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Small businesses can benefit from stimulus plan

What does the American Recovery and Reinvestment Act (ARRA), better known as the stimulus plan, mean for small businesses in Mississippi?  Among the plan’s provisions available to aid small businesses are an increase from 80 to 90 percent in loan guarantees, funding for increased access to broadband, computerized healthcare records and construction projects, investments in public, maritime and air transportation and incentives for green technology.

Janita Stewart, director of the Small Business Administration in Mississippi, says the implementation of ARRA has incentivized state lenders while providing tremendous savings to Mississippi small businesses because of two key provisions in the act.

“It temporarily raised the guarantee to 90 percent on the SBA’s 7(a) loan program, which provides banks greater confidence needed to extend credit, resulting in more capital availability to small business owners,” she said. “And it temporarily eliminates fees for borrowers on SBA 7(a) loans and for both borrowers and lenders on 504-certified development company loans until the funds are exhausted. This means more capital available to small businesses at a lower cost.”

Since passage of the act Feb. 17, 2009, the Mississippi SBA office has added 19 new lenders to its roll, including those that had not made SBA loans in a few years. Nationally, more than 1,300 lenders have been added.

“The boost in lending activity provides a positive impact on the state,” Stewart said. “Jobs that are created or retained as a result of the lending also increase Mississippi’s tax base which supports economic development.”

Dr. SherRonda Gibbs, assistant professor of management at the University of Southern Mississippi, believes the best hope of taking advantage of the ARRA plan is for the state to support creation and growth of businesses that stand to benefit from the stimulus package.

“Existing businesses must take advantage of every opportunity for tax credits and deductions by working closely with their CPAs.  These incentives mean that businesses may be more likely to hire due to the benefits to their bottom line,” she said. 

The President has also announced plans to spend millions of dollars on broadband access to rural communities and building a better communication infrastructure.

“The government is also providing millions in grants for green energy, green technologies, medical devices and related healthcare technologies. The State of Mississippi has made great strides of its own in regards to providing job creation incentives and tax deductions to business owners.”

However, she knows of few business owners taking advantage of these opportunities, perhaps because they are unaware or unwilling to go through what might appear to be unnecessary frustrations and paperwork.

At the University of Mississippi, Dr. William F. Shughart, Barnard Distinguished Professor of economics, says he hasn’t kept up closely with the effects of the stimulus plan on Mississippi, but knows a few Oxford contractors who have gotten contracts financed by stimulus money for carrying out road resurfacing projects.

“But visible evidence of the stimulus bill’s effects are few and far between around Oxford and Lafayette County,” he said. “I suspect that most of those projects would have been undertaken in due course anyway. The stimulus bill just pushed the start dates forward in time.” 

While Stewart says the SBA does not provide direct assistance to small businesses in regard to the application process, it has resource partners that offer such services at no cost. Those include the Service Corp of Retired Executives, Small Business Development Centers and Women’s Business Centers.

“In addition to helping with the application process, their services include help with financial, marketing, management, production, organization, engineering and technical problems and feasibility studies,” she said. “Specialized activities include international trade assistance, procurement assistance, venture capital formation and rural development. In fiscal 2009, our resource partners counseled and trained more than 10,014 entrepreneurs.”

With brisk activity this year, SBA in Mississippi anticipates another record year for loans, surpassing two previous record categories. The organization’s fiscal year runs from Oct. 1 through Sept. 30. 

Through June 30, the SBA has backed 919 loans valued at more than $166 million, exceeding the record of $151 million in loan dollars established in fiscal 2006 as well as the record 770 number of loans established in 2009.

“The first quarter of 2010 was a sign of good things to come when our office achieved a 161 percent increase in the number of loans and a 133 percent increase in loan dollars compared to the prior year’s first quarter,” Stewart said. “We’re shooting to get 1,000 loans approved for Mississippi small businesses this fiscal year.”

She went on to say that guaranteed loans are for start-up and expanding small businesses to use toward working capital, equipment, furniture, inventory, real estate and other general business purposes.

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