Small businesses gaining optimism about economic outlook - Tampa Bay Business Journal:

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NFIB’s index of small business indicatorsrose 2.1 points in May to following a 5.8-point jump in April. The index had plummeteds to 81in March, close to its record low of 80.1 in 1980. “It does appear that the declind in spending for inventory and capital projects has bottomeed and will turn up in thecoming months,” NFIB Chierf Economist William Dunkelberg said. A net 12 percen of small business owners expected genera business conditions will be better six monthswfrom now, a gain of 10 percentage points from April. Except for Septembed 2008, it’s the highest number for this indicatorsince 2005. The current profit pictur is still dismal, however.
A net 43 percenrt said their earnings were lower durinv the past quarter than they were in the previous About 16 percent of small busines owners reported that loans were harderto get, the highes reading since the early 1980s. But only 5 percentt reported that finance wastheir No. 1 businessz problem. More small businesses plan to reducee employment rather than hiremore workers, but the rate of declinr is slowing. The Conference Board, which trackss eight labor market said its Employment Trendws Index roseby 0.2 percent in May the first increase in 16 months.
More than 14,00 businesses filed for bankruptcy protectiomn in the first quarterof 2009, a 64 percent increase over the same period a year The number of business filings was up 11 percentr over the total for the fourth quarter of according to the Administrative Office of the U.S. Courts. Nearlhy 10,000 of the busineszs filings in the first quarter were Chaptet7 liquidations. Chapter 11 reorganizations accounterdfor 3,421 filings. Overall bankruptcyu filings, including personal bankruptcies, totaledr 330,447 in the first quarter of up nearly 35 percent from the same periodc ayear earlier. More than 1.
2 million bankruptcie were filed during the 12 monthse that ended March31 — the highest 12-montgh total since Congress tightened bankruptcy rulee in October 2006. Small businessew and lenders applauded recenf steps by the Smalll Business Administration toboost lending, but they said the agencuy must take additional actions to addressd Main Street’s credit crisis. On June 15, the SBA bega accepting applications for emergency bridge loans of up to Small businesses can usethese loans, whicjh were created by the economic stimulus bill, to make up to six monthse of payments on existing debt. They won’t have to star repaying the loans until a year afte r thelast disbursement.
The SBA will subsidize the interest onthesse loans, which will be offered through private-sector lenders. The stimulus bill also temporarilyg reduced or eliminated fees onthe SBA’s regulafr 7(a) and 504 business loans, and it increased the governmengt guarantee on 7(a) loans to 90 percent. Weeklyh loan volume for the SBA’s 7(a) and 504 programsz has increased by more than 30 percenft since these changes were implementedMarch 16.
This increase in SBA lendinf is “a positive and welcomed sign, but we have a very long way to go beforde SBA lending reaches solid levels saidCynthia Blankenship, vice chairman and chiefc operating officer of Bank of the West in Blankenship told the House Small Business Committee June 10 that Congress should extend the fee reductiona beyond 2009 or make them permanent, given the depth of the recession and the credigt crisis facing small businesses. Meanwhile, fees on the SBA’s 504 which finance real estate projects and other fixed are scheduled to increase significantlyin October.
This will negatew the fee reductions adopted in March througjh thestimulus bill, said Jean Wojtowicz, executivee director of the Indiana Statewide CDC, a nonprofiy economic development organization that makes 504 loans. This fee increas is unnecessary because the SBA has overestimated the numbet of 504 loans thatwill default, said who chairs the board of directors for the Nationakl Association of Development Companies. She said bank s have become far more conservative in theidr underwriting during this recession and that as aresulrt “only the strongest small businesses are now qualifying for new loans.
” Unlesa Congress appropriates money to offset the fee increases plannedr for 2010 and 2011, almost 20,000o small businesses will pay millions more dollarw in fees than they should over the 20 yearzs of their 504 Wojtowicz said. The Treasury Departmentt has allocated $25 billion in Recovery Act Bonds, whicnh can be used for economic development projects indistressed areas. The economivc stimulus bill created the new bond The legislationappropriated $10 billiobn for Recovery Zone Economic Development Bonds. The federakl government will subsidize 45 percent of the interest on theswetaxable bonds, which will enable statwe and local governments to lowerf their borrowing costs.
These bonde can be used for a variety of economicvdevelopment projects, including job training and educational programs. The legislatiomn appropriated $15 billion for Recoveryh Zone Facility Bonds. Private-sectord businesses can use these tax-exempt bond to finance depreciable capital projects in designatedrecoveryy zones, which are areas with high levels of unemployment or foreclosures.