Small Business Getting No Help From Government

[Guest MarCom]

There has been a decline in business-for-sale transactions and valuations. Additionally, the number of closed transactions reported in the first quarter decreased by 36 percent as compared to the same 2008 time period. As many small business owners across the country are struggling, many looking for answers about the value of their businesses during the tough economic times.

[Guest The White House]

In this week’s address, President Barack Obama spoke of how important small businesses are to the economy and described the steps his administration is taking to support them. Health insurance reform will allow small business to purchase insurance for their employees through exchanges, which will increase the quality of coverage while lowering the costs, and reform will provide tax credits to those businesses. To free up credit, the President called on Congress to increase the size of various SBA loans, and he announced that the administration will be making more credit available to the small local and community banks that many small businesses depend on.

 

 

Remarks of President Barack Obama

Weekly Address

October 24, 2009

Washington, DC

 

All across America, even today, on a Saturday, millions of Americans are hard at work. They’re running the mom and pop stores and neighborhood restaurants we know and love. They’re building tiny startups with big ideas that could revolutionize an industry, maybe even transform our economy. They are the more than half of all Americans who work at a small business, or own a small business. And they embody the spirit of possibility, the relentless work ethic, and the hope for something better that is at the heart of the American Dream.

 

They also represent a segment of our economy that has been hard hit by this recession. Over the past couple of years, small businesses have lost hundreds of thousands of jobs. Many have struggled to get the loans they need to finance their inventories and make payroll. Many entrepreneurs can’t get financing to start a small business in the first place. And many more are discouraged from even trying because of the crushing costs of health care – costs that have forced too many small businesses to cut benefits, shed jobs, or shut their doors for good.

 

Small businesses have always been the engine of our economy – creating 65 percent of all new jobs over the past decade and a half – and they must be at the forefront of our recovery. That’s why the Recovery Act was designed to help small businesses expand and create jobs. It’s provided $5 billion worth of tax relief, as well as temporarily reducing or eliminating fees on SBA loans and guaranteeing some of these loans up to 90 percent, which has supported nearly $13 billion in new lending to more than 33,000 businesses.

 

In addition, our health reform plan will allow small businesses to buy insurance for their employees through an insurance exchange, which may offer better coverage at lower costs – and we’ll provide tax credits for those that choose to do so.

 

And this past week, I called on Congress to increase the maximum size of various SBA loans, so that more small business owners can set up shop and grow their operations. I also announced that we’ll be taking additional steps through our Financial Stability plan to make more credit available to the small local and community banks that so many small businesses depend on – the banks who know their borrowers, who gave them their first loan and watched them grow.

 

The goal here is to get credit where it’s needed most – to businesses that support families, sustain communities, and create the jobs that power our economy. That’s why we enacted the Financial Stability Plan in the first place, back when many of our largest banks were on the verge of collapse; our credit markets were frozen; and it was nearly impossible for ordinary people to get loans to buy a car or home or pay for college. The idea was to jumpstart lending and keep our economy from spiraling into a depression. Fortunately, it worked. Thanks to the American taxpayers, we’ve now achieved the stability we need to get our economy moving forward again.

 

But while credit may be more available for large businesses, too many small business owners are still struggling to get the credit they need. These are the very taxpayers who stood by America’s banks in a crisis – and now it’s time for our banks to stand by creditworthy small businesses, and make the loans they need to open their doors, grow their operations, and create new jobs. It’s time for those banks to fulfill their responsibility to help ensure a wider recovery, a more secure system, and more broadly shared prosperity. And we’re going to take every appropriate step to encourage them to meet those responsibilities. Because if it’s one thing we’ve learned, it’s that here in America, we rise and fall together. Our economy as a whole can’t move ahead if small businesses and the middle class continue to fall behind.

 

This country was built by dreamers. They’re the workers who took a chance on their desire to be their own boss. The part-time inventors who became the fulltime entrepreneurs. The men and women who have helped build the American middle class, keeping alive that most American of ideals – that all things are possible for all people, and we’re limited only by the size of our dreams and our willingness to work for them. We need to do everything we can to ensure that they can keep taking those risks, acting on those dreams, and building the enterprises that fuel our economy and make us who we are.

 

Thanks.

[Guest Ernest]

This is an ideal time to start a bank! The media abounds with stories about how the financial services needs of small businesses and the community are being ignored.

[Guest Human]

You know what's so funny to me? We as a Country CAN DO in 1 Quarter what it took Brazil 2 years to do.

 

As for me ,I'm done waiting for a political solution. The democrats can go straight down into a rat hole for all I care.

 

I have taught Latinos on how to do it. Some have stayed in this country, and others have left the country, and have become exporters to this country. <LOL, You just got to find this as funny as I do. The simplicity of it is actually mind numbing.>

[Guest Human]

What I taught them, IS NOT POSTED on this web site. :)

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You know what's so funny to me? We as a Country CAN DO in 1 Quarter what it took Brazil 2 years to do.

 

As for me ,I'm done waiting for a political solution. The democrats can go straight down into a rat hole for all I care.

 

I have taught Latinos on how to do it. Some have stayed in this country, and others have left the country, and have become exporters to this country. <LOL, You just got to find this as funny as I do. The simplicity of it is actually mind numbing.>

[Guest Tea Party Patriot]

If we get not help from our Federal government, then why the hell should we pay taxes.

 

The Sixteenth Amendment (Amendment XVI) to the United States Constitution allows the Congress to levy an income tax without apportioning it among the states or basing it on Census results.

 

Under Article V of the U.S. Constitution, an amendment proposed by Congress must be ratified by three-fourths of the states to become part of the Constitution. The Article permits Congress to specify, for each amendment, whether the ratification must be by each state's legislature or by a constitutional convention in each state; for the Sixteenth Amendment, Congress specified ratification by the legislatures. There were 48 states in the Union in 1913 — the year when the Sixteenth Amendment was finally ratified — which meant that the Amendment required ratification by the legislatures of 36 states to become effective. In February 1913, Secretary of State Philander C. Knox issued a proclamation that 38 states had ratified the amendment. (According to Congressional analysis, a total of 42 states had ratified the amendment as of 1992.)

 

The William J. Benson protested that the legislatures of various states passed ratifying resolutions in which the quoted text of the Amendment differed from the text proposed by Congress in terms of capitalization, spelling of words, or punctuation marks (e.g. semi-colons instead of commas), and that these differences made the ratification invalid. Benson makes other assertions including claims that one or more states rejected the Amendment and that the state or states were falsely reported as having ratified the Amendment. As explained below, the Benson arguments have been rejected in every court case where they have been raised, and were explicitly ruled to be fraudulent in 2007.

 

In United States v. Benson, a criminal case, Benson himself raised the Sixteenth Amendment argument, which was rejected by the United States Court of Appeals for the Seventh Circuit. In this phase of the case, his conviction for tax evasion and willful failure to file tax returns was overturned on other grounds and the case was remanded to the trial court.

 

Upon retrial, Benson was again convicted of tax evasion and willful failure to file tax returns, and his conviction was upheld on appeal. The conduct for which he was convicted involved over $100,000 of income he did not report on Federal income tax returns. He was sentenced to four years in prison and five years of probation

 

In his book, Benson made the following claims:

 

* Seven states (Connecticut, Florida, Oregon, Pennsylvania, Rhode Island, Utah, Virginia) did not ratify the amendment, and it was reported as such.

 

* Two states (Kentucky and Tennessee) did not ratify the amendment, but Secretary Knox reported that they did.

 

* Eight states (Delaware, Michigan, Nevada, New Hampshire, South Dakota, Tennessee, Vermont and Wyoming) were reported by Secretary Knox as having ratified the amendment, but the States actually have missing or incomplete records of the ratification procedures or votes, and there is no conclusive record that they ratified the amendment or reported any ratification to the Secretary of State.

 

* Six states (Idaho, Iowa, Kentucky, Minnesota, Missouri, Washington) did approve the amendment, but the Governor or another official who was required by their respective state constitutions to sign the legislation into law did not sign the legislation.

 

* In twenty-five states (Arizona, Arkansas, California, Colorado, Georgia, Idaho, Illinois, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Montana, New Jersey, New Mexico, North Dakota, Tennessee, Texas, Vermont, Washington, West Virginia and Wyoming), the legislature violated a provision of its state constitution during the ratification process.

 

* Twenty-nine states (Arizona, Arkansas, California, Colorado, Georgia, Idaho, Indiana, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Jersey, New Mexico, New York, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Vermont, West Virginia and Wyoming) violated "state law" or procedural rules during the ratification process.

 

Additionally, Benson asserted that:

 

* Twenty-two states approved the amendment, but with changes in wording, and the inexact version was accepted as a ratification of the original version.

 

* One state approved the amendment, but with variations in spelling, and the inexact version was accepted as a ratification of the original version.

 

* At least twenty-six states approved the amendment, but with changes in punctuation, and the inexact version was accepted as a ratification of the original version.

 

Benson asserted that the Oklahoma State Legislature changed the wording of the amendment they approved so that it meant the opposite of the original amendment as it was submitted to the States by Congress, but that Secretary Knox counted Oklahoma as having approved the amendment.

 

Benson also asserted, as an example of a state’s violation of its own Constitution, laws, or procedural rules, the claim that the Tennessee State Constitution prohibited the legislature from acting on any proposed amendment to the U.S. Constitution submitted by Congress until after the next state legislative elections. According to Benson, the Tennessee legislature acted on the proposed 16th amendment the same month it was received (prior to any new state legislative elections).

 

http://www.thelawthatneverwas.com/new/home.asp

[Guest Human]

Because you have a left winger in the White House. The left wings dominance is fading politically as well as there presence on the net "No where to hide this time".

 

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If we get not help from our Federal government, then why the hell should we pay taxes.

 

The Sixteenth Amendment (Amendment XVI) to the United States Constitution allows the Congress to levy an income tax without apportioning it among the states or basing it on Census results.

 

Under Article V of the U.S. Constitution, an amendment proposed by Congress must be ratified by three-fourths of the states to become part of the Constitution. The Article permits Congress to specify, for each amendment, whether the ratification must be by each state's legislature or by a constitutional convention in each state; for the Sixteenth Amendment, Congress specified ratification by the legislatures. There were 48 states in the Union in 1913 — the year when the Sixteenth Amendment was finally ratified — which meant that the Amendment required ratification by the legislatures of 36 states to become effective. In February 1913, Secretary of State Philander C. Knox issued a proclamation that 38 states had ratified the amendment. (According to Congressional analysis, a total of 42 states had ratified the amendment as of 1992.)

 

The William J. Benson protested that the legislatures of various states passed ratifying resolutions in which the quoted text of the Amendment differed from the text proposed by Congress in terms of capitalization, spelling of words, or punctuation marks (e.g. semi-colons instead of commas), and that these differences made the ratification invalid. Benson makes other assertions including claims that one or more states rejected the Amendment and that the state or states were falsely reported as having ratified the Amendment. As explained below, the Benson arguments have been rejected in every court case where they have been raised, and were explicitly ruled to be fraudulent in 2007.

 

In United States v. Benson, a criminal case, Benson himself raised the Sixteenth Amendment argument, which was rejected by the United States Court of Appeals for the Seventh Circuit. In this phase of the case, his conviction for tax evasion and willful failure to file tax returns was overturned on other grounds and the case was remanded to the trial court.

 

Upon retrial, Benson was again convicted of tax evasion and willful failure to file tax returns, and his conviction was upheld on appeal. The conduct for which he was convicted involved over $100,000 of income he did not report on Federal income tax returns. He was sentenced to four years in prison and five years of probation

 

In his book, Benson made the following claims:

 

* Seven states (Connecticut, Florida, Oregon, Pennsylvania, Rhode Island, Utah, Virginia) did not ratify the amendment, and it was reported as such.

 

* Two states (Kentucky and Tennessee) did not ratify the amendment, but Secretary Knox reported that they did.

 

* Eight states (Delaware, Michigan, Nevada, New Hampshire, South Dakota, Tennessee, Vermont and Wyoming) were reported by Secretary Knox as having ratified the amendment, but the States actually have missing or incomplete records of the ratification procedures or votes, and there is no conclusive record that they ratified the amendment or reported any ratification to the Secretary of State.

 

* Six states (Idaho, Iowa, Kentucky, Minnesota, Missouri, Washington) did approve the amendment, but the Governor or another official who was required by their respective state constitutions to sign the legislation into law did not sign the legislation.

 

* In twenty-five states (Arizona, Arkansas, California, Colorado, Georgia, Idaho, Illinois, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Montana, New Jersey, New Mexico, North Dakota, Tennessee, Texas, Vermont, Washington, West Virginia and Wyoming), the legislature violated a provision of its state constitution during the ratification process.

 

* Twenty-nine states (Arizona, Arkansas, California, Colorado, Georgia, Idaho, Indiana, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Jersey, New Mexico, New York, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Vermont, West Virginia and Wyoming) violated "state law" or procedural rules during the ratification process.

 

Additionally, Benson asserted that:

 

* Twenty-two states approved the amendment, but with changes in wording, and the inexact version was accepted as a ratification of the original version.

 

* One state approved the amendment, but with variations in spelling, and the inexact version was accepted as a ratification of the original version.

 

* At least twenty-six states approved the amendment, but with changes in punctuation, and the inexact version was accepted as a ratification of the original version.

 

Benson asserted that the Oklahoma State Legislature changed the wording of the amendment they approved so that it meant the opposite of the original amendment as it was submitted to the States by Congress, but that Secretary Knox counted Oklahoma as having approved the amendment.

 

Benson also asserted, as an example of a state’s violation of its own Constitution, laws, or procedural rules, the claim that the Tennessee State Constitution prohibited the legislature from acting on any proposed amendment to the U.S. Constitution submitted by Congress until after the next state legislative elections. According to Benson, the Tennessee legislature acted on the proposed 16th amendment the same month it was received (prior to any new state legislative elections).

 

http://www.thelawthatneverwas.com/new/home.asp

[Guest Senator Jeff Merkley]

When financial products are full of tricks and traps, even a well-run, profitable small business can be put at risk. For many years, financial institutions have been marketing defective products to Americans. A Consumer Financial Protection Agency will allow us to crack down on these practices and make sure that a simple loan can’t destroy a well-run business.

[Guest Arden Dale]

Many firms now reap tax benefits as S corporations. But a bill in Congress would change tax rules on small S corps, which could lead some to merge or otherwise expand. Tax advisers are already talking about such a strategy to help S corps avoid a category of three or fewer skilled employees that would see taxes rise.

 

The U.S. House of Representatives passed the American Jobs and Closing Tax Loopholes Act of 2010 on May 28, and the Senate is expected to take it up this month. It would treat employee-shareholders of some S corps the same as partners and sole proprietors for employment tax purposes. That is, it would charge them all a 2.9% Medicare tax on all of their earnings from S corp business.

[Guest LAW]

Remarks by the President in Meeting with Bipartisan Leaders of Congress

 

A prominent area that we want to see movement on, hopefully in this work period, is on small businesses. They are the primary drivers of jobs in our economy. We are still seeing problems for small businesses when it comes to being able to obtain loans to expand or hire new people or just maintain their inventories. And so we’ve got a package of measures that have been worked on on a bipartisan basis that would help in terms of capitalizing small firms that would eliminate capital gains taxes for startups and small businesses. Those measures need to be put in place. We need to get that done, because the work of repairing this economy is not complete.

[Guest LAW]

Remarks by the President on Small Business Jobs Initiatives

 

THE PRESIDENT: Good morning, everybody. I just finished a meeting with these small business owners and a few of their workers. And we talked about some of the economic challenges facing these folks. And we talked about the ways that our government can make it easier for smaller firms to hire and to grow.

 

These men and women know how important it is because, historically, small businesses have created roughly two out of every three new jobs in our country. And to replace the millions of jobs lost in the recession, we're going to need to make sure that small companies are able to open up and expand and add names to their payroll. Small businesses will help lead this economic recovery. And that's why we will continue to stand by them.

 

But ensuring that small businesses can thrive is about more than just economic success. It's also about who we are as a people. It's about a nation where anybody who's got a good idea and a willingness to work hard can succeed. That's the central promise of America. It's that promise that has drawn millions of people to our shores. It's what drives workers to become their own bosses. It's what propels some basement inventor to bring a new concept to market.

 

That's what led two guys, Bobby Pancake and Steve Wheat -- their real names -- who are here today, to take a chance and try their hand at actually running restaurants. Obviously, they'd have to be restaurateurs, named "Pancake" and "Wheat." They worked for a restaurant chain for years, but they decided to leave the corporate offices and open up their own franchises. In fact, Bobby and Steve told me they recently opened up their sixth location. And Terry Haney, the general manager of one of their locations, is also here.

 

This same promise of being able to build your own dreams and be your own boss led Prachee -- Prachee Devadas to come to this country, become a citizen, and open up what's become a successful technology services company. Prachee told me that when she started, she had just one employee. Today, she employs more than a hundred people -- including her husband Anand, who is here today.

 

So the fact is that small businesses all across the country are hiring people, making a difference in their communities, giving back to their communities, but they've also been especially hard hit by the recession. From the middle of 2007 to the end of 2008, small businesses lost 2.4 million jobs. And because banks shrunk from lending in the midst of this financial crisis, it's been particularly difficult for small business owners to take out loans to open up shop or expand. It's been hard to finance inventories and payroll and new equipment.

 

Now, I've said before and I'll repeat, government can't guarantee success for these companies. But it can knock down barriers that prevent owners from getting loans. Government can't create private-sector jobs. But it can create the conditions for small businesses like these to grow and to hire more people. That's what's guided much of our economic agenda.

 

So let me be specific. Last year, we enacted seven tax cuts for America's small business -- seven tax cuts. So far, the Recovery Act has supported over 68,000 loans to small businesses, which translates into nearly $29 billion in new lending. More than 1,300 banks and credit unions that had not made SBA loans since before the financial crisis are now lending again. More than $8 billion in federal Recovery Act contracts are now going to small businesses. In fact, Prachee has been able to add 20 part-time and full-time workers because of the Recovery Act.

 

In addition, as a result of a bill I signed into law a few months ago, businesses are now eligible for tax cuts when they hire -- when they hire unemployed workers, they're eligible for tax cuts. Companies are also able to write off more of their investments in new equipment. And as part of the health reform package, 4 million small business owners recently received a postcard in their mailboxes from the IRS, and it was actually good news: It told them that they could be eligible for a health care tax credit this year that could be worth perhaps tens of thousands of dollars to these small businesses.

 

So these and other steps are making a difference. Little more than a year ago, the economy was in freefall. Today, it's growing again. Little more than a year ago, the economy was losing an average of 750,000 jobs per month. It's now been adding jobs for five months in a row. But even though we are in the process of digging ourselves out of this recession, we're still in a pretty deep hole. Millions of our family members, our friends, our neighbors are still looking for work -- they're still faced with the prospects of long-term unemployment. Credit is still less available than it should be, particularly to small businesses.

 

As small business owners like Prachee and Bobby and Steve will tell you, we may be recovering but we're not yet recovered. We have to keep moving forward.

 

And that's why I'm urging Congress to swiftly approve a set of tax breaks and lending incentives to spur hiring and growth at small businesses. The legislation that's being debated right now would eliminate capital gains taxes for small investment -- for investments in small firms, which will help move capital to these companies across America. It will provide tax relief to small start-ups to encourage folks to open up businesses, as well.

 

To foster more credit, the package would create the small business lending fund I proposed in my State of the Union address to help underwrite loans through community banks. And we'd create a new state small business credit initiative, because states facing budget shortfalls are scaling back lending to small firms and manufacturers. That's working against our recovery. I'm also urging Congress to expand and extend successful SBA programs -- by increasing loan limits, for example -- something that could benefit people like Bobby and Steve.

 

In fact, since the start of my administration, we've been hearing from small businesses that want to retain and hire more employees, but they need additional credit. And we've been hearing from small community banks that want to lend more to small businesses, but they need additional capital. So this bill helps fulfill both needs. And to help us create jobs without adding to our deficit, we're making the tough choices to pay for these proposals.

 

So I'm hopeful that the House will pass these measures next week, and that the Senate will follow as soon as possible -- with both support from Democrats and Republicans. And I'm eager to sign this tax relief and additional lending into law. That's how we can continue to move our economy forward -- to continue on the path from recession to recovery, but also, ultimately, to prosperity.

 

Thank you very much, everybody.

 

END

11:10 A.M. EDT

[Guest FRB]

Chairman Ben S. Bernanke

At the Meeting on Addressing the Financing Needs of Michigan's Small Businesses, Detroit, Michigan

 

Over the past two years, a concerted effort by the Federal Reserve and other policymakers has helped to stabilize our financial system and our economy. Following a sharp contraction in late 2008 and early 2009, we are now in the fourth quarter of economic expansion, with jobs once more being created rather than destroyed. Nonetheless, important concerns remain. One particularly difficult issue is the continued high rate of unemployment. High unemployment imposes heavy costs on workers and their families, as well as on our society as a whole. I raise this issue here because healthy small businesses, including start-ups as well as going concerns, are crucial to creating jobs and improving employment security.

 

Unfortunately, lending to small businesses has been declining. Indeed, outstanding loans to small businesses dropped from almost $700 billion in the second quarter of 2008 to approximately $660 billion in the first quarter of 2010.1 An important but difficult-to-answer question is how much of this reduction has been driven by weaker demand for loans from small businesses and how much by restricted credit availability. To be sure, the distinction between demand and supply is not always easy to make. For example, some potential borrowers have been turned down because lending terms and conditions remain tighter than before the financial crisis, perhaps reflecting banks' concerns about the effects of the recession on borrowers' economic prospects and balance sheets. From the potential borrower's point of view, particularly a borrower who has been able to obtain loans in the past, these changes may feel like a reduction in the supply of credit; from the lender's point of view, the problem appears to be a lack of demand from creditworthy borrowers. Although lenders and borrowers may have different perspectives, our collective challenge is to help ensure that creditworthy borrowers have access to credit so that, should they choose, they can expand their businesses or increase payrolls, helping our economy to recover.

 

At the Federal Reserve, we have been working to facilitate the flow of credit to viable small businesses. We helped in bringing capital from the securities markets to small businesses through the Term Asset-Backed Securities Loan Facility--the TALF program. Our bank stress tests of a year ago also drew private capital to the banking system, which helped offset credit losses and provided the basis for increased lending. I know that earlier in this conference you heard about the various interagency policy statements issued to banks and examiners, reinforcing our message that, while maintaining appropriately prudent standards, lenders should do all they can to meet the legitimate needs of creditworthy borrowers.2 Doing so is good for the borrower, good for the lender, and good for our economy. We have also conducted extensive training programs for our bank examiners, with the message that encouraging lending to small businesses that are well positioned to repay is positive, not negative, for the safety and soundness of our banking system.

 

As we continue to examine the factors affecting small business lending, our thinking will be shaped by information from diverse sources. For example, our most recent Senior Loan Officer Opinion Survey on Bank Lending Practices suggests that, for the first time since the crisis began in 2007, most banks have stopped tightening credit standards.3 We also know, from the survey conducted by the National Federation of Independent Business that while only 8 percent of small businesses list access to credit as their principal immediate economic problem, just 40 percent of small businesses attempting to borrow in 2009 had all of their credit needs met.4

 

Surveys like the two I just mentioned are informative, but getting a full picture also requires hearing from knowledgeable people with diverse perspectives on these issues. Meetings like this one allow us to gather intelligence we and others can use to facilitate the flow of credit to small businesses--for instance, by identifying specific credit gaps, clarifying examiner expectations and procedures, improving coordination of small business support services, and ensuring the availability of technical assistance for loan applications. Thus we can help ensure that small businesses are able to participate in and contribute to the recovery. The findings from the entire series of meetings sponsored by the Federal Reserve will be presented at a culminating conference at the Board of Governors in Washington later this summer.

[Guest Jen]

America's small businesses are essential to our nation's economy and its recovery. They create two out or every three new jobs in the private sector. Their ability to hire and expand is crucial to putting our economy back on the right track. But in the wake of this recession, too many small businesses are struggling to find the loans they need to strengthen their companies.

 

And that's why President Obama has called on the Senate to swiftly approve the Small Business Jobs Act – a set of tax breaks and lending incentives designed to spur hiring and growth at small businesses.

 

As we continue to fight for essential assistance to small businesses we know there will be a lot of misinformation and given what is at stake we want to provide the real facts.

 

Below is a point by point fact check of a story about the small business legislation the AP ran this weekend:

 

FICTION: "Congress is at work on a new program that would send $30 billion to struggling community banks"

 

FACT: To participate, a bank's Federal regulator must deem it viable – helping to protect taxpayer investments and ensure that they can increase lending. Indeed, Treasury and the Administration have opposed any program that has a focus on "bailing out" struggling banks rather than supporting viable institutions that will extend more credit.

 

When banking groups or Members of Congress have proposed legislation that requires Treasury to allow weaker banks to participate, the Administration strongly and successfully opposed these measures. For example, when an amendment was added to the House bill to allow small banks to be able to put off recognizing losses in impaired real estate loans, the Secretary of the Treasury publicly and strongly opposed it, and worked so that this measure was not included in the Senate bill. In fact, the Administration supported in the House and Senate language that explicitly prohibits banks on the FDIC's problem list from participating.

 

FICTION: "Yet under the new program, the 775 banks on the government's 'problem' list could qualify for bailouts for the first time."

 

FACT: The legislation explicitly states that "an eligible institution may not receive any capital investment under the Program, if (i) such institution is on the FDIC problem bank list; or (ii) such institution has been removed from the FDIC problem bank list for less than 90 days."

 

FICTION: "For banks in the hardest-hit areas, it can be nearly impossible to recover once too many loans sour. Yet the bill would require that banks be protected against "discrimination based on geography." It says the money must be available to lenders in areas with high unemployment."

 

FACT: The legislation requires that regulators or Treasury not "discriminate" on the basis of a bank's location. It does not remotely suggest that a weak bank can get capital simply because it is in a high unemployment area or distressed location. Not even close. To the contrary, the legislation is crystal clear that every bank must stand on its own and pass the same consistent, uniform viability test administered by its regulator – no matter where it is located. In addition, Treasury anticipates that the application process would allow for other Federal regulators to confirm the primary regulator's decision where necessary.

 

FICTION: "Many community banks are overseen by state regulators struggling under budget cuts and limited expertise. Many are ill-equipped to monitor banks during a crisis"

 

FACT: The legislation makes clear that every bank's primary Federal regulator would play the key role in determining whether or not an institution was eligible for the program – not state regulators. In addition, the legislation provides for strong oversight by the Treasury Inspector General and the Government Accountability Office – institutions with extensive experience in overseeing programs that require similar expertise as the SBLF.

 

FICTION: "This time, money is more likely to disappear as a result of bank failures or fraud"

 

FACT: The independent Congressional Budget Office – which initially projected significant losses under TARP's Capital Purchase Program (even though it now forecasts taxpayer savings for the program) has estimated that the Small Business Lending Fund would provide taxpayers with $1.1 billion in savings over 10 years. While CBO acknowledged there were other ways to do such scoring, the way the CBO chose and – by which Congress must abide – found that this program would not cost the taxpayer a penny.

 

FICTION: "It's supposedly reserved for banks deemed 'viable.' But regulators won't consider whether banks are viable now."

 

FACT: The only way a community bank (under $1 billion in assets) can get access to the full 5 percent of Risk-Weighted Assets in the program is to be found to be viable before it receives any government capital.

 

The Senate Legislation provides one narrow exception to this rule: in cases where a bank's Federal regulator determines that the bank has sufficiently strong management and solid long-term prospects – but nevertheless has a small capital shortfall – the legislation allows the bank to get government capital equal 3% of risk-weighted assets provided that private investors will invest the same amount, dollar-for-dollar. So not only must the government determine that the bank is otherwise viable, but private sector investors must be willing to contemporaneously put in at least as much of their own private sector capital at risk as the government for the bank to be eligible. Furthermore, the new private capital must be junior to the government's investment – meaning that Treasury gets repaid in full before any other new investors. Indeed, when the Congressional Budget Office reviewed this new proposal, because of these protections, they did not think this narrow exception would add any costs to the program at all. None.

 

FICTION: "But Federal Reserve Chairman Ben Bernanke and others have questioned whether the problem is lack of capital, or if there simply aren't enough creditworthy borrowers."

 

FACT: As Chairman Bernanke himself stated last month: "it seems clear that some creditworthy businesses--including some whose collateral has lost value but whose cash flows remain strong--have had difficulty obtaining the credit that they need to expand, and in some cases, even to continue operating."

 

Indeed, the National Federation of Independent Business – which reported in a survey earlier this year that 45 percent of small businesses found that their borrowing needs were not being satisfied – stated recently that "the lending fund has the potential to help credit-worthy small businesses that have had difficulties obtaining credit, which is a good thing." At the same time, the Small Business Jobs Act is designed specifically to address the range of problems facing small businesses – which is why it includes a series of targeted tax incentives for new investments, enhancements to SBA programs, and a new State Small Business Credit Initiative in addition to the SBLF.

 

FICTION: "The administration's haziness about whom the program benefits has fueled comparisons to the $700 billion bailout known as the Troubled Asset Relief Program, or TARP."

 

FACT: The Administration has been very clear about the intent of this program: it is to stimulate lending to small businesses by providing capital and incentives to the community banks on Main Street that make these loans. Indeed, the design of the program has been very explicit in addressing this goal – the program is directed only at small banks, which do the overwhelming amount of their commercial lending to small businesses, and the benefits banks receive are linked directly to their lending to small businesses. Loans over $10 million or to businesses with revenues over $50 million would not be counted.

 

FICTION: One source quoted in AP story stated, "What we lack here is oversight and true accountability."

 

FACT: There is no doubt that the legislation establishing the Small Business Lending Fund would provide for strong oversight and accountability. As a new program established through new legislation separate from TARP, the Small Business Lending Fund – in addition to requiring a small business lending plan from participants and regular reports on the impact of SBLF capital – would be subject to robust oversight from the Treasury Inspector General and the Government Accountability Office. These two bodies have a strong record of expertise and experience suited to the task of overseeing this program. For example, Treasury Inspector General Eric Thorson – nominated by President Bush in 2007 – has substantial experience and existing responsibilities relevant to monitoring a program like the SBLF: overseeing the Office of the Comptroller of the Currency, conducting material loss reviews of Treasury-regulated financial institutions that cause losses over $25 million to the FDIC's deposit insurance fund, and ensuring accountability for Recovery Act programs overseen by Treasury, to name a few.

[Guest LAW]

Here are the latest Small Business Loan Numbers.

 

SBA-Loans.pdf

[Guest Kenneth]

Why doesn't the SBA start making all the loans direct loans from the US Treasury. Eliminate the middle man just like we are doing with student loans. There are plenty of unemployed bankers around to place in an office in just about every county or major metropolitan area. Investing in small business direct sure seems like a better bet than handing out billions direct to large bankers.

[Guest NSBA]

The Kauffman Foundation recently published a report that finds there would be no net new job growth in the U.S. economy without small-business startups.

 

Examining information from a U.S. government data set called Business Dynamics Statistics (BDS), the report, "The Importance of Startups in Job Creation and Job Destruction," found that: "Job growth is driven, essentially entirely, by startup firms that develop organically."

 

The report found that small-business startups were not just responsible for net job growth on average, but for every year but seven since the government began collecting this data in 1977.

 

Given the indispensable role that small-business startups play in job creation, it is imperative that Congress and the administration focus more intently on the small-business credit crunch.

 

As U.S. Federal Reserve Chairman Ben Bernanke conceded during last week's Fed Forum on "Addressing the Financing Needs of Small Businesses," it is virtually impossible for startups to access financing in the current credit environment. Please click here for more on the Fed Forum.

 

If small firms are going to lead the U.S. out of the current state, as they have in past recessions, then they must be able to access sufficient capital.

 

firm_formation_importance_of_startups.pdf

[Guest Jim]

Lenin's classic script for success: chaos in the economy, shrinking middle class, alignment with the poorest and fiery oratory.

 

I recognize that despite the posturing, small business will receive a huge tax increase in 2011 as 70% of them report their earnings on Form 1040, Schedule C.

[Guest No More Taxes]

Please contact your Senators and encourage them to support legislation which repeals the expanded 1099 requirements. Some of the points you may want to include in your contact:

 

-The American Institute of CPAs and the National Association of Home Builders support repealing the requirement.

 

-The 1099 requirement creates a whole new class of transactions that must be reported to the agency by requiring that all businesses file information returns, generally using IRS Form 1099, for entities to which they made payments of more than $600 in a given year. This will significantly increase the paperwork burden on small businesses, already suffering from personnel cuts and budget shortfalls.

 

-The National Federation of Independent Businesses (NFIB) estimates that on average, small businesses already spend more than $74 per hour on meeting their compliance obligations, which represents the most expensive paperwork burden that the federal government imposes on small business owners. Small business owners typically lack in-house finance departments like most large businesses, leaving the additional paperwork burden to be handled by the owner or outsourced to an accounting firm – both of which take time and resources that could be used to reinvest and grow their business.

[Guest Mitch]

I really think those morons on Capital Hill think small private business exists only to fund the public sector.

[Luke_Wilbur]

Small Business owners and manufactures across the country need to come together and pool resources to compete. Manufacturers need give small businesses a better opportunity to buy smaller inventory. All businesses should give greater discounts to repeat customers.

 

Customers need to search for Made in America brands. When Customers receive their items they should make an extra effort to advocate where they purchased the product.

 

Only then can we compete.

 

Just like athletic sports, investors are looking for winners.

 

China has overtaken Japan for the number 2 biggest economy in the world.

 

The Dragon is looking to overtake the Eagle for the Number 1 spot.

 

Instead of bombs, we need to drop hard and soft goods.

 

We need to set the standards and fullfill orders at reasonable rates.

 

We are the greatest country.

 

Start buying from those that are part of it.

 

That is my opinion. If I am wrong let me know.

Edited August 16, 2010 by Luke_Wilbur

[Guest Alex Chilton]

Small Business owners and manufactures across the country need to come together and pool resources to compete. Manufacturers need give small businesses a better opportunity to buy smaller inventory. All businesses should give greater discounts to repeat customers.

 

Customers need to search for Made in America brands. When Customers receive their items they should make an extra effort to advocate where they purchased the product.

 

Only then can we compete.

 

Just like athletic sports, investors are looking for winners.

 

China has overtaken Japan for the number 2 biggest economy in the world.

 

The Dragon is looking to overtake the Eagle for the Number 1 spot.

 

Instead of bombs, we need to drop hard and soft goods.

 

We need to set the standards and fullfill orders at reasonable rates.

 

We are the greatest country.

 

Start buying from those that are part of it.

 

That is my opinion. If I am wrong let me know.

No, not wrong at all

[Guest David Lewenz]

Most banks today look at their balance sheet, consumer sentiment about paying back existing loans, commercial real-estate and are not going to take on any new risk without significant improvement in their balance sheet performance. Recently I applied for a commercial line of credit, with sales of $600,000 and deposits in place, I was turned down due to the fact that my business is new and my bank is not loaning to any new business without three years of history. How about that hope and change?

[Guest Encino Man]

City National Bank said Tuesday it will pay half of the standard loan guarantee fees, up to $3,000, for Small Business Administration loans in order to encourage lending.

 

Standard loan fees range between 2 percent to 3.75 percent of the guaranteed portion of a small business loan.

 

To qualify for the incentive, loan applications must be received by Sept. 10, and loans funded by Dec. 31.

 

Last year's federal stimulus legislation authorized the SBA to significantly reduce or eliminate certain loan fees and hike the guarantee on eligible SBA loans to 90 percent. Since the program expired, SBA lending has dropped by roughly 70 percent nationwide. That's hamstrung small businesses in their efforts to expand, City National business banking manager Jim Wullschleger said in a statement.

 

"And that comes at a time when small businesses -- typically a key employment driver -- have a vital role to play in our economic recovery," he said.

 

Proposed legislation to extend the fee incentives has been delayed until Congress reconvenes in mid-September.

 

Los Angeles-based City National has 80 banking offices in California, Nevada and New York.

 

http://www.cnb.com/business/lending/linesloans.asp

[Guest ASBL]

President Barack Obama is refusing to back a bill that could create millions of jobs in the private sector. The bill, the Fairness and Transparency in Contracting Act, H.R.2568, was introduced by Georgia Congressman Hank Johnson last May. The American Small Business League (ASBL) wrote the original draft of H.R. 2568. The bill is designed to stop the federal government from diverting over $100 billion a year in federal small business contracts to Fortune 500 firms and many of the largest businesses in Europe.

 

Since 2003, a series of federal investigations have found billions of dollars a month in federal small business contracts have been diverted to firms like Lockheed Martin, Boeing, Northrop Grumman, Raytheon, General Dynamics, Bechtel, Dell Computer and Xerox. Corporate giants from around the world that have received U.S. government small business contracts include Rolls-Royce, British Aerospace (BAE), French giant Thales Communications, Ssangyong Corporation headquartered in Seoul, South Korea and Finmeccanica SpA, which is located in Italy and has 73,000 employees. A recent investigation by Stars and Stripes Magazine found the federal government had awarded over $41.6 billion in small business contracts to “miscellaneous foreign contractors.” (http://www.stripes.com/blogs/ombudsman/ombudsman-1.8931/behind-the-media-contractors-veil-1.110840)

 

H.R. 2568 would stop the federal government from reporting contract awards to publicly traded firms and foreign owned companies as small business awards. The bill is based on language in the Small Business Act, which states that a small business must be “independently owned” in order to receive federal small business contracts.

 

If President Obama were to sign H.R. 2568 into law, or pass by executive order, over $100 billion in existing federal infrastructure spending would be redirected to legitimate small businesses in the private sector. Since the bill requires no new spending or tax increases, it is deficit neutral. The Obama Administration had estimated that for every billion dollars in infrastructure spending, 40,000 new jobs would be created. Based on those projections, if H.R. 2568 were to become law, over four million new jobs could be created. (http://www.nytimes.com/2008/12/07/us/politics/07radio.html?hp)

 

The ASBL points to H.R. 2568 as being far superior to the Obama Administration’s $30 billion small business lending bill. As opposed to a one-time infusion of $30 billion in loans, H.R. 2568 would inject over $100 billion a year in federal contracts into the small business economy for decades to come.

[Guest LAW]

Remarks by the President in a Backyard Discussion in Albuquerque, New Mexico

 

Cavalier Residence

Albuquerque, New Mexico

 

THE PRESIDENT: -- but let me describe for you what we did. Number one is we set up loan facilities both through the SBA as well as the new facility so that if you want to expand your business, you’re having trouble getting credit through your local community bank, we are now providing additional financing to the bank that they -- that gives them an incentive to loan to you and they only get these loans if they pass it on to small businesses.

 

So we’re not helping the bank just to hold the money. We’re saying if you, South Valley Bank, decide that you want to lend to Matteo’s Restaurant because you think that -- you’ve tasted their food, it’s terrific, and they want to open a new one or they want to build an addition, then they now have a pool of money that is going to make it much easier for them to lend to you at low interest rates. That’s number one.

 

SBA, the Small Business Administration, also has a whole host of lending programs that we have expanded. We’ve reduced the fees for them. We’ve made it easier to apply. So if you’re interested in the lending programs, then you should contact your local SBA administrator here in New Mexico, and I’m assuming that they’re -- I’ll bet your congressman here could probably let you know immediately how to get in touch with them and they would outline for you all the programs that were available. So that’s on the lending side.

 

Now, what we’ve also done is on the tax side we have said that for companies that are starting up, small businesses that are starting up, we’re going to give them a whole bunch of tax breaks. If you decide that you have to build a new oven, and you haven’t been sure -- should you invest in it this year, should you put it off, it’s kind of expensive -- well, we’re giving you incentives to go ahead and buy that oven this year and put it in. And it will be cheaper for you because you can essentially take -- you can write off the business expenses of purchasing that oven this year a lot faster than you would have otherwise been able to do. So that’s an example of just one of the kinds of tax cuts that are provided in this bill.

 

And it builds up -- by the way, eight tax cuts that we already passed as part of the Recovery Act that people don’t talk about, right now you can get a tax break if you hire an unemployed worker. We will give you a tax break on the payroll taxes that you have to pay for that person.

 

There are tax breaks right now for health care. I don’t know if you’re providing health care for your employees. It’s oftentimes very hard for restaurants, who are operating on pretty slim margins, to provide health insurance for their employees, but what we’re doing now is because of health reform, we’ll pay up to a third of the cost to your premiums in the form of tax credits so that it’s much more affordable, much cheaper for you to be able to provide health insurance for your employees.

 

So we’ve got a whole basket of tax cuts and lending assistance to small businesses. And the reason this is so important is because small businesses create the majority of new jobs in this country. Big businesses are very important, too, and we’re trying to encourage them obviously to do more to invest. They actually have a lot of money right now. It’s just they’re sitting on the sidelines with it instead of investing it, and we’ve got to encourage them to invest more.

 

But small businesses, that’s the beating heart of so many communities -- restaurants like yours, small dry cleaners, a plumbing operation, a tent company a flower shop. Okay, so the -- we’ve got a bunch of small business owners here. You knit the community together, and you give people opportunity, as well as building something for your family. And you’re so invested in it because it’s yours.

 

And small businesses have been harder hit by this recession than just about anybody else because they had a harder time getting financing and because obviously customer demand was down. And that’s why we have really tried to focus on making sure that small businesses on Main Street get help.

 

I’ve got to do a little bit of editorializing again, though, about the politics of this because this is something that -- this bill that I signed this week drew on Republican and Democratic ideas. Traditionally, this is something that’s been completely bipartisan. The Chamber of Commerce, the Association for Small Businesses, a whole bunch of different groups supported it. We could not get the Republicans to let this come up to a vote for months. And there were finally articles in USA Today about how small businesses were holding off making investments or hiring because they were still waiting to see if this thing would pass.

 

And finally we got two Republicans to vote for it -- out of 41. And one of them had to just admit -- he said, look, the time for playing games is over; this is too serious.

 

And I guess -- that’s something that I just hope as you are talking to your friends and your neighbors and your coworkers, I hope that’s the one thing you come away from here today thinking about is, these are serious times. I mean we’ve got tough competition out there. This is the greatest country on earth and will continue to be the greatest country on earth as long as we can go ahead and handle serious problems that we have, instead of playing political games all the time.

 

And when you look at the choices before you, I think you’ve got to ask yourself, who is offering serious answers. And I know you feel that way not just for your business but also for this new son that’s coming. Yes. Have you thought about Barack as a name? (Laughter and applause.) That’s good. I like that.