Geri Stengel

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What does 2010 hold for small businesses? That Depends on Who You Believe.

Officially, small business owners can expect good things in 2010:

  • The Small Business Administration has gotten more money for both staff and for loan guarantees with reduced fees.
  • America’s Recovery Capital (ARC) loan program will offer deferred-payment loans of up to $35,000, backed 100 percent by the SBA, to viable small businesses that need help making payments on an existing non-SBA loan.
  • The stimulus includes money for such thing as electronic medical records and the focus is on delivery of medical services. Consultants, IT experts, and hardware/software providers should benefit.
  • The Obama administration has been pressuring banks both large and small to loosen the purse strings.
  • There's some indication, according to Federal Reserve Board stats, that access to credit is just beginning to improve.

small business owner, SBAThe fact that the SBA is getting more money is “a strong indication that the US government is recognizing the power of small business in the economic recovery,” according to Jeffry Timmons, professor of Entrepreneurial Studies at Babson College.

The government may realize the importance of small businesses but the lenders don't seem to.

One small business owner has been growing during the downturn because the business helps nonprofits and small businesses realize efficiencies.

They have a good growth rate and they’re ready to hire six more people but have not been able to secure a working capital loan. These are not low-end minimum wage jobs; they come with benefits and health care. The business and the owner have good credit, and have been in business for 11 years. In other words, he has a solid track record.

The owner says, "I've written applications stressing job creation. However, the banks and the SBA expressed no interest in working capital and instead suggested equipment or real estate at much larger amounts than what we were asking for."

That doesn't even make sense! A bigger loan for something the business doesn't need? And no money for jobs?

Moreover, lenders are putting stumbling blocks in the way when they do approve his loan. Small banks want all your banking business, even if they can't provide the services needed. No transfer of all business, no loan.

And the criteria keep changing. The bank will tell this successful small business owner that he's got the loan; then the underwriter will refuse it.

The question is, will the SBA stimulus money be distributed and will it be enough? And if it isn't, what then? Will something else boost the small business sector?