A recession may not seem like a good time to start your own business, but some types of businesses actually historically hold their own during down times. For example, fast-food restaurants, auto repair shops, and job-search or tutorial services are just a few that continue to thrive. This recession, however, could be tougher for entrepreneurs as the availability of credit has all but dried up. Still, the SBA is making an effort to keep opportunities alive by waiving some fees and providing a higher percentage SBA guarantee on loans.
A new Kauffman Foundation-funded U.S. Census Bureau studyrecently reported that In the midst of record unemployment, …startup companies are a major contributor to job creation. The Business Dynamic Statistics (BDS) also indicate that while business startups decline slightly in most of the cyclical downturns, startups remain robust even in the most severe recession over the sample period (in the early 1980s).
“Job growth is essential for our economy to rebound, and this study shows that new firms have historically been an important source of new jobs in the United States,” said Robert E. Litan, vice president of Research and Policy at the Kauffman Foundation, which funded the BDS. “Our research into the early years of business formation consistently shows how vital new firms are to our economy, and this data should give policymakers and budding entrepreneurs alike great hope for how we can solve our current crisis—create and grow jobs through entrepreneurship.”
Small buisness in general should benefit from the new stimulus legislation. It has allowed the SBA to loosen up $6 million for microloans of up to $35,000 for firms with fewer than 10 employees. Stimulus legislation will also help by means of higher SBA guarantees on surety bonds for small construction companies and 100% SBA guarantees on bridge loans of up to $35,000 to help firms having trouble paying non-SBA loans.
For small businesses going green, the SBA offers a great opportunity. Small businesses can borrow up to $4 million to build, buy, or retrofit facilities with energy-saving technology. And small businesses that meet green building standards can get up to $2 million from the SBA. The package also contains a 30% investment tax credit for makers of renewable energy systems.
2008 Economic Stimulus Tax Incentives for Small Business can be found here