The latimes.com published a small business makeover plan to help entrepreneurs find affordable financing for expansion plans. The article reported that small business owners in struggling industries like construction and real estate are trying to increase existing credit lines to $100,000 or $200,000 and form joint ventures with larger companies to save face with lenders.

The recent sub prime collapse has stunted credit access for small businesses looking for long-term financing. Banks hesitancy to lend to sectors directly affected by the waning housing market – construction, real estate, mortgage brokerage – has prompted these entrepreneurs to explore alternate financing means. Apart from forming a joint venture or increasing existing credit lines, small businesses can look at leveraging up to 75 percent to 80 percent of their accounts receivables.

For more information on accounts receivables financing or other ways to build business credit read our breakdown of the best business loans according to industry type.

Small businesses suffering from an overly conservative lending market may find are now looking to hedge funds for asset-backed loans, according to a report by www.businessweek.com.

Banks, rattled by the $400 billion loss in bad investments over the past year, have largely cut off lending to small businesses throughout the U.S, forcing entrepreneurs to explore unconventional financing methods. Hedge funds providing asset-backed loans - commercial loans secured by the business’s inventories, equipment, accounts receivables, real estate or other collateral – have become a popular source of credit.

Since the 4th quarter of 2007 lending from 300 asset-based lenders has dropped substantially. Unlike larger corporations, small businesses don’t have large reserves to float the business through tough times. Asset-backed loans from hedge funds generally cost 2 to 3 percentage points higher than the prime rate, require asset appraisal, and may involve physical inspections. Fortunately, the processing time is only a 2 to 3 weeks.

A report published by www.bizjournals.com, small business owners in Massachusetts can claim state sales tax exemption on electricity, gas, heating fuel and steam purchases by filling a ST-13 form.The exemption is available to small business owners with five or less employees and generating less than $1 million in income.

The tax exemption can benefit small business owners to the tune of hundreds to thousands of dollars. To inform and alert small business owners, the Massachusetts Department of Revenue has released an online video explaining the details of the tax credit program.

Read more about state tax credits for small businesses.

The U.S. Small Business Administration has introduced two new free online courses to help small business owners understand the basic principles of finance and borrowing, according to the SBA’s San Diego District Office monthly newsletter, Newsline.

These courses will help small businesses find out which loan program is suitable for their financing needs and how to prepare loan packages correctly. Small businesses will learn how to avoid common mistakes like selecting the wrong financial package, miscalculating the amount of loan required and underestimating the interest charged on loans.
Read more about the two programs and how to register:

• Finance Primer: Guide to SBA’s Loan Guaranty Programs
• How to Prepare a Loan Package

For more information log on to www.sba.gov/training

The El Paso Times reported last week that the local U.S. Small Business Administration (SBA) and Compass Bank will join hands to offer small business owners loans to El Paso’s entrepreneurial community.

The SBA guarantees 7(a) loans and smaller Express loans for general expansion purposes and 504 loans for real estate or equipment purchases. Loan terms begin at 10 years, and amounts can range anywhere from $5,000 to $10 million.

Small business accounts for over 99 percent of the number of U.S. firms and employs about half of the private sector. This initiative will provide El Paso’s entrepreneurs with new financing options to help them with their working capital needs and expansion plans.

For more information about the partnership, read the full version of the article in the El Paso Times.

Texas is the best place to own a small business, according to a study conducted by the Development Counselors International. Thirty-three percent of executives surveyed said Texas’s favorable tax system, low cost of living and business-friendly atmosphere merited the state the number one spot to own a business.

North Carolina came second in the list compiled by site selection consultants, mid-sized companies and large companies. Texas and North Carolina were the only ones chosen by each category of respondents. Executives from mid-sized companies also included Nevada, Georgia and South Carolina in their top five while larger companies opted for Tennessee. Site selection consultants ranked Alabama and Florida in their top five.

Struggling to recover from the multibillion-dollar losses, banks are reducing loans to small business owners. Without a working capital cushion, business owners cancel expansion plans and slashing costs, stunting macroeconomic growth.

The depletion of small business funding sources like commercial and industrial loans and short-term commercial paper applies pressure on entrepreneurs while gas prices rise and home values plummet. In the past, banks lent much more freely, but younger and smaller companies should see credit lines completely dry up over the next few months.

For small businesses with a solid credit history and profitable margins, credit is still available but at a higher rate and a longer approval process.

Additional Resources:

• Learn about alternative financing methods to safeguard your business against financial crisis.
• Find out how to control business expenses and reduce unnecessary expenditure.
• Weigh your financing options and receive one-on-one financial advice, register and fill out a loan application.

According to a report released by the Office of Advocacy, the dollar amount of small business loans between $100,000 and $1million rose by 8 percent and loans less than $100,000, comprising mainly business credit card debt, increased by 9 percent from 2006 to 2007.

The survival and growth of small businesses depend upon easier access to adequate capital for startup and expansion. This data suggests that the number of outstanding small business loans has risen by 15 percent over last year. After relatively stagnant growth in the previous year, the number of micro business loans jumped by 13 percent.

To view the complete report visit www.sba.gov/advo/research/lending.html.

The U.S. Small Business Administration (SBA) has selected InnerCity Entrepreneurs to provide training to 200 promising small businesses as part of the SBA Emerging 200 initiative. In effort to foster economic development among the region’s SMEs, the SBA will host the instructional training throughout the remainder of 2008 in 11 cities including Boston, Chicago and Atlanta.

The program provides insight to small business owners on how to accelerate growth, access financing, diversify markets and expand their network. The InnerCity Entrepreneurs (ICE) will use their businesses as an example case study. Throughout the course, entrepreneurs will develop a three-year strategic plan to grow his or her business and work with peers, experts, and coaches to gain greater access to new sources of capital, markets, and knowledge.

More information on SBA’s emerging 200 initiative can be found at www.sba.gov/e200.

The asset devaluation tipped off by tighter credit markets, rising costs and waning revenues, has not stopped entrepreneurs from posting their companies for sale.

This month the number of businesses for sale spiked by about 66 percent according to bizbuysell.com, the country’s largest listing site. An article published Tuesday in the New York Times revealed personal problems and squabbles behind the selloff.

Additionally, officials predict 2008 to be an optimal buyer’s market with one catch.

Though, sellers will outpace the number of qualified buyers further depressing prices, small business owners will find it increasingly difficult to finance business acquisitions due to depleting home equity lines and commercial credit.