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Small Business

Steven Preston
Small Business Administration Chief
Monday, April 14, 2008 10:00 AM

Small Business Administration chief Steven Preston was online on Monday, April 14, at 10 a.m. ET to preview National Small Business Week (April 21-25) and to answer your questions about the small business community.

For more tips on navigating the challenges and opportunities of today's marketplaces, visit the Small Business Blog by washingtonpost.com's Sharon McLoone.

A transcript follows.

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San Francisco: How do free trade agreements really help small businesses? I have seen that Mr. Preston has been pushing for the Colombia trade deal.

Steven Preston: This is a great question and a very timely one.

Small and medium sized businesses account for almost 30% of our country's exports.

Free Trade Agreements (FTAs) do a number of things that help small businesses:

First, they reduce tariffs on our goods going into other countries. In many situations (as in the case of Colombia), our goods pay a high tariff going there, but theirs generally pay no tariffs coming here.

Second, FTAs make the regulations more transparent and hold the other country accountable for following them. They simplify the administrative burden in other ways too.

Third, they provide important intellectual property protections--this is especially important for our small innovators.

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Harrisburg, Pa.: How are small business, in general, doing in this economy? What are the biggest challenges you see as facing small businesses?

Steven Preston: Many small businesses are having challenges, but the issues often have to do with the industries and markets they are in.

Like all of us, higher energy and related commodity costs are affecting small businesses. This is especially hard for those who have vehicle fleets, large facilities or other energy related costs. Health care continues to be a very large challenge.

In addition, some are seeing a decline in demand for their products.

We are working with lenders and other providers of technical assistance to ensure that we are providing advisory support to businesses who need to work through these issues and helping to get capital to small businesses.

The challenges we are facing today are also another reason why we need to advance health care policy that reduces the cost to small businesses and open new markets for our small exporters, so they can expand.

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West Palm Beach, Fla.: Background: In considering the current economic stimulus plan, we have not observed in any of the pronouncements the number of small businesses that are helped by this (estimated or otherwise proven) and we have not seen the amount of dollars that small businesses will actually receive in tax dollar savings next year.

Question: Exactly how many small businesses do you anticipate will receive actual tax dollar benefits from this plan and what will be the total tax dollars earned by small business? What will be the range of monies received next year by amount?

Steven Preston: The benefit that small businesses receive will depend on how many take advantage of the depreciation and expensing benefits that reduce the near-term cost of investing back into the business. Virtually every small business with an investment need can benefit from these provisions.

You can find details on how to benefit from these incentives from the IRS web site. SBA will also be launching an education campaign--we expect to have details on our web site in the coming weeks.

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Boston: How are you specifically helping women-owned businesses get more federal contracts?

Steven Preston: We have hundreds of outreach events around the country, many of which are in coordination with other agencies.

We have established goals for all federal agencies to achieve targets for procurement from women-owned small businesses. In addition, we have rolled out technology that makes it easier for agencies to locate the right women-owned small business to meet a procurement need.

In 2006, $11.6 billion was awarded to WOSB's, which was a record year and a record growth year. Preliminary 2007 numbers (not finalized) indicate $12.9 billion.

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Bethesda, Md.: I own Be You Bi Yu Wellness Center & Spa in Bethesda, Md., www.beyouspa.com and we are celebrating our second year anniversary. We would love to get a business loan to pay back our start up costs at a better interest rate than our credit cards. How do we go about refinancing the debt?

Hyun Martin

Steven Preston: There are a number of things you can do.

If you are ready to speak with a bank, check with your local banks to see if they are SBA lenders, or call our Washington, D.C. district office to recommend bankers in your area.

If you would like help with a business plan to support your presentation to banks, you can go through one of the courses on our web site or contact one of our resource partners that can give you one-on-one support. You can find them through our web site also or call our district office for an introduction.

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Steven Preston: I would like to make sure you all know that next week is National Small Business Week in Washington. You can sign up for events that will take place during the week through www.nationalsmallbusinessweek.com. We will also be webcasting all of the events live.

Many of the events with cover topics important to small businesses like health care, energy, trade, government procurement and technology. We intend to use these forums to raise the profile of issues that are important to all of you.

Friday (next week), we will have events in New York to focus on the importance of getting support to small businesses located in our inner cities.

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Chapel Hill, N.C.: It is really hard for a start-up to get a loan from a bank right now - even a small loan. Do you have any suggestions?

Steven Preston: Yes. First, really get your ducks in a row and have a good business plan and presentation of your business. Call our office in Charlotte for a reference for free assistance from one of our partners to do this. There are a number of them in your area.

Also, find out from our district office which banks in your area provide SBA guaranteed loans, and don't go to just one lender. In this market, it is especially important to shop around.

Start-ups are an important part of what we do at the SBA. Last year, 35% of SBA guaranteed loans went to start-ups.

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Washington, D.C.: What is being done to help small business pay for employees' health insurance?

Steven Preston: This issue is so critical to all of us. Most of our uninsured workforce works for a small business. It just costs too much.

First, you should consider a Health Savings Account plan. These plans have helped many small businesses find a more cost-effective way to offer health care.

There are a number of policies that the President has tried to advance, which would help small businesses.

Small businesses are legally prohibited from combining their purchasing power to purchase insurance across state lines. It puts them a real disadvantage to larger businesses and unions.

In addition, many small businesses do not get the same tax advantages as large businesses--we need to give them the same deductions.

Our health care forum at Small Business Week will include many thought leaders in this area and should include good tips. It will be on Tuesday morning next week. Check it out on our web site at www.nationalsmallbusinessweek.com for speakers and exact times.

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Steven Preston: Many of you have asked about opportunities to sell your goods or services to the federal government. The federal government has a goal of purchasing at least 23% of its goods and services from small businesses.

Next week, two major purchasing conferences are going to be held. GSA Expo will take place in Annaheim, CA. In addition, multiple federal agencies will have a matchmaking session in the DC area. The web site for information on that event is www.fbcinc.com/osdbu.

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Dallas, Tex.: If the nation's patent system is changed, will that help small businesses? Most small business owners can't afford patent lawyers to figure this all out.

Steven Preston: This one could go in either direction.

It is so important for our small innovators to have protections on their inventions. Many of our richest innovations, which help to keep our country competitive, come from the small businesses in our country.

We do however, want to make sure that compliance with those regulations is not so onerous that it makes it overly costly or cumbersome for small businesses to comply with.

SBA's Office of Advocacy looks for regulations that affect small businesses to make sure that they do not put an undue burden on them.

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Steven Preston: Many people have asked us about challenges in getting credit in the current market place.

We have reached out to hundreds of lenders to understand changes in their policies and how it will affect small business credit. As part of the outreach, we are working to ensure that banks understand how to use our products to help small businesses get the credit they need. SBA can guarantee 50-85% of a loan that a private lender makes. It helps them reach businesses that are credit worthy, but may not quite meet their standards.

I encourage anyone who is looking for credit to discuss SBA products with their banks.

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Silver Spring, Md.: Everyone's talking credit crunch. What's the credit picture going to be like for the rest of the year?

Steven Preston: I think this came in before my last response, but let me add to it.

Right now, many banks are working through immediate challenges they have in their portfolios. The financial institutions have taken a number of charges and are looking at their policies going forward.

We are very hopeful that as more confidence develops in the marketplace, we will see credit open up. In addition, the President's economic stimulus package will provide the economy with a booster shot in the third and fourth quarters.

We have consistently heard from many lenders that they are open for business. Once again, if you are having challenges getting credit, call an SBA office to get support.

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Washington, D.C.: What advice can you offer for business owners?

Steven Preston: First, understanding the impact of the current environment on your business and make adjustments is critical. You may need to make decisions that affect your operating costs. You may need to change your marketing and sales plans.

One of the great attributes that small business owners have is that they are adaptable and flexible.

We even see small businesses adding a separate business line

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Pasadena, Calif.: What solution to small businesses' health care costs does the SBA advocate?

Steven Preston: Try looking at health savings accounts. This is a cost effective solution.

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Silver Spring, Md.: But aren't banks cutting back?

Steven Preston: We have seen new loans from banks come down. Many banks are telling us that they are seeing a decline in demand for credit. Other banks have told us that their credit standards were too liberal and they they have needed to tighten their standards.

I don't think any one factor is the issue.

As I mentioned earlier, if a small business needs credit, they should visit multiple banks and make sure that their business presentations are in good shape.

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Washington, D.C.: How can I get in the queue to get a federal contract?

Steven Preston: We have courses online at sba.gov. There is a lot to know about this process, and you really should rely on our resources to help you.

The DOD has a network called Procurement Technical Assistance Centers that are great to help you.

There are numerous outreach events and conferences--see my earlier comments on two next week.

You can always call our local district office for support here.

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Arlington, Va.: Do you think small businesses should get a standard home-office deduction?

Steven Preston: Our hour is up and we have to run. Thanks for allowing us to participate.

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