized Michigan businesses plan to hire new employees in the next six months, resulting in an estimated 260,000 positions that need to be filled. A significant portion of business owners believe they will have trouble filling these positions, not because of a shortage of applicants, but because of a shortage of qualified applicants.

The findings come from the semi-annual "Future Business Index" study, commissioned by Accident Fund Insurance Company of America and conducted by EPIC - MRA in November 2007. A total of 608 Michigan business owners, operators, officers or managers were interviewed.

Specifically, of the survey respondents who said they have had difficulty filling full-time positions during the past year, 70 percent offered "not enough of the applicants were qualified for the positions" as the reason. These industries range from non-profits and health care to manufacturing. The top two industries expected to look for qualified candidates in the next six months are business and professional services.

Nation’s Small Businesses Could See 10% Hike in Health Insurance Costs in 2009

The National Small Business Association, SBAM’s national affiliate, reports that Mercer, a leading human resource consulting firm in New York, has released preliminary data from their National Survey of Employer-Sponsored Health Plans 2008. The data indicates that 59 percent of employers will shift their rising health costs to their employees in 2009 by raising deductibles, co-payments, coinsurances or employee out-of-pocket spending limits.

Survey findings show health care costs for workers and employers to increase 5.7 percent in 2009– the lowest increase in more than 10 years. Despite the lower rate of increase in comparison to previous years, health care costs are still growing faster than the rate of inflation and workers’ wages.

The preliminary data was collected from 1.317 early respondents, nearly half of the 3,000 employers that will participate in the survey by the end of the year. Based on the early findings, the total costs for employers to renew their current health plan – if they were to make no changes – would grow by nearly 8 percent on average in 2009. Above all, small employers – those with 10-499 employees – costs would increase at 10 percent on average in 2009.

The survey also found that 19 percent of employers will lower their 2009 costs by adding a consumer-directed health plan – a high-deductible plan with an employee-controlled spending account (health savings account (HAS) or health reimbursement arrangement). The remaining 47 percent of companies are encouraging enrollment in health plans with lower premiums and higher deductibles.

New Law Extends Net Operating Loss Carryback for Small Businesses; IRS To Ensure Refunds Paid Timely

The Internal Revenue Service (IRS) announced that small businesses with deductions exceeding their income in 2008 can use a new net operating loss tax provision to get a refund of taxes paid in prior years.

To accommodate the change in tax law, the IRS updated the instructions for two key forms — Forms 1045 and 1139 — that small businesses can use to make use of the special carryback provision for tax year 2008. These forms are used to accelerate the payment of refunds.

The new provision, enacted as part of the American Recovery and Reinvestment Act of 2009, enables small businesses with a net operating loss (NOL) in 2008 to elect to offset this loss against income earned in up to five prior years. Typically, an NOL can be carried back for only two years. The IRS released legal guidance today in Revenue Procedure 2009-19 outlining specific details. Some taxpayers must make the election to use this special carryback by April 17, 2009.

“The new net operating loss provisions could throw a lifeline to struggling businesses, providing them with a quick infusion of cash,” said IRS Commissioner Doug Shulman. “We want to make it as easy as possible for small businesses to take advantage of these key tax benefits.”

With the economic downturn and the new law, the IRS expects record numbers of small businesses to be eligible for the refunds. The IRS is putting in special steps to ensure timely processing of these refunds to help small businesses during this difficult period.

Small businesses with large losses in 2008 may be able to benefit fully from those losses now, rather than waiting until claiming them on future tax returns.

The normal two-year carryback remains available if the small business does not elect the special carryback provision. If the loss exceeds the income for the carryback period, the taxpayer can continue to carry forward the remaining balance of the NOL for up to 20 years.

For small businesses that use a fiscal year, this special carryback may be used for an NOL in either a tax year that ends in 2008 or a tax year that begins in 2008. Once a taxpayer makes this election, it may not be changed.

To qualify for the new five-year carryback provision, a small business must have no greater than an average of $15 million in gross receipts over a three-year period ending with the tax year of the NOL. Businesses with more than $15 million in gross receipts still qualify to carry back their 2008 NOL for two years.

There are several methods that a small business uses to elect the new provision as detailed in the Revenue Procedure.

If a small business previously elected to waive the carryback of 2008 NOL but now wants to elect this special carryback, the small business may revoke its previous election to waive the carryback. The election revocation must be made on or before April 17, 2009.

Generally small businesses that are not corporations (including sole proprietorships filing schedule C with their Form 1040) may accelerate a refund by using Form 1045, Application for Tentative Refund.

Corporations with NOLs may also accelerate a refund by using Form 1139, Corporation Application for Tentative Refund.

The IRS will be closely monitoring these filings and will provide additional staff as needed to process these forms. The IRS will work to issue refunds within 45 days or even earlier to the degree possible.

In addition, questions and answers have been posted on this Web site. Small businesses that file Form 1040 can also call 1-800-829-1040 with NOL questions. Corporations can contact 1-800-829-4933 with NOL questions.

Form 1045 or Form 1139, whichever the taxpayer uses, generally must be filed within one year after the end of the tax year of the NOL. In addition, the current year’s tax return must be filed by the date the Form 1045 or Form 1139 is filed. Form 1045 and Form 1139 are filed at the same place the taxpayer’s

SBAM Opposes Expansion of Unemployment Benefits to Part Time Workers

In this week's Small Business Champion podcast, SBAM's Vice President Communications Michael Rogers talks with SBAM’s Director of Government Relations Mike Batterbee about a legislative proposal to make part time workers eligible for unemployment benefits – and how that would be costly to employers, who are the ones who pay for the unemployment compensation system. The weekly Small Business Champion podcast is the place where you can get the scoop on what’s really happening in Lansing and what it means to your bottom line.

You can listen to the podcast by:

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You can find a podcast archive here, where you can also comment on this podcast and find links to additional resources.