NASE on Micro-Business

President Barack Obama spoke via ABC News’ “Nightline” to Americans about health care reform during a special edition of the program from the White House on June 24, 2009. The President specifically addressed the concerns of the self-employed and small business owners in response to a question from Gary Cloutier, a self-employed body shop owner from Massachusetts, who is currently unable to afford health insurance.

President Obama’s comments on the self-employed and health care reform start at the 4:00 mark of this video clip of the interview.

The other clips of the interview are also well worth watching!

Volunteering makes you feel good, and according to this Small Business Trends article, it can also be good for your business.  From giving business to other small business owners to teaching your skills to people in your community, author Lisa Barone suggests a bunch of great ways to make new connections, which could lead to new business.

What kinds of things have you done in your community lately?  Have these activities led to new business or contacts?

[Hat tip: Small Business Trends]

facebook logoNASE has jumped from a Facebook group to a Facebook fan page. It’s a subtle difference, but one that we think gives a better user experience.

On our group, if you posted a question on the wall, it was hard to reply directly to your question. Instead, we had to create a new wall post, but there might be three or four other comments in between your question and our answer.

On the fan page, when you post a question or comment, a thread is created, so you can know immediately what others said about your post.

It’s also a lot easier for us to post up pictures — like of our Achievement Award ceremony last week — and video — like of our staff and members testifying on your behalf on Capitol Hill.

So take a look, and join our Facebook fan page! Post on the wall and let us know you’re there!

As all small-business owners know, access to capital and credit is important to running a business.  However, the economic downturn has made access almost unattainable as banks are tightening lending standards and cutting lines of credit.

According to the National Small Business Association, 59 percent of small businesses were relying on credit cards to help finance their day-to-day operations as of April, up from 44 percent at the end of 2008.  Small-business owners have also been spending more on their credit cards, making up 11 percent of revenue for Visa and MasterCard today from 3 percent of revenue in 1998 according to the Nilson Report as cited by The New York Times.

Despite the large numbers of small business owners using credit cards, and the amounts they are spending on these cards, three-quarters say they have experienced a large decrease in credit limits over the last six months.  Small businesses were not included in the Credit Cardholder’s Bill of Rights legislation signed into law in May by President Barack Obama.  That legislation limits excessive fees and interest rate increases on existing balances beginning in 2010.

Credit card companies say they have had to restrict credit to small businesses because of rising defaults and uncertainty, but as banks cut credit limits, the credit scores of small businesses are hurt as well, making it even harder to get other types of credit.

Tighter lending standards mean higher credit scores are necessary to qualify for loans.  Despite some various entertaining commercials on television, according to this Washington Post article, getting an accurate credit score is confusing and expensive.

Most lenders base your creditworthiness on your FICO score, which is calculated from information in credit reports from the three major bureaus, TransUnion, Experian and Equifax.  Experian and TransUnion have developed their own “educational scores” that consumers can access by paying $14.95 per month for a credit-monitoring service, however the fine print reveals these scores are not the same as a FICO score.  Equifax gives FICO scores to anyone paying $14.95 per month for its credit-monitoring service.  Many consumers have found large discrepancies between the educational scores from these bureaus and the FICO score that most lenders use.

Consumers can access their FICO scores through Equifax.com or myFICO.com.  While nervewracking, if you have paid your bills on time, don’t have negative public records such as bankruptcies, and have used less than 30 percent of your available credit, you probably have a good credit score.

Do you monitor your credit score regularly?  Have you been surprised by differences between your educational score and your FICO score?

Hat tip: The New York Times, The Washington Post

Previously: Credit Card Bill Might Leave Small Businesses Out, New Credit Card Law Missing Micro-Biz Protections

Often times when policymakers are putting together economic recovery and stimulus packages, it is usually micro-business and the self-employed that are left out in the cold. This is not because legislators don’t care about micro-businesses, but rather because they are do not realize that the needs of the self-employed differ greatly from a small business with 25, 50 or 150 employees.

In February, President Obama signed into law the American Reinvestment and Recovery Act (ARRA), a stimulus package which included various spending projects and tax cuts to spur our ailing economy. In addition to some changes to various SBA loan programs, the big stimulus provision touted for small business was an extension of the $250,000 limit of Section 179 expensing. Of course, for some businesses that use expensive equipment such as construction or manufacturing this is an important provision. However, the average micro-business owner is not likely to purchase that much equipment in one year. Yet there is one new tax credit included in ARRA that, I am happy to report, will benefit the self-employed.

The “Making Work Pay” tax credit is a temporary refundable tax credit available in the 2009 and 2010 tax years that will allow the self-employed to receive a credit of up to $400 for individuals and $800 for married taxpayers filing jointly. To qualify, your gross income must be less than $75,000 or $150,000 for married couples. The Corporation for Economic Development’s (CFED) Self-Employment Tax Initiative estimates that the “Making Work Pay” tax credit could positively impact up to 15 million self-employed taxpayers or 68% of all Schedule C filers. Interestingly, it is not well known that this tax credit applies to the self-employed; yet, for all those entrepreneurs struggling in this difficult economic time, it could offer welcome financial assistance.

The “Making Work Pay” tax credit is the realization of the Obama administration’s promise to offer economic assistance to the middle class. We are pleased to see that they did not exclude the self-employed from their efforts.

The health care reform debate is constantly evolving. Here are some of the week’s top health care headlines to help keep you up-to-date on what’s being said:

Q+A – Where Does Health Care Reform Stand In US Congress? (Reuters)

Congress Considers Single Payer Health Care System (House Committee on Education and Labor): Lawmakers in the House recently held a hearing to examine the option of a single payer health care system amongst the many proposals for health care reform currently being discussed by legislators. Much of the debate was inspired by a bill that would establish a single payer system proposed by House Judiciary Committee Chairman John Conyers (D-Mich.). Rep. Conyers’ bill, The United States National Health Care Act (H.R. 676), would establish a publicly financed, privately administered universal health care system with single payer financing, based on improvements and expansion of the existing Medicare program.

Senate Committee Hears Many Opinions On Health Reform (Senate Committee on Health, Education, Labor and Pensions): The Senate Committee on Health, Education, Labor and Pensions recently held a hearing on health care reform featuring the testimony of numerous witnesses from across the health care sector. Sen. Christopher Dodd (D-Conn.), sitting in for Committee Chairman Sen. Edward Kennedy (D-Mass.), stated that health care reform is an urgent issue and “delay is not an option.” On the other hand, Ranking Member Sen. Mike Enzi (R-Wyo.) cautioned that “if we don’t get [health care reform] right, America will suffer. We shouldn’t be subject just to timetables; we should be subject to getting it right.”

Health debate to intensify (Atlanta Journal-Constitution): After weeks of relatively polite discussion about health care reform – the top item on President Barack Obama’s agenda – Congress and interest groups are beginning to draw battle lines as the first specific proposals emerge from Congress. The rhetoric will sharpen when Obama, who pushed change in a town hall meeting Thursday in Wisconsin, addresses the American Medical Association, the nation’s largest doctors’ group, in Chicago.

Obama Urges Health Care System Overhaul To The American Medical Association (Associated Press on YouTube)

What a busy day!  Awarding $30,000 to a deserving NASE Member and her business made for a hectic and exciting few hours here at the NASE offices today.  The staff at the NASE offices had the opportunity to meet our 2009 Achievement Award winner, Tiffany Washington, and her family this morning.  Tiffany’s parents, grandmothers, 3-year-old son, and Chantelle, the assistant she was able to hire because of how much her business grew from the NASE Business Development Grant she received in 2008, were all on hand to see Tiffany receive her big check.

NASE Staff and Tiffany with big check

Everyone was really excited to be here, and it was great to meet Tiffany and learn more about her and her business after only “getting to know her” from her grant application and interviews for the award.  We had a photographer and video crew in the office for the ceremony as well, so sometime soon you’ll be able to hear Tiffany’s thoughts on her small business, too.  For now, you can check out a video of last year’s Achievement Award winner, Sheri Novak of Hazlenut Kids, by clicking the “Business Development Grant” video in the NASE Media Player at this link or from the front page of the NASE Web site.

We wish our most heartfelt congratulations to Tiffany, and we are looking forward to see where the Achievement Award takes her and her business in the future.  As she said herself, “the grant gave me confidence to pursue larger goals and take my business further; but now with this award, the possibilities are just endless.”

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