With the passage of time, one cannot help but wonder whether or not the Small Business Administration will get a second stimulus package to help our nation's small businesses. There has been a lot of talk in Congress and among colleagues as to how many billion dollars will be made available through this Stimulus Package for the purpose of assisting our nation's small businesses recover from their financial hardship. Some are speculating that we may get as much as $80 billion, but others feel that we may actually only get a half billion dollars. In any event, the Small Business Administration is definitely doing their best to help the small business community recover from the worst recession since the Great Depression. However, can we expect a repeat of what happened during the Great Depression? The answer is no.
While it is certainly true that the Great Depression was the largest economic disaster to hit the United States since the Great Depression, it was not totally unprecedented. Just before the Great Depression, Congress passed the Emergency Banking Act, which gave an extra five percent in loans for small businesses. This time, however, Congress included the provisions in the Recovery Act that are extending those funds until the end of the year, allowing smaller businesses the same chance at recovery as larger businesses. Will the government extend those same provisions for the Small Business Administration?
No one can predict how this stimulus package will come about, but one thing is certain: there will be billions of dollars available to help small businesses get back up and running again. What does that mean? A small business may need to get cash flow lines opened, or there may be a need to increase plant capacity. Some small business owners are asking if the SBA can intervene, making use of their lending programs to get needed working capital. Is the SBA an effective lender for small business? Well, it depends on the individual business and circumstances.
When a small business is facing bankruptcy or a near future bankruptcy, there is no free lunch. Small banks have very few options for working with businesses that are facing financial problems, so they may have to engage in extremely creative tactics to encourage financing and to keep a large share of the profits. In fact, one of the things that the government is encouraging is lenders to increase commercial loan interest rates. This may help to mitigate the impact of the Great Recession on small businesses. It may even keep them afloat through the worst months of the economic cycle.
On the other hand, when a business is doing well and has enough working capital to survive for at least a year without having to raise additional capital, then lenders will have more options available to them. Lenders may be more willing to work with a business that is still growing rather than with a new startup. Is the Small Business Administration an effective lender for a small business? The answer will have a lot to do with how much the business can get back from its credit line and its ability to use this stimulus money to grow.
The Small Business Administration has been very useful in assisting small business owners throughout the country. In fact, there is a great deal of information about the Small Business Administration online at their website. In addition, there are a variety of SBA loan programs that a business can apply for. To get a quote, you simply need to fill out a short online form.
What will happen if a small business's owners are unable to continue paying their loans? The Small Business Administration will assist in providing interim funding to businesses that face this problem. This interim funding will give a business time to reorganize and restructure its working capital management. Without the interim funding, a business may not be able to make the needed adjustments in its operations to improve its cash flow and eventually generate more profit.
If a small business is experiencing a difficult year financially, don't feel discouraged. The Small Business Administration has many loan programs that will help you through a rough year. Just because you are a small business running on a tight budget doesn't mean you have to forgo your obligations. There are many resources available that will assist you in applying for the right financing for your business. If you qualify for any of these programs, you may just get another stimulus package to help your business recover.
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