Tag Archives: Small Business Administration

Federal Government Fails Small Businesses for 11th Straight Year, Washington Post Reports

The following was reported in the Washington Post:

The federal government has yet again fallen short of its stated small-business contracting goals, extending a streak of coming up just shy for an eleventh consecutive year.

Federal agencies awarded a total of $91.5 billion to small companies in fiscal 2011, down 7 percent from $97.9 billion the year prior, according data released Tuesday by the Small Business Administration. That amounts to 21.7 percent of all prime government contracts, down from 22.7 percent in fiscal 2010 and even further short of the stated annual goal of 23 percent.

The government also missed its procurement goals for women-owned and service-disabled veteran-owned businesses, as well as those located in traditionally underserved and underemployed regions of the country.

“Releasing the numbers at this point really highlights where there are opportunities for improvement,” John Shokora, SBA associate administrator for government contracting, said in a media call. “This highlights the fact that we need to improve and highlights the agencies that need to focus on that improvement.”

The SBA also grades each agency on its success over the past year awarding contracts to small businesses. Notably, the Department of Energy, the second-largest government buyer, received a failing grade, signifying that it came up at least 30 percent short of meeting its procurement goals.

On the other hand, the Department of Health and Human Services, which spends the third most of any agency, received an ‘A’ for awarding 24 percent of its contracting dollars to small businesses.

Currently, there are no penalties in place for agencies that fall shy of their small business contracting goals. However, lawmakers in both chambers and on both sides of the aisle recently introduced bills that would either eliminate bonuses for department heads or reduce budgets for agencies that miss the mark.

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MultiFunding Aims to help Small Businesses Find Loans

The mission of MultiFunding is to help small-business owners and entrepreneurs through the challenges of getting loans and working capital, according to its founder Anne Kassar.

MultiFunding aims to match borrowers with lenders so borrowers get the best loans: the lowest possible price with the best possible terms.

Small-Business Lending Is a Highly Inefficient Market

Few owners have the time to investigate credit markets. The processes are confusing and overwhelming.

Small-Business Lending Is a Confusing Mess

The owner poses  good questions: Why has there been a decrease in lending?  Have the banks stopped making the risky loans they were making before the economic crisis hit? Did they overreact and stop making even sound loans to sound companies? Or did lending drop because after the recession, businesses started to retrench and their demand for credit declined? Did all banks stop lending or was it just the big banks? It is very hard to get definitive answers to these kinds of questions.

One reason is that we can’t even agree on important definitions. The Small Business Administration reports on lending activity, but nobody knows what percentage of overall lending the S.B.A. accounts for. The big banks release their scorecards on small-business lending, but they define small businesses as those with revenue of $20 million or less. For its reports, the Federal Reserve defines small businesses as having revenue of $50 million or less. The  Federal Deposit Insurance Corporation defines small-business loans as those with balances of $1 million or less in its reports. The merchant cash advance lenders and factors do not release reports at all.

Many Small Business Owners Are Still Reeling

Some say that the recession is over and that the economy is on the  mend. However, most small-business owners report that they are still reeling from the recession and struggling to catch up. Working capital is a fight. Banks are not easy to deal with, and fair loans are tough to come by.

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