SMBs - How | Phonebooth Blog

What does a small business look like?

Is it the one-person business working out of a spare room at home or a residential real estate company with $25.5 million in annual rental receipts?

Both are small businesses, according to the U.S. Small Business Administration.

A Look at Typical Small Businesses

Based on latest available U.S. Census data from 2007, the U.S. Department of Commerce said three-quarters of all businesses operating in this country ? 21.4 million ? have no payroll and most are of the self-employed variety.

Of the remaining almost 6 million companies which have employees, only 18,469 had 500 or more employees.

The SBA uses that number of workers as the cutoff in determining what is a small business. However new SBA rules look more at a business? annual receipts than the number of employees and opens up funding for firms with larger budgets.

New Ways of Measuring

In new rules that went into effect Oct. 24, the SBA redefined its size definition of what is considered a small business and boosted the upper limits of its requirements in three business sectors ? real estate/rental and leasing, educational services, and health care/social assistance.

SBA estimated almost 19,000 businesses would now be considered small businesses under the new size rules ? and be eligible for SBA loans and federal contracts.

The change is part of the agency?s review of its size rules for small business as part of the Small Business Jobs Act of 2010.

So expect more changes to the definitions to come, which will open up the SBA programs to more businesses. Or look at the flip side ? the changes increase competition among business for those programs.

Size Matters in Lending

While lenders have reported to the Federal Reserve an easing of credit standards for large- and medium-sized companies, no such breaks have been given to small businesses, according to a recent survey by the Federal Reserve Bank of New York.

The report, based on interviews with 544 small businesses, showed lending to small business dropped 10% between the first quarter of 2011 and the same quarter of 2012.

Businesses that responded to the survey reported high rejection rates for smaller loans and a reluctance on the part of financial institutions to make loans or give credit to younger, smaller firms.

?I had great credit,? said Allison O?Neill, owner of the children?s store Bundle in New York City, in her survey response. ?I had basically four times the amount of a loan I was looking for in my brokerage account, and they didn?t care. They were just like, ?we?re not taking any risks on start ups.??

Capital Options

Apart from a traditional bank loan or a line of credit, where can a small business turn to find funding?

Businesses do have avenues to get funding through SBA loans, which take into account both the business? financial strength as well as its collateral and the ability of the firm?s owner to repay the loan.

Even though the SBA doesn?t give grants, small businesses may qualify for grants if they meet certain criteria intended to encourage research and development.

There are two main grants designed to boost small businesses: the Small Business Innovation Research and the Small Business Technology Transfer programs.

Has your business experienced difficulty securing financing because of its size? Share your stories and how you coped with the problem.

Linda is an award-winning journalist with more than more than 22 years? experience as a reporter, editor and blogger.

Source: http://www.phonebooth.com/blog/2012/10/smbs-small-small-business/

super tuesday states shepard fairey is snooki pregnant snooki pregnant gbc hedy lamarr jack white