Archive for February, 2012

EXPERT ADVICE: It’s Tax Time!

Every year around this time, individuals and businesses are scrambling to gather the necessary tax-related documents to see if they can plan vacation, or perform budget cuts in their personal lives. If you are a business owner thinking about your tax strategy, you are probably going to have some surprises ahead.  Small businesses and taxes are often uneasy bedfellows, simply because many people fear the Internal Revenue Service (IRS).  Having this misconception is most small businesses’ first mistake. The IRS can actually be a flexible and friendly partner for your business, if you contact them early and often. The IRS has many resources for small businesses and also offers tax workshops around the state.

As a heads up to small business owners, tax liabilities—whether it is payroll, sales, federal or other taxes—are probably the number one reason that a lender will turn down a business for a loan. Many businesses are hesitant when it comes to obtaining an accountant.  But, not only will having an accountant help you avoid tax issues, it will also be helpful when seeking financing. Lenders find it comforting when a business has an accountant to handle the fiscal aspects of their business. It implies that the business owner has thought ahead and is less likely to have future tax problems. The cost of paying an accountant can seem overwhelming for a start-up or existing small business, but the old adage still prevails, “Pay now or pay later”!  In this economy, when everyone is looking for ways to create revenue, it is possible to find affordable accountants who would be happy to work with you to help you succeed, and also would be willing to work out a reasonable payment plan for their services. Check your local community college’s Small Business Center (http://www.aacc.nche.edu/Pages/default.aspx ) or your local university’s Small Business Technical and Development Center (www.sbtdc.org ) for guidance on tax help and other business services. The NC Department of Revenue also offers a Small Business Taxpayer Recovery Program for businesses with fewer than 200 employees.

 

– by Roberta McCullough, Vice President, Business Services & Operations

February 24, 2012 at 3:09 pm

Filling the Grocery Gap: Financing Healthy Food in “Food Deserts”

The Administration’s Fiscal Year 2013 budget proposal, released this week, includes a $25 million appropriation for the Healthy Foods Financing Initiative, which is a part of the overall $221 million the President is requesting for Community Development Financial Institutions (CDFIs).

The First Lady’s mantra, “Let’s Move,” has spurred families, government agencies, and groups across the nation to move into action and improve the health of our country. As we all work to find our rightful place in this Healthy Foods movement, it’s becoming clear that small businesses will play a vital role in making it possible.

The key to the success of this program is being able to get healthy foods into low-income areas where healthy options are dangerously out of reach. While many Americans enjoy the ability of choosing whether to take carrots or potato chips for lunch, there are millions of Americans who do not have that choice. In a 2009 report to Congress, the U.S. Department of Agriculture (USDA) found that 23.5 million people, including 6.5 million children, live in low-income areas that are more than one a mile from the nearest supermarket. Not surprisingly, low-income communities suffer disproportionately from a number of health problems stemming from poor diets, namely heart disease, diabetes, and obesity.

To improve the food options for these “food deserts,” many are recognizing that it will take a network of small businesses, farmers, truckers, nutrition specialists, and neighborhood coalitions to create a sustainable healthy food system. Small businesses that are either already embedded in these communities, or that are seeking to open up shop, will play an important role—but they will need financing to expand their products to include more nutritious foods.

Having access to funding specifically designated for healthy foods related business will motivate local store owners, business leaders, policymakers, concerned residents and other stakeholders to create some real solutions to solving the grocery gap in their neighborhoods. The $25 million, if approved, will be a modest yet good start. These funds will allow CDFIs to make loans to small businesses that demonstrate that they are doing their part to sustain health and wellness in the most rural and low-wealth parts of the country.

Programs like this will bring a host of economic and social benefits, and start us on a journey to ensure that all communities have healthy, fresh food options.

– by Vicki Lee Parker, Development & Communications Director

 

February 17, 2012 at 3:28 pm 1 comment

President Obama’s Small Business & Commerce Consolidation

The White House launched a new website in recent weeks, consolidating information on various programs and resources into one site for small businesses and entrepreneurs. Perhaps this is part of the President’s recently announced  plan to merge the Small Business Administration with the Commerce Department and four trade agencies into “one department, with one Web site, one phone number, one mission: helping American businesses succeed.”  The new consolidated department would be based on four pillars: small business & economic development, trade, technology & innovation, and statistics.

The plan has received mixed reviews. Small business advocates seem torn—on the one hand they feel the new streamlined approach will create a “one-stop-shop” for America’s small businesses and make accessing information and assistance much easier. On the other hand, advocates feel that the reorganization may minimize the emphasis placed on small businesses by the federal government, which could lead to an even greater imbalance toward promoting the interests of larger businesses over those of smaller businesses.

However, outside-the-box thinking is what we need to get the American economy back on track. Of course, special care should be taken to ensure that small businesses do not get lost in the shuffle. The proposed 2012 SBA budget includes $3.8 million in subsidies to support $25 million directed in Microloans to small businesses; the remainder of the $27 billion budget for capital support will be targeted at loans to community development, financing for specialized start-ups, and loans to support innovation and high-growth firms. The President’s plan could be an opportunity for more funding to be allocated for small businesses, especially considering there are roughly 23 million self-employed small businesses across America.

A stronger agency that will allow business to find assistance and resources in one central location, rather than having to go from department to department, will help businesses and lenders alike. But for now, having all the information for small businesses in one place is a very helpful start.

-by Ed Timberlake, Small Business Lending Manager

February 10, 2012 at 7:11 pm 1 comment

Access to Capital: Is it the Real Problem?

There has been much discussion during these turbulent economic times regarding the lack of access to capital for small businesses. This is especially true for small businesses in underserved communities.

The U. S. Chamber of Commerce stated in a 2010 report, Small Business Access to Capital: Critical for Economic Recovery, that “small firms represent 64 % of net new jobs created over the past fifteen years.” This reinforces the point that providing capital is necessary to sustain small businesses.

While it is without dispute that small businesses are central to the recovery of our economy and traditional lending sources have in the midst of this economic downturn increased lending standards, capital is still available for small businesses. I want to suggest that the problem is not really lack of access to capital but not knowing where capital is available to support small business lending.  Many small businesses look only to traditional lending sources, perhaps never being told about non-traditional lenders such as Community Development Financial Institutions (CDFIs).  There are over 900 across the country and 20 in North Carolina.  For many years,  they have  been successful and productive lenders to small businesses across the state.

The Chamber’s report suggests that any strategy to jump start the economy must have a robust small business development component.  Why, then, is there such little debate around making capital accessible to small businesses?  Not only should this be central to policy development in all segments of government, but also in the lending policies of banks as well.  Instead, banks complain that their purse strings are being tied by bank regulators. Rather than playing the blame game, there should be a cooperative push by the public and private sectors to make sure there is a strong flow of capital to our small businesses in order to help with our economic recovery.  I applaud the CDFI Fund for doing its part to get capital into the hands of those who need it most—since 1996, $69 million in CDFI funding has been awarded to CDFIs in North Carolina alone.  

Success, however, requires a flow of information from all lending sources down to small businesses. If this flow improves, then the flow of capital to small businesses would improve. Let’s allow small businesses to become the driving force for bringing all sectors of our economy back to a place of thriving. Help spread the word about alternative access to capital.

For more about the CDFI fund see http://www.cdfifund.gov/.

 – by Lenwood V. Long, Sr., President/CEO

February 3, 2012 at 11:00 am 2 comments


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