The leading financial institutions are taking proactive steps to commit themselves to supporting small businesses. Goldman Sachs Group, Citigroup, and Bank of America are the frontrunners in this movement and have announced separate programs to attract SME entrepreneurs. The change comes in response to the Obama administration’s stress on banks to increase their lending to small businesses.

Community development financial institutions, CDFIs are funded largely by banks like Goldman Sachs and Citigroup. Goldman has decided to funnel $300 million and Citi has announced that they will provide $200 million to CDFIs. Citi’s initiative comes at a time when its loans to SMEs have dropped from $10.2 billion to $9.5 billion from last year. But Citigroup’s director commented that ‘this program does not intend to make up for the decline because it targets business owners that are outside the scope of Citi’s traditional lending reach.’ This current program is termed by Citi as ‘Communities at Work Fund’ and it will enable CDFIs to request for five year loans to lend to qualifying business firms. The program under Goldman Sachs is still in its pilot stage, but it is expected to reach out to 10,000 businesses in the next five years. Additionally, Goldman has committed itself to providing $200 million for educational programs and community colleges.

Bank of America has a more aggressive approach to increasing their small business lending. BofA promises to increase its funding to SMEs by $5 billion in 2010. Last year BofA lent $81.4 billion and by May of this year it already loaned out $19.4 billion. The bank will lend more than $22 billion in each of the next three quarters.

What makes a small business thrive even during a recession? CNNMoney.com contributor Vern Harnish gives advice on six ways to grow your small business.

• Get an edge on competitors. Harnish says to look at the biggest cost and time constraints in your industry and challenge the conventional thinking in those areas.

• Own a phrase. Brand your company so you “own” the phrase to describe your product. How do you know if you own the phrase? Google it and see if your company shows up.

• Hyperfocus. Align the entire company around a single measurable priority each quarter. Whether it’s organizing inventory or raising your Google ranking, focusing on one overarching goal for 90 days will ensure you’re getting things accomplished.

• Control your cash. Growth sucks cash, so construct a business model that fuels growth without requiring outside capital. Advanced payments, tighter billing practices, and shorter sales and delivery cycles are a few strategies, says Harnish. To stay focused, look at your cash position daily.

• Write. Flood the digital market space with blogs, white papers, YouTube videos, and Twitter messages that align with the phrase you own (check out The Shipping Bloke blog).

• Pulse faster. Successful executive teams meet daily or weekly to go over priorities, metrics and data.

Small businesses, the oft-touted economic engine that pays nearly 45% of total U.S. private payroll, is feeling economic pain just as badly as corporate America. This Jan. 11 Associated Press story posted on MSNBC.com took a look at some small business owners who are feeling the recession deeply, like the Minneapolis-based Scandia Bake Shop. There, high flour prices and slow sales had the current owner contemplating closure after the shop’s 60 years in business.

“They come out in droves and you make most of your money between Thanksgiving and Christmas,” owner Gary Arvidson told the AP. “And then this year I was really counting on that and the economy went into the dumper.”

To cope, the AP said, “small business owners — from neighborhood plumbers to graphic design firms — are paying employee salaries before their own, trying to renegotiate leases and pleading for customers on neighborhood blogs. But despite their best efforts, the customers aren’t there.”

Raymond Keating, chief economist at the Virginia advocacy group the Small Business Survival Committee, told the wire service: “People are scared. They’re not quite sure what to do.”

Small businesses account for more than 99% of all employer firms and produce almost a third of the nation’s export value, the story said, quoting federal statistics. So when they hurt, everyone feels the pain, even chain office supply stores who depend on small business owners for business.

Ajay Ekesa told the AP his Kahawa Coffee House in Chicago may not last through the spring. He’s spreading flyers, opening his shop for community meetings and trying to drum up business on the Web.

“Right now I’m trying to do everything I can do,” he told the AP. “With every hour that I’m staying open, I’m not making money. I’m losing money, which doesn’t make much sense.”

As for the Minneapolis bake shop, it looks like the community is going to rally around it. So far, about 1,000 people have signed a petition to keep Scandia open, the AP said.

Automakers may be grabbing the lion’s share of the headlines, but U.S. auto parts suppliers that feed the industry are hurting just as bad.

And now they, too, are looking to the federal government for help.

U.S. auto parts suppliers are in discussions with the Treasury Department about ways to address their financial troubles, industry trade groups said in a Feb. 4 Associated Press story.

However, no formal request for financial help has been made and no dollar amount has been requested, according to a joint statement by the Motor Equipment and Manufacturing Association and the Original Equipment Suppliers Association, the AP said.

Earlier media reports said suppliers were seeking roughly $20 billion in aid, with representatives from one trade association, the Original Equipment Suppliers Association, offering conflicting information. In one interview with the AP, Dave Andrea, vice president of industry analysis and economics for the group, said there had been no formal request to the feds. At the same time, trade publication Automotive News cited Neil De Koker, president of the Original Equipment Suppliers Association, in reporting that suppliers were asking Treasury for $10 billion in direct loans and another $10.5 billion through the Detroit Three automakers, the AP said.

No comment from the Treasury Department.

“Auto parts suppliers have been battered by the downturn in the auto industry as vehicle demand collapses and automakers slash production. Last week, American Axle & Manufacturing Holdings Inc., Lear Corp., Gentex Corp. and Autoliv Inc. all reported net losses for the fourth quarter,” the AP reported, adding this quote from supplier groups:

“Many suppliers have minimal cash flow coming in and very few options to remain viable.”

Starting in January, employers must recognize a broader standard for defining who is disabled under the Americans With Disability Act and new regulations make several small but important revisions to the Family and Medical Leave Act, including an expansion to include family members taking care of covered military service members.

The changes to the Americans with Disabilities Act overturn a series of Supreme Court cases and expand the number of workers considered disabled as well as employers who must make reasonable accommodations, according the Small Business Administration in its newsletter “The Small Business Advocate.”

The ADA defines a disability in part as a “physical or mental impairment that substantially limits a major life activity of an individual.” The new amendment says the statue should be broadly interpreted and directs the Equal Employment Opportunity Commission to interpret the term “substantially limits” in its future rulemaking, the SBA said.

The amendment also provides examples for the previously undefined term “major life activity” to include “seeing, eating, sleeping and thinking.” The provision adds that major bodily functions such as prosthetics will not be considered in assessing whether a person has a disability with an exception for eyeglasses or contacts, the SBA wrote.

The amendment clarifies that if a condition is temporary or in remission, such as cancer, it can still be considered a disability and shifts the focus of litigation from whether an employee is disabled to whether there was discrimination in the workplace.

The changes to the Family and Medical Leave Act, passed in 1993, take effect Jan. 16.
Under FMLA, employers with 50 or more employees are required to provide up to 12 weeks unpaid leave for the birth or adoption of a child or for a serious health condition or to take care of a family member with a serious health condition.

One new rule removes provisions that allowed employees to notify employers two full business days after their absence, the SBA wrote. Employers can now require workers to comply with existing call-in provisions for notification. Second, employers will now be allowed to ask for annual medical certification for conditions that last longer than a year and re-certifications under certain circumstances. Another new provision expands the FMLA to cover family members taking care of covered service members.

This article was submitted by Kathleen O’Connor, a contributing writer for Biz2Credit. Biz2Credit is a small business marketplace that provides entrepreneurs with the latest industry news and financial advice. Send all questions to info@biz2credit.com.