Hailed as the backbone of our economy, small businesses are struggling to secure financing and turn a profit in this recession. Stats show businesses with fewer than 50 workers shed 175,000 jobs just last month, all while consumer spending drops, banks close their coffers and the number of Small Business Administration loans diminishes. SBA loans, in fact, fell by almost a third in 2008, to roughly 78,000 loans.
Sure, President Obama’s $787 billion stimulus plan promises to double a small business tax deduction for office and manufacturing equipment and vehicles to $250,000. (Yawn.) And yes, when it’s all trickled down, small contractors may get a taste of the billions being set aside for the transportation and infrastructure sectors. (Woop de doo!) The SBA is also receiving some $700 million from Uncle Sam, most of which will go to reduce fees on loans as well as a new loan program to help small businesses meet existing debt payments. (OK, that’s better.)
But what if you want to start the next Google (Stock Quote: GOOG) and can’t get a loan? What if your craving for delicious cupcakes has less to do with your sweet tooth than an entrepreneurial calling, and you need seed money? What if your existing green business can’t afford the technology and worker training it needs to stay afloat?
Fortunately, a growing number of municipalities are stepping up to the plate and addressing the small business sector by launching new programs to boost and aid entrepreneurism with more loans and free resources. Here are some recent developments across the country.
New York City: Mayor Michael Bloomberg announced an 11-part plan to encourage the city’s newly unemployed, especially those in the financial services sector, to stay and help create the next generation of innovative businesses. Part of the $45 million program, called New York 2.0, will go toward starting an angel investment fund that will invest $20,000 to $250,000 in NYC-based startups. The plan will also offer free business training programs and lease subsidized incubator spaces, among other initiatives that are effective immediately.
“This is at time when people need government to react,” says Seth Pinsky, president of the New York City Economic Development Corporation. “From New York City’s perspective, that means we have to act quickly.”
Boston: Mayor Thomas Menino recently set aside $350,000 to distribute loans to qualifying small businesses in Boston’s empowerment zone. These include distressed neighborhoods that include Roxbury, Dorchester and sections of Chinatown, Mission Hill and South Boston. The “Microloan Boston” loans will range from $5,000 to $25,000 and carry 9% fixed interest rates.
Philadelphia: Mayor Michael Nutter plans to invest $13 million to help developers and small businesses in certain developing areas of the city. One million dollars will go to help stores fix up their storefronts. The other $12 million will arrive in the form of federal tax credits for construction projects in blighted areas of the city. So, if you build your business in a distressed part of town, you may pay less taxes.
San Francisco: The northern California city just unveiled its own economic stimulus plan, including several tax rebates and credits for business owners. The city’s also setting aside new loan money for businesses previously rejected by banks. Mayor Gavin Newsom wants to give $23 million in no-interest loans to local entrepreneurs. There’s also a plan to offer local artists space in empty storefronts for free.
Miami: The city just opened the Minority Business Enterprise Center, a new assistance center to coach and counsel local business owners and startups. Services include developing a business plan, financial analysis, training, marketing plans,and loan sourcing, especially from ACCION USA, the largest micro-lender in the U.S. ACCION USA has been giving business loans to Miami business owners since 2003, ranging from $500 to $50,000.
Norwalk, Conn.: It’s a small step, but nice enough: Mayor Richard Moccia announced reduced parking rates to help businesses attract customers.
Lake County, Calif.: The city council recently gave a green light to extending the city’s business loan program to offer loans ranging from $15,000 to $75,000 to businesses desperate for capital.
If your municipality is offering new deals for small business startups and current owners, share it with us. Visit your mayoral office’s web site and your local economic or development organization for updates on new loan reserves and programs for small businesses and startups.
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