SBA Town Hall: Down Economy Means Less Credit for Small Businesses
By Julia Wilkinson
AuctionBytes' Julia Wilkinson gives a first-hand account of Monday's U.S. Small Business Administration Town Hall event held in Washington DC.
Frustration with the inability to get enough credit was foremost on the minds of many small business people at the Small Business Administration's Town Hall discussion Monday, May 24 at the Mandarin Oriental Hotel in Washington, DC. The event was part of a three-day conference, May 23-25, celebrating National Small Business Week.
Sponsored by eBay and moderated by MSNBC "Your Business" host J.J. Ramberg, the panel included SBA Administrator Karen Mills; eBay North America V.P. Dinesh Lathi; and two small business award-winners: Frank Masley, CEO of high-tech glove manufacturer Masley Enterprises; and John C. Sweet, owner of artisan bread company Niedlovis Breadworks Inc. (Masley and Sweet were named "small business person of the year" in their respective states, Delaware and Tennessee).
"Every day, half of working Americans go to work at a small business," said Ramberg, opening the discussion, which she said was to focus on how small businesses could grow in these tough economic times, noting small businesses created 64% of jobs in the last 15 years.
When she opened the forum up to take questions and hear stories from the audience, the difficulty with securing loans in today's climate came up frequently. Stanley Shavers of S.S. Technology in Atlanta expressed frustration about being denied a business line of credit from SunTrust Bank, even though he said he had been dealing with them for 20 years.
"A lot of banks pulled back," affirmed Mills. "That's why this 90% became so important," she said, referring to Section 502 of the Recovery Act, which authorizes the SBA to guarantee up to 90 percent of a 7(a) loan (except for SBA Express, which remains at a 50% guaranty). She added that another issue was with the regulators, "where the (government) guidance is, don't penalize just because the market caused the dip."
A small business owner from Nevada (where he said unemployment is at 14% vs. some 9% nationwide) also has had trouble getting financing. He said that while the SBA had been extremely supportive, "unfortunately the banks are pretty tight - I don't even waste my time with Bank of America." He added his firm is now "looking to international moneys, which is really unfortunate."
Masley noted that while he did secure a business loan from his bank, Wilmington Trust, "we still needed to put the house up as collateral," and to boost his family's life insurance. He joked they "had to put one kid up" as well. Masley also said that he went to a local small business development center (aka SBDC), which was instrumental in his securing a government contract for his "better mousetrap" of a high-tech glove.
Without reaching out, Masley indicated he would not have procured his all-important government contract: "I learned about PTAC - procurement technical assistance center - who told me about this GSA (General Services Administration) contract that you really should think about having if you're going to sell to the government," he said. He went to his local economic development office as well.
Breadmaker Sweet's advice to Shavers was to find a community bank, especially if the business "has some intangible benefits that can't be shown on a balance sheet." He noted he's always had cosigners on his business loans.
Ramberg asked the small business owner panelists how they deal with fluctuations in sales. "In truth, you need a spouse with a steady income," joked Masley, to much laughter. He acknowledged he had the engineering part of his business down, "but the H.R. part was critical." He said he has had to lay some people off, "and that hurts."
Tony Colon, CEO of Combat Training Solutions in Colorado Springs, said that to get around the slow season due to the U.S. government's fiscal year cycle, he would focus on exports: "In 14 countries, they spend at the end of the year."
Asked about tools for small business folks, eBay's Lathi noted eBay is "fast, easy and cheap" to use, and it provides access to 80 million buyers globally. (eBay's fact sheet for the event noted that eBay drives more sales annually than any other retailer, with about $60 billion in successfully closed sales on the site in 2009 and over 768,000 professional sellers in the U.S).
He also touted both eBay University, run regularly across the country in university lecture halls, and the eBay on Location conferences, which have already been held in Atlanta and Dallas, and will be held next in Chicago July 9-10.
But whether small business owners use SBA resources or tap into the eBay marketplace and its forums, it seems clear from the stories shared at this town hall that they will need all the tools in the proverbial toolbox to push through this recession.
About the author: Julia Wilkinson is the author of "The eBay Price Guide" (No Starch Press, 2006) and "eBay Top 100 Simplified Tips & Tricks" (Wiley, 2004-6). Her ebook compilation of yardsalers.net readers best flips is at BigBucksFlips.com.
About the author:
Julia Wilkinson is the author of "The eBay Price Guide" (No Starch Press, 2006) and "eBay Top 100 Simplified Tips & Tricks" (Wiley, 2004-6). Her free "Yard Salers" newsletter is at available at YardSalers.net where you will also find her latest ebook, Flip It Again.
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