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House Approps on SBA FY2015 Budget

This from our guy in DC, Martin Feeney of Madison Services Group.

On April 3, the House Appropriations Subcommittee on Financial Services and General Government met to consider the President’s FY2015 proposed budget for the Small Business Administration (SBA). Acting Administrator Marianne O’Brien Markowitz testified on behalf of the SBA.

The purpose of this hearing was to review the President’s $865 million funding recommendation for the SBA, as the Subcommittee begins to draft the FY2015 SBA spending bill. The FY2015 request is a decrease of $64 million from current FY2014 funding.

In his opening remarks, Chair Ander Crenshaw (R-FL) highlighted the importance of the SBA’s Women’s Business Center (WBC) program, and noted that the WBC in his District, the Jacksonville Women’s Business Center was recently recognized by the SBA for outstanding performance.

Ranking Member Jose Serrano (D-NY) said one of his primary concerns with the proposed budget was the elimination of the PRIME program, saying that he and his colleagues will once again fight to reinstate funding for the program.

Topics covered during the hearing included:

  • Focus on high-growth businesses: Chair Crenshaw noted that there seems to be more focus on assisting businesses poised for growth rather than assisting true small businesses; he asked the SBA ensure the needs of entrepreneurs are being met.
  • Microloan: both Chair Crenshaw and Ranking Member Serrano emphasized the importance of the Microloan program and support the SBA’s recommendation for full funding for the program.
  • PRIME: As noted, Ranking Member Serrano repeatedly noted the SBA’s lack of support for the PRIME program, asking the Administration to better articulate why the continue to propose eliminating it. SBA Acting Administrator O’Brien Markowitz noted her familiarity with the program and the benefits it provides from her time as a regional SBA director, saying “I know the good the program does.”
  • Disaster preparedness: all Members gave the SBA high marks for its disaster efforts and recognized the SBA’s efforts to enhance disaster responses, including new lending approval processes for disaster loans.
  • Agency-wide efficiency: the SBA has successfully reduced administrative costs by better managing fleet services, consolidated office space.

How ACA Enrollment Affects You

Thanks to John Stanford of Madison Services Group for this article.

Individual Health Insurance Enrollment Has Ended – How It Affects You

March 31st marked the end of “open enrollment” in the new Health Insurance Exchanges for 2014. For most Americans, this signaled the final day to create an account, compare plans, and choose health insurance for 2014. Amid the many updates, delays, and conflicting media coverage, business owners and their employees may not know how they are affected. Depending on your current insurance situation, here are actions you may need to take:

For Individuals Not Covered Through Work:

  • If you had technical problems signing up, either through the federal exchange at healthcare.gov or certain state exchanges (at this point Maryland, Minnesota, and Nevada), the enrollment period has been extended until mid-April. To qualify for this extension, you must have created an account on the exchange (including your email address) by midnight yesterday.
  • If your insurance was cancelled and will end at some point in 2014, you will be able to sign up during a “special enrollment period” — right before your plan ends. Alternatively, your insurance carrier may choose to extend your plan as-is. Check with your current carrier to find out.
  • If you are self-employed, you are considered an individual, not a small business. Your enrollment period ended yesterday, just like everyone else.

For Small Business Owners

  • If you are a business owner and planned to offer insurance through your business to your employees, you can enroll throughout the year in the SHOP (Small Business) Marketplace. Generally, you can enroll up to the 15th of any month for coverage beginning the 1st of the next month. The Small Business Marketplace is limited to business with up to 50 employees. Online applications will not be available until the fall, though you can apply for coverage through a paper application or broker, both accessible through healthcare.gov.
  • If you already provide health insurance to your employees (under 25 employees), make sure you consider the Small Business Health Tax Credit which can cover up to 50% of your costs. The credit is available for 2013 (the taxes being filed in April this year). Use the IRS Taxpayer Advocate calculator to determine if you qualify and for how much.

As a reminder, there are no penalties for any employer until 2015, no matter how many employees you have.

Summary of Proposed Microloan Program Changes

Thanks to Martin Feeney of Madison Services Group for this summary.

1) Revision Regarding Insured Depositary Institutions
The proposed rule would allow microloan intermediaries to maintain their Microloan Revolving Funds (MRFs) and Lon Loss Reserve Funds (LLRFs) in federal insured credit unions. The current definition specifies only insured banks and savings associations.

2) Removal of Interest Bearing Account Requirements
The proposed rule would remove the requirement that the Microloan Revolving Fund (MRF) and the Loan Loss Reserve Fund (LLRF) be held in interest-bearing Deposit Accounts.

3) Borrower Eligibility Expansion
The proposed rule would allow microloan intermediaries to make loans to businesses with an Associate (as defined in § 120.10) who is currently on probation or parole. Individuals who are currently incarcerated or under indictment would remain ineligible for a microloan, as would individuals who are on probation or parole for an offense involving fraud or dishonesty.

4) Increase in Minimum Loan Requirements
The proposed rule would update § 120.716; gradually increasing the minimum number of loans a microloan intermediary must make each fiscal year to twelve. Currently, intermediaries must make a minimum of four microloans to remain in the program. The proposed rule would require intermediaries to make a minimum of:

Six loans in FY2015
Eight loans in FY2016
Twelve loans in FY2017 and thereafter.

The proposed rule would also update § 120.716 to specifically state that intermediaries that do not meet the minimum loan requirement are not eligible to receive new grant funding for management and technical assistance. An intermediary that is ineligible for a grant due to failure to make the minimum number of microloans in the previous Federal fiscal year may become eligible for grant funding the following year by meeting the minimum number of loans for the current year.

Additional Resources:

Federal Register Proposed Rules Publication (March 17, 2014)
Microloan Program Standard Operating Procedure (SOP 52 00)
Microloan Program Overview and Eligibility Requirements
Participating Microloan Intermediaries

MMS 8 Month Update

CAMEO brought Accion Texas’s Microloan Management System to its members as a way to decrease the cost of microlending. Three members are active in the pilot: CDC Small Business Development, TMC Development Working Solutions and Women’s Economic Ventures.

In the first eight months of the MMS pilot, the program has received 160 loan applications, rejected 107 and approved 32 for an approval rate of 20%. The program has lent $656,000; we hope to reach $1 million in the first year.

Susan Brown, the program manager, spoke with Devon Johnson of Women’s Economic Ventures about her experience.

Devon Johnson, WEVDevon has been, until very recently, WEV’s one-person microlending shop serving Santa Barbara and Ventura Counties. For the past couple of years Devon has closed about 20 micro deals per year, lending about $300,000 for an average loan size of $15,000. That was the limit of what she could handle on her own.

When the opportunity to try Accion Texas’ MMS program came along, she was open to the possibilities of expanding volume – almost like hiring another person for a fraction of the cost.

And that’s turned out to be true.

Because MMS’ Auto Review gives instant feedback on applications, she doesn’t waste time on unqualified deals. With eligible deals, she has cut her processing time in half, which quickly enabled her to double the number she could handle at one time. MMS also provides a rigorous structure for her and her clients, allowing her to make quick, quality decisions and give clients specific feedback on their application.

Her use of MMS has paid off. In the first year Devon has been able to loan nearly $500,000.
“The way it was done in the past — with loan officers chained to a desk — it’s not the best model,” said Devon. “MMS leaves me with more in-the-field time for presentations, relationship building with referral partners and connecting to the community.”

Devon produced quick results because she was willing to immerse herself in the MMS process and study the underwriting approach diligently. She also conferred with Accion Texas’ underwriting team, to give them what they needed for fast turnaround.

Where does Devon plan to go in the next two years with MMS? “In two years we should be able loan close to $800,000 with an loan average of $15,000 to $20,000,” said Devon. She recently hired a junior loan officer to help her meet that goal.

Do-It-Yourself Economic Growth

The world is rapidly changing. Nothing is as it was 10 years ago, and we can only imagine what will be in 10 years and that includes changing economic conditions and a changing labor market. This means the economic development field needs to consider new economic development tools to deal with a new reality. One of those tools is the Do-It-Yourself Economy, an economy built on a foundation of small, locally-owned, diverse businesses. CAMEO was asked to write an article for the IEDC Economic Journal that focuses on why we need new tools, explains the reality of small business and self-employment labor market trends, and delineates some of the tools that local economic developers can use to create a sustainable future for their regions.

Please download Do-It-Yourself Economic Growth: How Communities Can Cultivate Their Talent and Thrive. Read it. Use it as a resource. Share it.

Contreras-Sweet Confirmed as SBA Administrator

Senate Confirms Administrator Maria Contreras-Sweet to Lead the SBA

Maria Contreras Sweet Confirmed as SBA AdministratorToday the Senate confirmed Maria Contreras-Sweet as Administrator of the U.S. Small Business Administration (SBA). CAMEO congratulates Administrator Contreras-Sweet as she takes on this important new role.

Administrator Contreras-Sweet spoke at CAMEO’s 2009 Viva! Event and is a founding board member of the Los Angeles Latino Chamber of Commerce, a CAMEO member. We know firsthand that she understands the importance of microbusinesses to the economy. During her testimony she said she “is very much in support of microloan programs” and CDFI’s and “programs like CAMEO… have been really good stewards of making sure that particularly underserved communities… that they’re [CAMEO, et al] providing for that first line of credit.“

We look forward to working with Administrator Contreras-Sweet, whose roles have included: entrepreneur, founder of ProAmérica Bank, a Los Angeles-based community bank, and cabinet secretary of the California Business, Transportation and Housing Agency. Her experience will serve her well in her new position at the SBA.

We welcome Administrator Contreras-Sweet and we are excited to have an ally who understands the need of America’s smallest businesses at the helm of the Small Business Administration. We look forward to partnering with her to help entrepreneurs of all shapes and sizes start and grow their businesses.

Women’s Business Centers Factsheet

Women’s Business Centers Effectively Growing Entrepreneurship
Association of Women’s Business Centers

Published March 2014

The SBA’s Women’s Business Center (WBC) Program supports 106 nonprofit organizations that provide business training and counseling to female entrepreneurs and aspiring entrepreneurs, which includes women in underserved communities. The program is supported by the Small Business Administration and matched by donations.

(read more)

President Obama’s FY2015 Budget

Note the following budget summary is from AEO.  President Obama’s requested budget is the first of many steps in the budget process.  CAMEO will work to ensure that the programs we care about are funded.

Budget in Brief: An Overview of the President’s FY2015 Budget Submission

On March 4, 2014, President Obama released his FY2015 proposed Budget.  The Budget, which is submitted annually to Congress, is a blueprint of the Administration’s priorities for the upcoming fiscal year. It details funding requests for government programs and proposed policy changes.  The Congress uses the President’s Budget as a starting point for the appropriations process as it considers how to fund the government agencies.

For FY2015, the President’s Budget adheres to the funding level – $1.014 trillion – agreed to in the December 2013 Budget deal.  This is somewhat misleading, however, because the President attached an additional request for $56 billion to fund new projects in defense, transportation infrastructure, universal preschool education and an expanded Earned Income Tax Credit (EITC) for individuals.

Small Business Administration

The President has requested $710 million for the Small Business Administration in FY2015 — a significant [23.6%] decrease from the FY2014 enacted funding level [$929 million].  The Administration attributes the reduced request to improving economic conditions, which are expected to reduce guaranteed loan default rates.  The Budget, nonetheless, expects that the SBA will continue to guarantee loans at the Congressionally authorized level of $25 billion in FY2015.

Microloan Program (Lending) – $25 million
Microloan Program (TA) – $20 million
Small Business Development Centers – $113 million
Office of Advocacy   – $8.5 million
Boots2Business – $7 million
Emerging Leaders ([formerly E200) – $15 million

The President’s Budget submission would eliminate the SBA’s Program for Investment in Microentrepreneurs (PRIME).

Please note: For other entrepreneurial counseling programs, such as the Women’s Business Center (WBC) Program, the Budget does not provide funding amounts at that level of detail.

The Budget includes a policy proposal to reauthorize the SBA’s 504 Loan Refinancing Program.  This offshoot of the standard 504 loan program allows small business owners to access low, long-term interest rates to refinance commercial mortgage and equipment debts.  Similar legislation has already been introduced in the Congress.  (Please note: this is not to be confused with the standard 504 loan program for commercial real estate mortgages.)

Department of the Treasury

The President’s Budget requests $225 million for the Department of the Treasury’s Community Development Financial Institutions (CDFI) Fund, unchanged from the FY2014 appropriated amount.  The Budget specifies that $35 million of the $225 would be reserved for the Healthy Foods Initiative.

The Budget also requests $1.5 billion for a second funding round of the State Small Business Credit Initiative (SSBCI).  The SSBCI allows states to use federal funds to support programs that leverage private lending to help finance small businesses and manufacturers that are creditworthy.  The SSBCI is expected to help spur up to $15 billion in lending to small businesses.

Department of Labor

The President’s FY2015 Budget includes $3 billion grants to States and localities to provide Employment and Training (ETA) services at 2,500 American Job Centers across the country through the Workforce Investment Act (WIA).

Building on the President’s pledge in his State of the Union address to improve workforce training, the Budget requests an additional $750 million to restore prior cuts to these grants, increase the investment in innovation, evidence-based practices, and performance in the workforce system.

The Workforce Innovation Fund (WIF) request is for $60 million, while the FY2015 Budget also includes $80 million for Incentive Grants, a new grant to reward states that succeed through their WIA programs in serving workers with the greatest barriers to employment.

Expanded Earned Income Tax Credit (EITC)

The President’s FY2015 Budget includes a proposal to expand the eligibility of the EITC.  The proposal would increase the maximum credit for workers without children from $500 to $1,000 and expand the age of eligibility to 21 – 66 years of age (currently 25 – 64).

Veteran Program In Full Swing

LizPerezIn August 2013, we hired Liz Perez (pictured left) as our Veteran Outreach Consultant to ramp up our veterans program, driving outreach efforts and facilitating referral relationships between traditional veteran serving organizations and CAMEO member organizations that specifically serve veterans. It’s been about six months, so we decided to check in with Liz for an update on the program.

CAMEO: What are your main goals?
Liz: Our goal is to work with CAMEO members to reach the veteran entrepreneurs or wannabe entrepreneurs. Our ultimate goal is to create more veteran entrepreneurs and business owners.

CAMEO: What kinds of activities are you engaged in or planning?
Liz: During the first three months I met a lot of CAMEO members throughout the state and planned a lot. As a new program, we’re looking at which strategies will have the most impact for the members and the veterans.
We hit the ground running with two veteran events in San Diego during October. On the 8th of October, we participated in Reboot’s Veteran Women’s hiring and Entrepreneurship event. Over 150 Veteran women attended the event, 26 of whom showed interest in starting their own business. We connected the veteran women with local CAMEO resources and some have attended additional CAMEO workshops. The following day, we were on a panel at the UCSD/MIT Veteran Entrepreneurship event, where we promoted the CAMEO Entrepreneurship Veteran Program and promoted CAMEO partners like ACCION San Diego, and the SBA and the SBDC’s in San Diego.

CAMEO: The workshops kept you pretty busy, right?
Liz: Yes, in November, December and January we had six workshops in San Diego and Riverside. These workshop topics included veteran franchising, business financing, and certification. We also provided veterans with local and national resources and introduced them to CAMEO members.

CAMEO: What are the outcomes so far?
Liz: To date through workshops or working remotely, we have assisted over 228 veterans to start or grow their business through. In every case, we have referred these veterans to CAMEO members in their region and other resources that might be available.

CAMEO: What are the plans for the next few months?
Liz: I’ve got a few things on our agenda. One is to follow up with CAMEO members to see how the referrals are working. So if anyone has served a veteran that’s attended a workshop, let me know! Another priority is to connect CAMEO members with veterans groups and foster relationships between the micro sector and the veterans groups, so if you’ve got a group that you’ve been trying to make headway with, let me know and I’ll see what I can do. And number three would be to help CAMEO members market their services to the veteran population. And we’ll be partnering with the Prosperity Center and others for a workshop in Orange County on March 26 and attention LA partners – we’ve got something scheduled for the end of April.

CAMEO: Thanks Liz, we’re excited to see what manifests and hear about new veteran businesses that are opening across California.
Liz: And we are extremely excited about being a part of the CAMEO family, too!

What the SOTU Really Said

SOTU2014 word cloud (minus American)

To get an idea of what’s important, I did a word cloud but took out the word America and Americans because well, that’s the obvious topic of the President’s speech (check out the original word cloud of the SOTU.)

Some of the phrases that jump out at me?

help people work / support work
need working home businesses
jobs families country

What about you?