The Small Business Person is in Crisis – How Factoring Can Help

Comprising more than seventy percent of all new jobs in the United States, small businesses employs more than half of all private sector employees. Over the last 15 years, it’s these companies that have generated 64 percent of all new jobs.

The SBA says that a small business in the U.S. will have less than 100 employees. Many of these companies are in crisis thanks to the recession, so that is why the federal government is trying to make it easier for small businesses to obtain loans now that there are guarantees for loans at 90 percent so lenders only have a 10 percent risk.

Other trends in the country include the fact that small companies and their owners have figured out how to implement accounts receivable financing to cover their bills including health care costs. Today’s health insurance costs is one of the nation’s small business owner’s primary concerns. This is driven by the high costs of insurance premiums and the associated administrative expenses.

Current legislation before the House includes the fact that businesses with payrolls as low as $250,000 would pay a two percent tax if they didn’t provide health insurance for employees, and what’s worse, this number rises to eight percent with a payroll of $400,000. Early Senate legislation states that companies employing 25 or more workers would have to insure them pay penalties.

All of these current economic points are sure to discourage small businesses and their growth. On the other hand, it is the big businesses that offer deluxe insurance to employees tax-free. This helps them recruit and retain their workforce.

A growing number of small businesses would like a tax on premium insurance which would generate necessary funding for healthcare reform. It would also limit plans that cover unnecessary procedures and level the playing field. Congress could then grant self-employed taxpayers the same healthcare deductions as businesses. Ultimately, many of today’s entrepreneurs would like to see the federal government put a cap on the value of tax-deductible insurance for big companies.

Furthermore, the government is holding “Stimulus Presents Opportunities For Small Business” nationwide specifically to help small business owners understand how they can obtain stimulus dollars. Why? Many small businesses don’t understand how to take advantage of these kinds of government opportunities.

The stimulus package approved by Congress earlier this year is now presenting business opportunities in both the public and private sector, but figuring out how to take advantage of these opportunities is challenging.

The Small Business Administration (SBA) believes that small businesses are the backbone of the economy, so it’s important for them to try to help small businesses participate in the stimulus programs.

Small businesses are taking a look at other strategies like accounts receivable factoring to get by. Business owners will most likely have their money from a factoring company long before a small businesses looks can get a Small Business Association (SBA) loan.

Our government is funding projects, and there will also be an increase in federal funding “to state government programs that already exist.” The timeline for the SBA funding will vary depending on the program but it will end at the end of 2010 or in early 2011.

By Suzana