Businesses ready to go green can take advantage of an expanded Small Business Administration loan program that rewards eco-friendly projects.

The SBA’s 504 loan program, which offers financing for projects designed to reduce energy consumption by at least 10 percent or which will generate renewable energy or fuels, raised the loan cap from $2 million to up to $4 million. Private banks and the companies themselves provide the rest of the project’s financing.

The SBA program is helping one San Francisco company, Service West Inc., purchase an energy-efficient 132,000-square-foot commercial office building, according to the San Francisco Business Times.

Service West provides contract furniture installation, commercial moving, delivery and warehousing services. The $10.5 million loan for the company’s new property was serviced by TMC Development.

“Service West is a perfect example of how recent changes to the SBA 504 loan program make this type of financing an even better fit for larger projects,” Barbara Morrison, CEO of TMC Development, told the San Francisco Business Times.

The Small Business Administration reminded disaster victims that they do not have to wait to settle with their insurance companies before applying for disaster loan assistance.

Specifically, victims of severe storms and flooding in Kentucky on Aug. 4, 2009, should return their completed loan applications as soon as possible, said an SBA press release. Homeowners, renters, businesses and non-profit organizations of all sizes in Jefferson County, Ky., are eligible to apply for SBA physical disaster loans.

Disaster loans up to $200,000 are available to homeowners to repair or replace damaged or destroyed real estate. Homeowners and renters are eligible up to $40,000 to repair or replace damaged or destroyed personal property. Businesses and non-profit organizations of any size may borrow up to $2 million to repair or replace damaged or destroyed real estate, machinery and equipment, inventory, and other business assets, said the SBA.

Loan amounts and terms are set by the SBA and are based on each applicant’s financial situation.

SBA representatives will be at Disaster Recovery Centers in the area to issue loan applications and answer questions. Click here for more information.

Many business owners hoping that the Small Business Association’s emergency loan program would keep their companies afloat have been disappointed to discover that most banks are not participating in the program.

More than 1,000 loans have been granted to small businesses since the SBA’s America’s Recovery Capital program began in mid-June, but of the 8,200 FDIC-insured banks in the country, only about 400 are making ARC loans, according to CNNMoney.com.

The ARC program offers qualifying businesses SBA-insured, interest-free loans of up to $35,000 to help them pay off existing debt.

Many large national banks have been unwilling to participate because small, low-interest loans don’t generate profits and they worry about a high default rate. Even though the loans are guaranteed by the SBA, the administrative costs for collecting on defaulted loans aren’t worth it for many banks.

Only three of the SBA’s 10 most active lenders — Wells Fargo, PNC Financial and Zions Bank – have issued the loans, said CNNMoney.com.

Smaller, regional banks eager to participate in the program have found that many applicants don’t qualify for the loans.

“We’ve screened hundreds of applications from customers and non-customers alike,” Bob Polito, senior vice president of Webster Bank in Waterbury, Conn., told CNNMoney.com. “All need the help, but few qualify.”

Despite the small number of loans issued so far, the SBA says it is on track to provide 10,000 ARC loans by the time the program ends in 2010.

A new requirement by the Obama administration will hopefully spur the 21 largest banks receiving U.S. government money to lend more to small businesses.

The new rules, outlined in a March 16 Associated Press story, have those banks reporting monthly on how much they lend to small businesses. All others are being called upon to make an “extra effort” to boost small business lending.

The announcements came March 16 as part of a broad package aimed at small business that was being unveiled by President Barack Obama and Treasury Secretary Timothy Geithner, the AP said. The package also includes reduced small business lending fees and an increase on the guarantee to some Small Business Administration loans.

“We know that small businesses are the engine of growth in the economy, and we absolutely want to do things to help them,” Christina Romer, who heads the White House Council of Economic Advisers, told the wire service. “There are already a lot of things to help them in the recovery package, and some of what will be coming out are the things that were in the recovery package: increasing the SBA loan guarantees, lowering fees.”

Republicans appeared to embrace the efforts, but with some qualifications.

U.S. Rep. Eric Cantor of Georgia said: “We’ve got to do something to help these small-business people. We know that they’re the job creators in this economy. And the problem … I think we’re seeing out of the Obama administration is a lack of focus on how to get things going again.”

The new measures have the government stepping in to buy loans, temporarily eliminate upfront fees of up to 3.75 percent and some processing charges on certain SBA loans typically passed along to borrowers, the AP said. It also increases the government guarantees on certain loans to 90 percent, up from 85 percent for loans below $150,000 and 75 percent for larger loans.

Just when it seems like the bad news couldn’t get much worse, tales of economic success amid financial chaos are thankfully bubbling up.

And it’s in the form of successful entrepreneurship, everything from shoestring-budget start-ups to major viral marketing coups by tiny companies.

Recession be damned, some entrepreneurs are not only doing well, they are doing exceptionally well, wrote Jill Priluck of MSNBC’s “The Big Money” on March 17.

“With less overhead, a slim-to-none bureaucracy, and a philosophy that goes against even the most innovative Fortune 500 game plan, little guys in industries such as finance, marketing, entertainment, and media are busy, some more than ever, and a few are moving into territory where the big fish can’t swim. Whether making deals, planning ad campaigns, or signing talent, all small fish have the same slogan: lighter, cheaper, faster,” she wrote. “Welcome to the Little-Guy Economy, where boutique investment banks make deals while big finance is frozen, where Web geeks field calls from big media and corporate clients who need viral video and other digital-branding tools, where small law firms prosper and laid-off lawyers open their own shops, where independent music labels innovate faster, and where the word “team” can have a whole new meaning.”

Finance is perhaps the most interesting example, where small firms are playing a strong hand, particularly in the credit markets, where huge loans are history.

“While firms like Goldman Sachs and JPMorgan Chase depend on freely flowing credit markets, boutique firms, which do smaller deals, rely more on private equity sponsors—and don’t have the same bank, credit, or securitization obligations,” Priluck wrote.

If small is in, then it doesn’t take long for some bigger fish to swim over and take a look.

New York City Mayor Michael Bloomberg — as big a billionaire as there is — is now looking to spearhead small business and entrepreneurship in the financial services sector, Priluck wrote.

Video producers Lindsey Johnson and Leo Borovskiy of Lush Life Productions know how it is to make it big when your administrative assistant is your voice mailbox.

They turned a viral marketing jackpot and YouTube sensation “The Chad” into a thriving business that today includes clients like Hearst Digital, Priluck wrote.

“We’ve gone from only working for advertising agencies and marketing companies to having corporations directly approach us with their brands and ask, ‘What can you do and how much can you do it for?” Johnson told Priluck.

The federal government is pouring cash into huge financial firms with very little oversight while even the slightest hand out to small business owners brings “we-need-scrutiny naysayers” out of the woodwork, says journalist JJ Ramberg of “Your Business.”

Ramberg, who anchors the MSNBC weekly show on small business, continued in her March 18 blog post:
“Maybe I’m missing something here, but small businesses are the lifeblood of the economy, and they are struggling right now largely through no fault of their own. They can’t get loans because the big boys messed up the system; and the faltering economy — caused in large part by the big financial firms — is also taking a big bite out of their sales,” Ramberg wrote. “All they want is a little bit of a break. So many entrepreneurs I’ve profiled in this blog — and many of the ones who post comments here — are struggling to keep their doors open.”

The impetus for her outrage came from a recent proposal by President Barack Obama to boost declining lending on Small Business Administration-backed loans. The idea was to do such economy-stirring efforts as directly purchasing up to $15 billion of securities backed by loans from the SBA, eliminating fees and increasing loan guarantees.

But it soon ran into criticism, she said, citing a Wall Street Journal story that worried the Obama administration could be creating incentives for another run on unwise credit and create a huge pool of unregulated money.

“I’m all for putting a lid on the bailout free-for-all with tougher standards and regulations,” she wrote, “but isn’t it odd that when small businesses want a helping hand suddenly the scrutiny reaches a fever pitch?”

The head of the U.S. Small Business Administration said the latest version of a government plan to pry loose lending markets will help small businesses.

Acting SBA Administrator Darryl K. Hairston in a Feb. 10 release praised the Federal Reserve Bank of New York and the latest version of its Term Asset-Backed Securities Loan Facility, or TALF.

“If we want to thaw the credit markets for small businesses, we absolutely have to get the secondary market for small business loans moving again. TALF is a critical element in doing that,” he said. “SBA supports this program and we’re glad the TALF is moving forward with some changes we asked for that will make SBA lending more attractive for 7(a) and 504 program lenders.”

The goal of TALF is to help unfreeze recession-battered credit markets and its revised terms and conditions were announced on March 3 by the Federal Reserve of New York.

The revisions include a reduction in the interest rates and collateral haircuts — a percentage subtracted from the market value of the collateral — for loans secured by asset-backed securities guaranteed by the Small Business Administration or backed by government-guaranteed student loans.

The Reserve said in a release that TALF was “designed to catalyze the securitization markets by providing financing to investors to support their purchases of certain AAA-rated asset-backed securities. These markets have historically been a critical component of lending in our financial system, but they have been virtually shuttered since the worsening of the financial crisis in October. By reopening these markets, the TALF will assist lenders in meeting the borrowing needs of consumers and small businesses, helping to stimulate the broader economy.”

Under the announcement, the Federal Reserve Bank of New York will lend up to $200 billion to eligible owners of certain AAA-rated ABS backed by newly and recently originated auto loans, credit card loans, student loans, and SBA-guaranteed small business loans.

Issuers and investors in the private sector are expected to begin arranging and marketing new securitizations of recently generated loans, and subscriptions for funding in March will be accepted on March 17, the Reserve said.

On March 25, those new securitizations will be funded by the program, creating new lending capacity for additional future loans, it said.

The program will hold monthly fundings through December 2009 or longer if the Federal Reserve Board chooses to extend the facility.

“SBA is optimistic the TALF will help unfreeze the secondary markets and help restore liquidity to the small business lending industry,” Hairston said. “We’re going to keep working closely with the Federal Reserve and the Treasury to make this program successful.”

Congress has reached an accord on a $789 billion package of tax cuts and new spending to help get the U.S. economy back on track.

President Barack Obama hailed the deal, saying it will help save or create millions of jobs and “get our economy back on track,” said a Feb. 12 article in Businessworld .

But that optimism came as the economic bad news kept pouring in, including a sharp fall in Chinese imports.

Some 35 percent of the compromise bill provides for tax breaks and the rest in government spending.
Senate Democrats put the jobs figure at 3.5 million, the report said. The package passed on Feb. 11 and was signed by Obama in Denver on Feb. 17.

“…Obama had been pushing Congress to act fast to help reverse the recession he inherited on taking office three weeks ago,” the report said. “U.S. stock markets, hammered the day before by uncertainty over the new administration’s financial recovery effort, reversed losses after (the) news.”

The Dow Jones industrial average gained 0.64 percent on the news, with other stock indices posting similar gains, later lost.

At the same time, on Capitol Hill, lawmakers grilled bankers on how wisely they have spent taxpayer money already received.

For one, Vikram Pandit, CEO of Citigroup Inc., said he told his board he would take a salary of $1 per year until a return to profitability.

The same scenario unfolded in London, the story said. There, a parliamentary investigation is looking into the integrity of the British banking system, which was partly nationalized in the crisis.

The report also said the Commerce Department noted a worldwide drop in demand for goods, driving U.S. imports and exports down for a fifth straight month in December.

“The clear message is that global trade activity has collapsed, as the world economy sinks deeper into recession,” Nigel Gault, chief US economist at IHS Global Insight in Lexington, Mass. told Reuters.

Credit ratings agency Standard & Poor’s expects nonperforming loans to continue to rise through 2009 and into 2010, forcing banks to increase reserves to cover losses.

The number of bank failures is also expected to increase amid the widening economic downturn, Standard & Poor’s said in a new report released Jan. 6.

“Asset-quality weakness will likely spread to a wider range of loan types such as commercial real estate, credit cards, and certain pockets of commercial lending, such as loans to the auto and retailing industries,” S&P said according to The Associated Press via BusinessWeek.com.

Such news came as no surprise as analysts widely predicted the recession would cause losses to continue to mount and move beyond residential real estate.

The key will be to use government support to keep capital levels as high as possible, S&P said, though warning that such support cannot completely protect the industry.

The most notable government program at work is the $700 billion TARP program, which stands for Troubled Assets Relief Program. The investment program allows the Treasury Department to directly purchase preferred stock in banks. Other programs include expanding government lending options to various banks, the AP said.

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.

If President-elect Barack Obama is looking for boosters to support his vision of a new New Deal, the U.S. Chamber of Commerce will not be the first in line.

The business group says the plan represents a look back, not the new vision the nation needs.

“The nation must avoid a big and permanent expansion of government payrolls and powers,” said U.S. Chamber CEO Tom Donohue said in remarks on the economy on Jan. 7. “We don’t need and can’t afford another New Deal. The 2008 election was all about change. It’s not change if you go backwards to the policies and approaches of the 1930s.”

But a key aspect of Obama’s nearly $1 trillion plan is federal spending on public works and transportation projects, aspect widely cheered by cash-strapped local governments. According to the Phoenix Business Journal local cities such as Mesa, Phoenix and Scottsdale have a list of so-called “shovel-ready” works they are hoping will gain funding by an Obama stimulus package.

Chamber officials do not oppose the public works aspect of the plan, but have called for it to be coupled with business-oriented tax relief, the Business Journal story said, including lowering the cost of Small Business Administration loans, keeping in place tax cuts passed in 2001 and 2003, and lowering business investment taxes.

Either way, the economic outlook only gets more dire by the day, it seems

“The chamber expects the fourth quarter of 2008 to show a GDP decline of at least 5 percent,” Donohue said. “GDP in the first quarter of 2009 will likely shrink by more than 3 percent. The economy should reach its low point around the middle of the year, but further problems in credit markets or other external shocks may prolong the recession into the second half of 2009.”

Despite its push for business aid, the chamber did not specifically back plans favored by U.S. Sen. John McCain, R-Ariz. and some business advocates to cut federal corporate income tax rates from 35 percent to 25 percent, the Business Journal article said.

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.