There are any number of pitfalls entrepreneurs can make when trying to start a business. USA Today columnist Steve Strauss has advice on four start-up mistakes to avoid.

1. Don’t take on too much debt. It’s expected that most entrepreneurs will have to take on some debt, but Strauss says to keep it to a minimum and have a plan to pay it back. It’s easy for a business to go under as debt accrues interest and cash flow shrinks.

2. Not having a marketing plan. The only way to get your name out there is through marketing and advertising. Social networking is a great way to do it on the cheap, says Strauss. On his web site www.MrAllBiz.com , he offers a webinar called Marketing on a Shoestring.

3. Don’t jump into decisions without carefully consideration. Before entering a partnership, for example, work on a project together to find out if your styles and goals are compatible. Strauss also says to beware of bad vendors and lousy locations.

4. Not having a great team. The problem with being too independent is that there is not another person around to give you feedback and share the work, says Strauss. How do you build a great team? The Small Business Administration and its Related Small Business Development Centers offer no-cost and low-cost counseling and training seminars. Find interns at local business schools, or consider hiring part-time employees. Tap business associates and fellow entrepreneurs to serve as informal advisors.

Despite pressure from the Obama administration to pump up small business lending, the country’s biggest banks cut small business lending by $1 billion in November, according to a Treasury report released Jan. 15.

The 22 banks that got the most help from the Treasury’s bailout programs have cut their small business loan balances $12.5 billion since April, when the Treasury began requiring them to file monthly reports, according to CNNMoney.com.

Bankers defend the cuts, saying small business loans are too risky and fewer entrepreneurs are seeking credit because of the recession.
But many small business owners say lending standards have grown more restrictive the past three years, and a report from the Federal Reserve backs that up, said CNNMoney.com.

Earnings at most big banks have turned around. JPMorgan, for example, reported earnings of $3.3 billion in the last quarter of 2009.

A number of politicians including the president have railed against bank executives for their unwillingness to free up credit while continuing to dole out huge employee bonuses.

Rep. Peter Welch, D-Vt., introduced a bill calling for a 50 percent tax on bonus compensation in excess of $50,000 at banks that received government bailout money. All revenue raised from the tax would go directly to the Small Business Administration to fund a new direct lending program, said CNNMoney.com.

The Small Business Administration said on Nov. 23 that it has run through all of the $375 million Congress allocated to temporarily waive fees and boost SBA guarantees on small business loans, said CNNMoney.com.

SBA chief Karen Mills put out a statement two weeks ago cautioning banks that funds were low but believed the money would last through December.

Congress approved funds for the SBA through February 16, 2010. SBA officials would like to extend the lending program through that date, estimating it would need about $100 million, according to CreditDaily.com. The SBA says the program has resulted in more than 40,000 loans to small businesses.

The government is considering other programs to benefit small businesses. Earlier in the month, President Obama announced a plan to offer banks low-interest government loans in order to encourage lending to small businesses. With $200 billion left in the TARP bailout fund, Senate Democrats want some $40 billion spent on small business loans. And Goldman Sachs said recently that it would spend $500 million to help thousands of struggling small businesses.

Small businesses hoping to cash in on government contracting jobs might be better served by first winning subcontracting work, says an article in the Wall Street Journal.

While the federal stimulus plan has poured billions of dollars into municipal projects, experts warn that small businesses with little experience working with government agencies may get in over their heads.

By subcontracting, businesses can make money while learning about the many requirements necessary for direct contracting work. A smaller business doing subcontracting work also can build a reputation in the industry and gain valuable contacts that might lead to more lucrative contracting work in the future.

Small businesses can find out more about subcontracting opportunities by networking at federal agency meetings, trade shows, conferences and events sponsored by the Small Business Administration and industry associations, said the Wall Street Journal.

Businesses should also check out Web sites such as the Federal Contracting Network at www.tfcn.us and at www.mySBX.com. The SBA’s Subcontracting Network (www.sba.gov/subnet) posts opportunities from contractors.

Business owners should be ready to explain how they will add value to a job. Melinda Warren, a corporate executive who frequently hires subcontractors, told the Wall Street Journal she “wants proof of past performance, information about present capabilities and insight into prospective subcontractors’ business approach.”

A business should fully understand any contracts they enter into and even consult an attorney so terms and conditions are absolutely clear. Finally, experts warn that low-balling on a bid just to win the contract could very well lead to problems down the line.

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.

For Raudel Sanchez and many other immigrant business owners in the United States, the current economic recession has taken a heavy toll and threatens to destroy their hard-won dreams.

Sanchez, 63, came to the U.S. from Mexico in 1967, and he worked up to 14 hours a day, saving money to bring his family to the country, said an article in USA Today.

Eventually Sanchez saved enough to open a small business empire that includes clothing stores, a restaurant and a record label. But with consumer spending and bank loans drying up, he’s stopped advertising, laid off employees and closed two of his businesses.

Immigrant-owned businesses are a cornerstone of the American economy. About 1.5 million immigrants own businesses and account for over 11 percent of all U.S. business income, said Rob Fairlie, an economics professor at the University of California-Santa Cruz, in a study for the Small Business Administration.

Because they have worked so hard and taken so many risks to build their businesses, “immigrants are much more likely to battle it out for longer” during a bad economy, Allert Brown-Gort, associate director of the Institute for Latino Studies at the University of Notre Dame, told USA Today.

Some economists believe that recovery will come slower to small businesses, but many immigrants said they still believe they will succeed.

Sanchez, for one, is sure the economy will rebound. “I still believe in this dream I had many years ago,” he told USA Today. “The only thing is you have to work hard.”

Some struggling small businesses will soon be eligible for a much-needed cash infusion thanks to a new government loan program.

Deferred-payment loans of up to $35,000 will be available to qualified small businesses beginning June 15 as part of the federal stimulus package. The interest-free America’s Recovery Capital loans will be 100 percent guaranteed by the Small Business Administration.

“These ARC loans can provide the critical capital and support many small businesses need to make it through these tough economic times,” SBA administrator Karen G. Mills said in a press release. “Together with other provisions of the Recovery Act, ARC loans will free up capital and put more money in the hands of small business owners when they need it the most. This will help viable small businesses continue to grow and thrive and create new jobs in communities across the country.”

ARC loans provide funds for payments of principal and interest for existing, qualifying small business debt including mortgages, term and revolving lines of credit, capital leases, credit card obligations and other debt. Loan repayment will not begin until 12 months after the final disbursement. After the 12-moth deferral period, borrowers have five years to repay the loan principal.

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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?”