The Small Business Administration announced proposed changes to the 504 and 7(a) SBA loan programs this week, saying the tweaks would help streamline the application process and expand access to the programs.
The two SBA loan programs that would be affected by the proposed changes are the 504 and 7(a) programs. The 504 SBA loan program provides long-term fixed asset financing to small businesses, to be used for buying or improving land, buildings or equipment. The 7(a) SBA loan program aims to assist eligible small businesses in accessing credit when they are unable to do so elsewhere.
Both programs’ ultimate aims include facilitating job creation.
“Streamlining and simplifying has been a key focus of our agency over the last few years,” the SBA’s Karen Mills wrote in a press release. “The changes are the latest steps to reduce paperwork burden, with our eye on the larger goal of expanding access to capital and giving entrepreneurs and small business owners the financial resources to grow and create jobs.”
The proposed changes announced by the SBA include eliminating the personal resource test, which requires potential borrowers to “obtain a maximum level of personal finance resources.” Additionally, the SBA is proposing a revision to the rule on affiliation, which currently blocks potential applicants from obtaining loans under size standards, due to affiliations with other companies.
The proposed changes would also reduce the paperwork requirements for both loan programs and eliminate the “nine-month rule” for the 504 program, which limits businesses to including in their 504 project application expenses that have occurred only in the nine-month period prior to the date of application.
Lastly, the SBA is suggesting an increased accountability for the Certified Development Companies (CDCs), which are the “community-based partners for providing 504 loans,” as described on the SBA’s website.
Today, President Obama signs the Jumpstart Our Business Startups (JOBS) Act into law. For those of you who haven’t been following the JOBS Act, it is a bill that will make it easier for startups and small businesses to raise funds, especially through online crowdfunding.
As an entrepreneur myself, I’ve been watching the evolution of the JOBS Act very closely. It passed Congress last week through a 73-26 Senate vote and a 380-41 House vote, including an amendment designed to protect crowdfund investors in order to make it easier for startups to access financing.
Both statistics and anecdotal evidence tell us entrepreneurship is the key to job creation. So, while the JOBS Act doesn’t relate to the job market per se, I asked a few crowdfunding experts how it might impact the unemployment rate.
“Simply, the JOBS Act will make funding more accessible for startups by allowing non-accredited investors to participate in the funding rounds, and this alone, I believe will be the main factor driving the increase in new companies being founded. And with new companies comes the need to hire staff. Without a doubt, this will help the current unemployment rate,” said Tanya Prive, founder of Rock The Post, a social networking platform for entrepreneurs to fund and swap resources.
As the global economy writhes and rattles, entrepreneurship has ever more clearly emerged as the solution to economic recovery. Young startups not only create nearly two thirds of America’s new jobs, they also bring forth innovation that often revolutionizes humanity and provides widespread prosperity. The best part is, ease in creating businesses has increased dramatically due in large part to apps and sites that help entrepreneurs.
Here are 10 of the best digital tools to help you launch and grow your startup:
Over the past year, Big Fuel has seen its revenue more than triple, to $40 million, and its head count swell, from 70 employees to 140. But with growth comes growing pains. Like many start-ups, the New York City-based social-media marketing agency had never bothered with a formal orientation program and was finding it difficult to train all these new staff members—many of whom came from disparate industries and lacked experience in social media. As a result, Big Fuel began to experience a problem it never had: employee turnover. As the churn mounted, Avi Savar, the company’s founder and chief creative officer, grew concerned that the company would lose its competitive edge when pitching clients. “It’s a matter of staying ahead of the curve,” he says. So last June, Big Fuel unveiled an onboarding process for new hires. Here’s how the system worked for one recent hire.
Turns out customizing video game controllers for gaming addicts who want to shoot faster can be a decent business. Tim Erven says his five-year-old venture, Custom Gaming in Whippany, New Jersey, has been profitable since he started it, with revenue around $300,000 in 2011, and some 250 orders a week now, mostly through its Amazon storefront.
To keep up with demand, the 22-year-old has been trying to get banks to lend him as little as $10,000 to improve his website and rent a warehouse near his home. The six banks he’s approached have rejected his applications because of his age and because he hadn’t gotten a business loan before, even though his tax returns show profits and his parents were willing to put up their home as collateral. “From what the banks told me, asking for 10 percent of my annual revenue was reasonable, and what tends to be conventional, but even by decreasing the amount I was seeking I was still unable to obtain approval,” says Erven, who juggles balances on six credit cards to manage cash flow.
The economy grew slightly faster than initially thought in the fourth quarter and a gauge of factory activity in the Midwest hit a 10 month-high in February, pointing to underlying strength in the economy.
Gross domestic product expanded at a 3 percent annual rate, the quickest pace since the second quarter of 2010, the Commerce Department said on Wednesday in its second estimate.
The reading, which was up from the 2.8 percent pace the government reported last month and reflected modest upward revisions to almost all components of GDP, added to the recent run of fairly upbeat economic reports.
The tone of the GDP report was further bolstered by upward revisions to income and savings data, which should help support consumer spending in the face of rising gasoline prices.
U.S. small businesses that initially rushed to Chinese factories to get their products made are now dumping them for American manufacturers.
And the shift is gaining traction, said industry experts who match U.S. small companies with domestic firms.
It’s not unusual for America’s wealthiest individuals to invest through angel groups or sit on boards at venture capital firms. But these days the superrich also want to own and operate small companies where their deep pockets and powerful networks can create growth, says Mindy Rosenthal, executive director of the Institute for Private Investors in New York