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US-Korea Trade Agreement Opens Big Market for Small Businesses
Karen Mills
Post date: 03/15/2012 - 10:00

The US- Korea trade agreement, which takes effect today, is a major win for America’s small businesses.  A key part of President Obama’s National Export Initiative, this historic agreement provides businesses with greater access to a fast growing market and more opportunities to create jobs.   It is estimated that the tariff cuts in the agreement will support 70,000 American jobs.

The U.S. International Trade Commission estimates that the US-Korea agreement will increase annual exports to Korea by about $10 billion.  Here at SBA, we’re ready to help small businesses tap into this market. 

There are several provisions that benefit small businesses.  For example, the agreement expands U.S. firms’ access to the $100 billion Korean government procurement market, ensuring that U.S. firms will get to bid on contracts on a level playing field.  At the same time, the agreement preserves government procurement rules that benefit U.S. small businesses, for example in bidding on Department of Defense procurement, for which small businesses will continue to receive the same treatment they have in other agreements. 

Leveling the playing field on government procurement will help small businesses like Rachel Carson.  Rachel is president of Helicopter Tech, Inc. (HTI), a Pennsylvania company that provides thousands of aircraft parts to aviation companies.  HTI is already exporting and Rachel is excited about continuing to grow her company.  Having already attended business matchmaking events in Korea, this trade agreement will enable her to pursue viable exporting opportunities that were previously inaccessible.  

“Made in America” goods will gain easier entrance into the Korean market thanks to the US-Korea trade agreement terms.  The agreement will eliminate tariffs on over 95 percent of industrial and consumer goods within five years.  Additionally, the agreement’s provisions on cross-border services, telecommunications, and electronic commerce offer advantages to the information and communications technology service sector – an area where the United States excels – benefitting small- and medium-sized American companies without the resources to establish an office in every market they serve.

SBA has a variety of programs and initiatives in place that will help these ambitious small business owners take advantage of the new market, scale up and create jobs.  Many small businesses benefit from our International Trade Loans, or Export Express and Export Working Capital programs.  American small businesses that shipped to Korea were supported last year by almost $40 million in loan guarantees under these programs. 

Additionally, the State Trade Export Promotion (STEP) pilot program - a joint federal-state-and local program to help small businesses export – is enabling several states to conduct small business trade missions to Korea this summer focusing on industries such as food and agriculture, services and medical devices. 

At SBA we know that exporting is a key way to help small businesses create an economy built to last.  The US-Korea trade agreement comes at the perfect time to help the economic recovery continue to gain momentum and enable American small businesses to start or increase their level of exporting, grow and create jobs.

Business Lending Showing New Signs of Strength
Karen Mills
Post date: 03/05/2012 - 14:51

Over the past three years, the Obama administration has made it a top priority to increase access to capital for small business owners across America.  When I came to SBA in early 2009, small business owners would say to me, “I need a loan to survive.”  Since that time, SBA has worked hard to provide small businesses with access to capital – even during the depth of the recession.  Thanks to the Recovery Act and the Small Business Jobs Act, SBA had a record year in FY2011, supporting more than $30 billion in small business lending across the country. 

Now we’re getting encouraging news that business lending is showing new signs of strength.  You may have seen that the FDIC recently released data showing that banks had their biggest increase in business lending in four years.   And the Wall Street Journal recently wrote “At Last! Banks Are Making New Loans.” Lately, small business owners are no longer telling me they’re fighting for survival; they’re talking about needing a loan to take advantage of a new opportunity, hire another worker or buy more inventory. There are additional signs that more money is getting into the hands of business owners.  The Department of Treasury began receiving reports from the banks that participated in the Small Business Lending Fund (SBLF).  Already these financial institutions, mostly community banks, have increased their small business lending by $3.5 billion.  And, the 27 states participating in the State Small Business Credit Initiative are also putting the funds to use, supporting lending to small businesses and small manufacturers.

Of course, we all know that even though lending is on the rise, there’s still more to be done.  That’s why SBA is working hard to continue filling gaps in the market place.  For example, we’re working with some of the largest lenders around the country, who last year committed $20 billion for small business lending over the next three years.  We’re also working to streamline our processes and make it easier for small businesses to benefit from our programs.  We recently revamped the CAPLines program to provide a working line of capital to certain businesses, including manufacturers and government contractors.  We also created new programs, such as Small Loan Advantage and Community Advantage, which incentivizes lenders to make small-dollar loans and opens up SBA programs to new lenders, such as CDFIs.  

We’re confident that this is just the beginning of the momentum small businesses need to keep growing and creating jobs.  Everyone at SBA recognizes that this is a critical time for small businesses, and we’re committed to helping them get the financing they need so they can lay the foundation for an economy built to last.

 

Small Manufacturers Driving Job Creation, Economic Growth
Karen Mills
Post date: 03/02/2012 - 20:07

Made in America is hot.  More than 400,000 manufacturing jobs have been created since the start of 2010 and there are currently about 229,000 job openings in the manufacturing sector, according to data from the Labor Department.

America’s small manufacturers are a critical part of that.  According to BLS and Census data, 98 percent of America’s manufacturing firms are small.  More than one in three Americans who work in manufacturing, work at a small business.  

Everyone from the President on down has been working very hard to make sure these firms have the tools they need to grow and create jobs.

For example, in 2010, President Obama signed into law the Small Business Jobs Act.  One of the most important provisions was increasing the limit on SBA loans from $2 million to $5 million.  The higher loan limits directly helped nearly 2,500 small businesses – including nearly 450 small manufacturers – with access to over $10.2 billion to help buy new buildings, buy more equipment, and hire more workers. 

We’re building on that momentum by taking even more steps to help small manufacturers.

For example, a recent study shows that access to a supply chain can help employers increase revenues by more than 250 percent and create 150 percent more jobs. That’s why SBA is working with America’s biggest companies to develop easier access to those critical supply chains.

In addition, the federal government itself is working to make sure we meet the goal of 23 percent of federal contract dollars going to small businesses, including small manufacturers.  Already, we have had two consecutive years of increases, with nearly $100 billion going to small businesses last year.

Also, a recent report on the state of capital access from the Manufacturing Extension Partnership (MEP) – a program of the U.S. Department of Commerce’s National Institute of Standards and Technology - shows a lack of available capital to manufacturers has “restricted the ability of many small manufactures to grow and compete.”  We’ve heard this and have developed new tools to support access to capital including a redesigned Supply Chain loan program (CAPLines) that provides low-cost, short-term financing to help small contractors and sub-contractors get the working capital they need to fulfill the contract, including creating jobs in the short-term. 

And finally, for those manufacturing small businesses that are poised for significant expansion and growth, the Small Business Investment Company (SBIC) program has been a great source of long-term, patient capital.  It had a record year in 2011, and over the past several years, more SBIC dollars from the debenture program have gone to manufacturing than any other sector. 

Through our continued work with the White House Office of Manufacturing Policy, the MEP, and many other partners, we will continue to help manufacturers create good jobs here over the long term.

BusinessUSA: New Website to Help Small Businesses and Exporters Navigate the Federal Government
Karen Mills
Post date: 02/17/2012 - 14:05

Today, the Obama Administration is launching a new online platform, BusinessUSA, to help small businesses and exporters of all sizes find information about available federal programs without having to waste time and resources navigating the federal bureaucracy. 

BusinessUSA, currently in “beta”, combines information and services from 10 different government agencies through one consolidated website and coordinate telephone support through a single 800#. The site already presents hundreds of business resources, in one place.

Whatever services a business owner is looking for, he or she can find it on BusinessUSA – whether it be support to grow a small business, export financing, counseling and training to help sell goods and services overseas, or various loan programs like SBA small business loans, USDA farm loans, and NOAA fishery loans.

To ensure that it is designed with the customer in mind, BusinessUSA was built with the active feedback of U.S. businesses and relevant online communities. To collect additional input from small business owners and entrepreneurs, we set up an easy-to-use mechanism to provide feedback to make the site even better.

It’s a “No Wrong Door” approach for small businesses and exporters, creating a common platform to match businesses with the services relevant to them, regardless of where the information is located or which agency’s website, call center, or office they go to for help.  The BusinessUSA initiative will modernize the federal government’s customer service channels and help streamline the process for today’s innovators and entrepreneurs to get their hands on information to help make better decisions.

As President Obama said in his State of the Union address, we need to give U.S. businesses every opportunity and tool to succeed. As part of his blueprint for an economy built to last, the President is committed to making our government leaner, smarter and more customer-friendly. BusinessUSA is an important step the Administration is taking to realize the President’s vision of a streamlined government that serves the 21st Century economy.

Karen Mills is the Administrator of the U.S. Small Business Administration.

Expanding the Healthcare Tax Credit for Small Businesses
Karen Mills
Post date: 02/16/2012 - 13:20

Right now, small businesses across America pay an average of 18 percent more to provide health insurance than large businesses.  While the insurance exchanges included in the Affordable Care Act will bring these costs down starting in 2014, we need to make it easier for small business owners to provide insurance to their employees right now.  One important part of President Obama’s Fiscal Year 2013 budget proposal expands a tax credit that does exactly that.

The Small Business Health Care Tax Credit has benefitted hundreds of thousands of small businesses since the Affordable Care Act passed in 2010.  After listening to business owners around the country, the President is proposing to make the tax credit available to more businesses and easier to claim. The budget increases the maximum size of eligible companies from 25 employees to 50, proposes more generous phase-out provisions and simplifies the credit, making it easier to claim.   It is estimated that if the President’s proposal were enacted, the tax credit will benefit about half a million employers who provide healthcare to 4 million workers in 2012 alone.  Over the next decade, this proposal would provide an additional $14 billion in tax credits to small employers across the country.

These changes will help small business owners hire more employees and create an economy built to last.   Take for example, Mark Hodesh, who owns Downtown Home and Garden in Ann Arbor, Michigan.  He started offering healthcare about 15 years ago to attract and retain talented employees so that he could compete with bigger stores and to help address skyrocketing healthcare costs his employees were facing. 

In 2010, after qualifying for the small business healthcare tax credit, he got back nearly $9,000, almost 30 percent of his costs for offering coverage to 11 full-time employees. The money he saved helped him hire a new employee, and now, with 12 employees, his tax credit could be go up to about $10,000 if the President’s proposal to expand the tax credit is adopted by Congress. 

We know that Mark and most small business owners think of their employees like family and want to offer coverage.  The small business health care tax credit helps make that possible -- and the improvements to the tax credit President Obama is proposing will increase the number of eligible small businesses and make the process of claiming the credit easier. 

The sooner the President’s plan is implemented, the sooner small business owners across the country can benefit.  For more information on the tax credit, go to www.whitehouse.gov, www.healthcare.gov and www.irs.gov, which all have special sections to answer questions and help small businesses figure out if they qualify for the credit.

Karen Mills is the Administrator of the U.S. Small Business Administration