What's in the small business stimulus package for small business owners?

If you own a small business and you're looking for practical takeaways on how the stimulus package might affect a small company, here's the Cliff's Notes version of the bill.

Help for Small Business Owners Who Need to Raise Money

Expanded SBA Microlending will come as good news to many entrepreneurs. The money allocated to microlending was increased by $6 million. This is for small business loans of $35,000 or less. They are available throguh SBA partners lending organizations.

If you are thinking of applying for an SBA loan, you will be happy to know that SBA 7(A) loan guarantees have been increased to up to 90% of a qualifying loan, no more than $150,000 but still a nice increase. The SBA will also temporarily eliminate or reduce fees on their loan guarantee programs, which is a nice added bonus.

Of course, SBA lenders have not been lending. The latest small business stimulus program attempts to crack that code by allowing the Treasury Department to spend up to $15 billion to buy pooled SBA loans. With this secondary market in place, expect banks to start lending again. Cross your fingers that it will happen!

Another great source of funding is government agency grants. Many start-ups get funding via programs like the Small Business Innovation Research (SBIR) grants and Small Business Technology Transfer (STTR) programs. Monies for these federal grants programs has been expanded and that money will filter down to small businesses as they win government grants.

Help for Small Business Owners Who Lost Money

Your accountant can explain this one better than us, but here's how it seems to work. If your business lost money, you can go back in time two years and apply a loss to taxes you've already paid. You can also carry forward a loss for two years, allowing you to reduce future taxes. You can only do this if your gross receipts are at or below $15 million.

Help for Small Business Owners Who Need to Buy Equipment

Through 2009, you can write off up $250,000 in spending for equipment (machinery, vehicles, computers, etc.). That's up from $125,000. Prior to the stimulus, you'd have to depreciate your spend over $125,000. Long story short, this can lower small business taxes for many business owners.

Help for Small Business Owners Who Hire New Employees

If you're in the mood to hire, there's some good news. The small business stimulus package contains some nice hiring tax credits. If you give a job to a new employee who falls in a targeted group of disadvantaged individuals , you can receive a $2,400 credit per worker . In addition, the Work Opportunity Tax Credit allows a 40% tax claim on the first $6,000 in wages paid to these new workers.

Two new categories of disadvantaged workers have been added to the new package. These include veterans who have been unemployed for at least 4 weeks and left the military within the past 5 years, and disconnected youth, with disconnected being defined as between the ages of 16-25 with no formal education and no work in the past six months.

SBA Loan

SBA Loans are the best alternative to those increasingly elusive grants for starting or expanding a small business. While some grants are available through the states, these grants are not always “free money,” and most require the recipient to match the funds awarded or combine the grant money with other forms of financing such as SBA loans.

The SBA does not make loans directly to the public. You will need to contact your bank or lending institution to initiate an SBA loan. Your bank will submit your loan package to the SBA and service your loan in the future.

SBA provides a number of financial assistance programs for small businesses including:

7(a) Loan Guaranty Program
One of the SBA's primary loan programs, 7(a) offers loans of up to $2,000,000. (The maximum dollar amount the SBA can guaranty is generally $1 million.)

Certified Development Company (CDC), a 504 Loan Program
Provides long-term, fixed-rate financing to small businesses to acquire real estate or machinery or equipment for expansion or modernization. Typically a 504 project includes a loan secured from a private-sector lender with a senior lien, a loan secured from a CDC (funded by a 100 percent SBA-guaranteed debenture) with a junior lien covering up to 40 percent of the total cost, and a contribution of at least 10 percent equity from the borrower.

Microloan Program
This new program offers loans of up to $35,000 to qualified start-up, newly established, or growing small business concerns. Loans are arranged through nonprofit community based lenders (intermediaries) which, in turn, make loans to eligible borrowers. The entire Microloan process is handled on the local level, but you must go to one of the local intermediaries to apply.

Disaster Recovery Loans
If you are in a declared disaster area and are the victim of a disaster, you may be eligible for financial assistance from the U.S. Small Business Administration - even if you don't own a business. As a homeowner, renter and/or personal-property owner, you may apply to the SBA for a loan to help you recover from a disaster.

Veterans & Disabled Persons?
Unfortunately, the SBA has not been granted funds to offer special loan programs to assist either veterans or disabled persons. However, individuals of both groups are eligible for all SBA loan guaranty programs. In addition, veterans are eligible for special consideration under SBA's guaranty loan programs. The special consideration given veterans includes: Liaison personnel in each field office; In-depth management counseling and training assistance; and, Prompt and priority processing of any loan application.

How to apply
Like any loan, an application for a loan guaranteed by the U.S. Small Business Administration involves forms and documentation. When you apply for an SBA loan to start or expand a small business, you will be required to provide the these documents