Saturday, March 28, 2009

Something For Everyone

I've been in sunny Florida, which does the heart good when you live in winter-until-May Northeastern Pennsylvania. While there I accumulated a number of topics and corresponding information from SBDC staff and others I'd like to share.

Someday I'll do a blog on customer service and the airline industry....but this isn't the day!

(1) For those who asked...we are still waiting for the specifics on the Business Stabilization Loans to come out of SBA as a result of the stimulus package. As soon as we obtain the information (I have contacted our Philadelphia District Office and let them know we would like to receive that information as soon as possible) we will post all of the data and "how to's" on this blog. Stay tuned in!

(2) Keith Yurgosky found this website, which confirms everything we always say about business planning in a five-step-or-less-format. My only concern....the writer did not recommend the SBDCs as your source for business planning assistance. To read the quick "reasons for" site, click here.

(3) Theresa Kaplan did alot of searching for a client recently on the topic of NEW REGULATIONS FOR HOME IMPROVEMENT CONTRACTORS IN PA. She contacted the Attorney General's office after finding very good information on their site, asking if we might post that information to this blog.

Thank you to the Attorney General's office in Pennsylvania for allowing us to do so!

Here are the FAQs which appear on the site. The responses are too lengthy to post here, so you can go directly to the site by clicking here to read the responses.

The Office of Attorney General has prepared this document to answer commonly asked questions about Pennsylvania's Home Improvement Consumer Protection Act. This document highlights key areas of the law-it is not, however, a complete explanation of the statute and is not a legal opinion. We recommend that you carefully review the Home Improvement Consumer Protection Act and consult with a private attorney if you have any questions about the law or need legal advice.
  • What is the Home Improvement Consumer Protection Act?
  • What is a home improvment?
  • Is new home building included in the law?
  • Whis is a home improvement contractor?
  • Who must register under the law?
  • How do I register?
  • What information is required to register?
  • When do contractors need to register?
  • Does every employee of a home improvement business need to register?
  • What if a contractor fails to register?
  • Does the law contain a "grandfather" clause for businesses that have been doing work for a long time or do they still need to register?
  • How long are registrations valid?
  • Does someone who only does a few jobs a year need to register?
  • Do subcontractors who are paid directly by a general contractor and who never enter into contracts with consumers need to register?
  • Do hardware stores or businesses that supply products and equipment used in home improvements need to register?
  • Must landscapers register?
  • Do building superintendents or the maintenance staff for apartment buildings, condominiums, or community associations need to register?
  • Do engineers, architects, land surveyros, electrical contractors, master plumbers, locksmiths, burglar alarm businesses, fire alarm businesses and similar businesses need to register?
  • Do contractors need to show their registration to their customers or display the registration in their business?
  • Do contractors need to display their registration number on their vehicles?
  • Is there an exemption for work performed by or on behalf of a charity or a non-profit corporation?
  • Does the law aply to home improvements done on commercial properties?
  • Does the Home Improvement Consumer Protection Act affect the licensing or registration of home improvement contractors by counties, cities or towns?
  • Are there additional requirements in the act besides the registration requirement?
  • Does the law apply to out-of-state contractors?

All the info on the regulation, including a link to the online registration as well as to a PDF of the registration form are found at http://www.attorneygeneral.gov/hic.aspx.

A PDF of the Act itself is located here.

To register, click here.

(4) AND FINALLY, students from the Kania School of Management's Management 351 class, Section 1, will be competing to appear on this blog in the next week. Forty-one students have an assignment to read through the blog and create their own blog entry on the issues facing management in a downturn economy. The top three blog entries will be posted here on three consecutive days. We are encouraging our students to participate as much as possible in analyzing the economic issues facing ALL businesses in today's environment. Check in to see who made it to the blog!

Enjoy your weekend!

Monday, March 23, 2009

What's Happening Out There With Small Business Lenders?

A client recently called the office and told me that their long-standing revolving line of credit, which they used sparingly and payed down immediately after use, was pulled by their bank with no notification or explanation. He found out about it because he tried to use the line, only to have someone at the bank tell him the line had been revoked.

Wondering if this was happening to other clients, I checked into our network of 18 SBDCs across the State of PA. The answer is "YES." Other SBDCs have also had clients contact them to relate a tale much like the one above.

I decided to do some research to see if we could answer why this is happening. Here's what I found.

A Senate Hearing held on Thursday, March 19, might give us a clue. To read the article on the results of that hearing, click here.

And here is an interesting piece on SBA's emergency business loans--up to $35,000 to pay down debt. Most debt, except for an existing SBA loan, qualifies.

Finally, here is a great little piece on how to up your chances of getting a loan! To read it, click here.

Happy Monday!

Friday, March 13, 2009

HR 875: The Food Safety Modernization Act

The Scranton SBDC is a member of PASA, Pennsylvania Association for Sustainable Agriculture. Recently, as a listserve member, the following information was provided, which may be of interest to our agriculture and food-oriented clients. We have PASA's permission to provide you with the information through our Blog. The original data comes from Food and Water Watch, which I'll discuss at the end of this entry.

PASA Members: The following information about a bill now before Congress, HR 875, was developed by our friends at Food and Water Watch, and forwarded to us by the National Sustainable Ag Coalition (NSAC), of which PASA is a member. This Myth/Fact sheet was developed to help answer some of the rumors that are fairly rampant on the Internet right now. We will keep a close eye on the situation, and share further updates from NSAC as they become available.

Myths and Facts: HR 875 - The Food Safety Modernization Act


MYTH: H.R. 875 “makes it illegal to grow your own garden” and would result in the “criminalization of the backyard gardner.”
FACT: There is no language in the bill that would regulate, penalize, or shut down backyard gardens. This bill is focused on ensuring the safety of foods sold in supermarkets.

MYTH: H.R. 875 would mean a “goodbye to farmers markets” because the bill would “require such a burdensome complexity of rules, inspections, licensing, fees, and penalties for each farmer who wishes to sell locally - a fruit stand, at a farmers market.”
FACT: There is no language in the bill that would result in farmers markets being regulated, penalized any fines, or shut down. Farmers markets would be able to continue to flourish under the bill. In fact, the bill would insist that imported foods meet strict safety standards to ensure that unsafe imported foods are not competing with locally-grown foods.

MYTH: H.R. 875 would result in the “death of organic farming.”
FACT: There is no language in the bill that would stop organic farming. The National Organic Program (NOP) is under the jurisdiction of the United States Department of Agriculture (USDA). The Food Safety Modernization Act only addresses food safety issues under the jurisdiction of the Food and Drug Administration (FDA).

MYTH: The bill would implement a national animal ID system.
FACT: There is no language in the bill that would implement a national animal ID system. Animal identification issues are under the jurisdiction of the USDA. The Food Safety Modernization Act addresses issues under the jurisdiction of the FDA.

MYTH: The bill is supported by the large agribusiness industry.
FACT: No large agribusiness companies have expressed support for this bill. This bill is being supported by several Members of Congress who have strong progressive records on issues involving farmers markets, organic farming, and locally-grown foods. Also, H.R. 875 is the only food safety legislation that has been supported by all the major consumer and food safety groups, including:
  • Center for Foodborne Illness Research & Prevention
  • Center for Science in the Public Interest
  • Consumer Federation of America
  • Consumers Union
  • Food & Water Watch
  • The Pew Charitable Trusts
  • Safe Tables Our Priority
  • Trust for America’s Health

MYTH: The bill will pass the Congress next week without amendments or debate. FACT: Food safety legislation has yet to be considered by any Congressional committee.

If you haven't checked out Food and Water Watch's website, you may want to make it one of your favorites. Even if you are not presently farming, there are a number of good, solid resources for consumers as well.

Food and Water Watch is a nonprofit organization whose mission statement (to "ensure clean water and safe food") is a simple one. Newsletters covering the aspects of water protection (Currents) and food protection (Food Alert) are archived on the site for review. There are links to a Blog list and a Consumer Tools list on the home page. It's worth your while to investigate what the site has to offer.

Thursday, March 12, 2009

Follow Up on the Stimulus and SBA

I wanted to follow up with our friends at SBA on which items, specifically, we should be aware of that are relevant to small business owners in terms of translating the stimulus package to action.

John Banks, Lead Business Development Specialist in the Philadelphia District Office, was kind enough to spend some time creating an informative email to me, outlining exactly what the American Recovery Reinvestment Act has in store to stimulate lending. John has given me permission to copy his email thoughts to this Blog. You will find them below.

90 Percent Guarantee
The bill allows SBA to raise its loan guarantee from the current levels to as much as 90 percent for some loans. At present, SBA can guarantee loans up to 85 percent on loans up to $150,000, and up to 75 percent on loans greater than $150,000. The 50 percent guarantee on SBA Express loans would remain unchanged. Increasing the SBA guarantee percentage will encourage lenders to extend more capital to small businesses by increasing the share covered by an SBA guarantee.

Business Stabilization Loans
The bill creates a new SBA loan program to provide deferred-payment loans of up to $35,000 to viable small businesses that need the money to make payments on an existing, qualifying loan for up to six months. These loans will be 100 percent guaranteed by SBA. Repayment would not have to begin until 12 months after the loan is fully disbursed. The bill provides $255 million for this new program. These loans will help ensure that small businesses have time to re-focus their business plans in order to succeed in the long run.

Microloans
The bill expands SBA’s Microloan program, which provides small loans (up to $35,000) paired with technical assistance to start-up, newly established or growing small businesses. The bill provides funding to increase loans from SBA to participating Microlenders by $50 million through September 30, 2010, and adds $24 million in grants to provide technical assistance to borrowers. Historically, these loans reach low-income individuals, women and minorities in both rural and urban areas. Expanding this program through the stimulus bill will help ensure these entrepreneurs are not left behind in the credit crunch.

Refinancing
The bill also gives SBA the power to use the 504 Certified Development Company program to refinance existing loans for fixed assets, providing fresh support for small business expansion. This change will help business owners expand their current development projects and create jobs in their communities.

Secondary Market Expansion
The bill authorizes SBA to establish a secondary market for pools of “first lien” loans under the 504 program. These “first lien” loans from commercial lenders currently have no SBA guarantee. The bill authorizes SBA to deploy federal guarantees for pools of these first lien loans, so that they can be sold to investors in a secondary market. Providing liquidity for these first mortgages will help encourage lenders to continue participating in SBA’s 504 loan program, which provides a key source of capital for community development and other projects.

The bill also empowers SBA to set up a Secondary Market Lending Authority that would make direct loans to broker-dealers that participate in the secondary market for SBA-guaranteed 7(a) loans. These broker-dealers would use the funds to purchase SBA-backed loans from commercial lenders, assemble them into pools and sell them to investors in the secondary loan market. This program may help address some of the issues facing the secondary market for SBA loans and may ultimately help SBA lenders make new loans to borrowers.

Investment Program
The bill helps SBA-licensed Small Business Investment Companies (SBICs) and families of SBIC funds better leverage the capital they use to invest in small businesses. The bill sets maximum levels of funding the agency can provide to these companies at up to three times the private capital raised by those companies, or $150 million, whichever is less. It also raises the percentage any one SBIC can invest in a single small business to 10 percent of total capital, and raises from 20 percent to 25 percent the percentage of any licensee’s dollar investments that must be made in “smaller” businesses.

Surety Bonds
The bill also raises the maximum contract amount that can be covered by an SBA guaranteed surety bond from $2 million to $5 million, and, under certain circumstances, for contracts amounting to $10 million, and provides additional funds to cover the costs of expanding this program. Small businesses need surety bonds in order to bid on and obtain many federal and other contracts. SBA guarantees surety bonds to small businesses that private surety companies would not otherwise be able to extend.

Monday, March 9, 2009

Stimulus Scams

The SBDCnet site has a great article on Obama stimulus plan scams SBDC staff member Keith Yurgosky would like to share. To read the blog entry, click here.

This got me wondering about internet scams in general. As a savvy consumer, I know how to spot a scam, read the fine print on all things, and never give out any of my information on line, unless I am the one contacting the source to make an online purchase, and there is a security system in place to take my information. Even then, I'm somewhat leery of use.

Off I went to Google, searching for the latest articles on internet scams. I found some things I'd like to share.

First, we find this particular piece on "Top 10 Work at Home and Home Based Business Scams" by ScamBusters. I'm not advocating that this is the best article out there, but it does give food for thought on homebased business scams. The most unfortunate piece of this site is the ADS selected by Google to highlight it. Guess what? They are all work at home scams. Why are we highlighting comments on how not to be scammed with scam-worthy material? This is a lesson in how Google ads can work against your message.

Second, there are quite a number of sites devoted to telling you--from an individual's perspective--how they were personally scammed and how they don't want you to be. So they recommend a "good" work-at-home opportunity. One such recommendation from a previously scammed individual was "Maverick Money Makers." Further delving into on-line research and we find out that Maverick Money Makers may offer you the chance to make $397 per day, though "affiliate" marketing. That is....tell people about Maverick Money Makers so they buy into the program and you get a cut. You should also know that you become a member of a "secret club" for which you must pay $97.00 per month to stay a member, and you don't even get a decoder ring.

It's easy to see how people in dire situations might turn their gas money into get rich quick schemes once you start reading through the countless (and I do mean endless) array of on-line "opportunities" that promise you can make money.

My suggestion? If you are unsure about something you are reading on line, contact your local SBDC and have a consultant analyze the site and opportunity for you. They will honestly evaluate it from an unbiased perspective and give you the ins-and-outs of possible affiliation. Don't turn your hard earned money into a loss situation. To find an SBDC near you, go to http://www.asbdc-us.org/ and click on the map on your right.

Thursday, March 5, 2009

Dribs and Drabs: Springing Into Action

Today is one of those days where you just know Spring is coming, but you need further proof. In light of that feeling, which has been with me since I got up this morning, I'm concentrating on items that are "further proof" of statements made by agencies in how they will help you in terms of the Recovery and Reinvestment Act of 2009.

(1) Employers to Receive COBRA Medical Coverage Tax Credit. The IRS released information relative to employers claiming credit for the COBRA medical premiums they pay for former employees. If your small business has had to lay off workers due the recession, this may be important for you to know. The IRS unveiled new information on their website that includes an extensive set of questions and answers for employers. In addition, the website contains a revised version of the quarterly payroll tax return that employers will use to claim credit for the COBRA medical premiums they pay for their former employees.

The American Recovery and Reinvestment Act of 2009, which became law last week, includes changes to the health benefit provisions of COBRA. Under the new law, eligible former employees, enrolled in their employer’s health plan at the time they lost their jobs, are required to pay only 35 percent of the cost of COBRA coverage. Employers must treat the 35 percent payment by eligible former employees as full payment, but the employers are entitled to a credit for the other 65 percent of the COBRA cost on their payroll tax return.


Employers must maintain supporting documentation for the credit claimed. This includes:

  • Documentation of receipt of the employee’s 35 percent share of the premium.

  • In the case of insured plans: A copy of invoice or other supporting statement from the insurance carrier and proof of timely payment of the full premium to the insurance carrier.

  • Declaration of the former employee’s involuntary termination.
I want to make note here that while many have complained about the IRS over the years for various reasons, which may or may not be factual, in doing research on follow through on the Recovery Act of 2009, and agencies that have begun to get information to the public on how EXACTLY they are to apply, check, utilize, respond to, move forward with, and generally take advantage of what the Act proposes, the IRS wins hands down on the fastest to come to the plate with a formula. Case in point, above. Most other websites are still saying: STAY TUNED. The IRS has the information ready for you to use now.


(2) Recovery Website. The federal government has created a recovery website to afford transparency and accountability to taxpayers on how the money allocated to the process will ultimately be used. If you would like to keep track of who does what with funding received, click here.

(3) Department of Labor Website. Second place in getting information translated from paper to action goes to the Department of Labor. At a special "recovery" webpage (with associated links from that point) you can find a host of information on activities being implemented.


(4) PASBDC. The Pennsylvania Association of Small Business Development Centers has a spot on their main website devoted to tutorials which may be of help to you and your small business in these times. Providing links to some of our friends and partners, such as the SBA, Famee Foundation, and Corporate Turnaround, you can take advantage of free tutorials (one from the Famee Foundation is a 10-email-over-10-day tutorial geared to Marketing in times of recession) and other documented information prepared specifically to assist you in developing your knowledge base and generate ideas for coping with what's ahead.

If you know of a good resource not presented here, one which translates the recovery act into action and makes it easier for us, the common man, to follow and take advantage of, please post it in the comments section.



Tuesday, March 3, 2009

Building Web Credibility

An interesting fact came my way today. Stanford University's Persuasive Technology Lab has done research into what makes a website credible. The information, compiled under a document entitled "Stanford Guidelines for Web Credibility", is based on three years of research and 4500 participants. It comes complete with supporting research, for those who want to follow up the third party references.

With many small businesses moving to a web-based format for selling and marketing purposes, these items are most important to review.

The research fell into four areas: evaluation strategies, design, individual factors, and context/content.

In evaluation strategies, researchers examined the deciding factors people take into account in determining the validity/credibility of a website. Do people try to verify what they find on line? How much does their own past experience reflect on what they believe and do not believe about what they read?

The visuals and structure of a website, including advertisements on the site, often lend to the design credibility factor. Researchers noted "like human communicators, websites benefit (or suffer) based upon their appearance."

The individual factors are the reason why, if I find a few typographical errors on a website, I don't feel it is very professional or credible (and is the reason why I am constantly going back and editing these blogs!!!!!). But not everyone responds to typos, errors and design flaws the way I do. It depends on the individual. There is a great follow up piece to this element, with key findings which you can review by clicking here. That being said, I can honestly point you to some very well done websites, which I personally have found, through my own research, to not be credible. (But then again, what is my definition of credible and what is yours?)

Context and content further elaborates on the information a user finds while researching websites. The motivation behind seeking the information, the information presented, and whether or not the user has the time (or inclination) to prove the results as valid, are all involved in this area of research.

All-in-all this makes for interesting reading and another well-researched perspective on website development.

Monday, March 2, 2009

The Stimulus and Small Business: What's In It For Us?

We've had a number of small businesses wondering how the recent passing of the stimulus package will ultimately affect their bottom line. Based on our research, the following seems to be of importance for small business owners.

  1. If you lost money. Some small businesses will be able to use monetary losses to their tax advantage. To qualify your gross receipts have to fall at $15 million or under. You can use your losses to alleviate your tax bill for two years prior to the loss and 2o years following the loss. Ask your accountant about this important change to the tax regulations.
  2. Money for equipment. A business can normally write off up to $125,000 in spending for equipment such as vehicles, machinery and computers. In 2008, that amount was temporarily increased to $250,000. The stimulus package maintains the $250,000 level through 2009. However, if you already spend more than $800,000 on these types of capital expenditures, the deduction is phased out. For this reason it is geared more toward small business spending.
  3. Hiring tax credits. You can receive a $2,400 credit per worker on your taxes providing you hire a worker who falls in a targeted group of disadvantaged individuals. The Work Opportunity Tax Credit allows a 40% tax claim on the first $6,000 in wages paid to such a worker. Two new categories of disadvantaged workers have been added to the new package. These include veterans who have been unemployed for at least 4 weeks and left the military within the past 5 years, and disconnected youth, with disconnected being defined as between the ages of 16-25 with no formal education and no work in the past six months.
  4. Increased SBA lending. An additional $6 million is allocated to microlending through SBA sponsored non-profit lending organizations. The SBA has also been authorized to temporarily eliminate or reduce fees on their loan guarantee programs, and increases the amount of the guarantee to 90% for qualified loans.

Although there is alot more to the stimulus package than the four items above, we feel that the impact of what is left does not affect ALL small businesses, but may be geared toward certain industries and certain types of businesses. The above four points affect ALL small businesses.

To read a very good article on the full package from Forbes, click here.