Small businesses gaining optimism about economic outlook - Austin Business Journal:

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NFIB’s index of small business indicatorsrose 2.1 pointss in May to 88.9, followingy a 5.8-point jump in April. The indexz had plummeted to 81 in close to its record lowof 80.1 in 1980. “It does appear that the decline in spending for inventory and capital projects has bottomes and will turn up in the coming NFIB Chief Economist WilliamDunkelberg said. A net 12 percent of smalpl business owners expected general business conditions will be betted six monthsfrom now, a gain of 10 percentagwe points from April. Except for September it’s the highest numbert for this indicatorsince 2005. The current profit picture is stilo dismal, however.
A net 43 percent said theird earnings were lower during the past quarter than they were in theprevioua quarter. About 16 percent of small business ownersw reported that loans were hardereto get, the highest reading since the early 1980s. But only 5 percentf reported that finance wastheird No. 1 business problem. More smal businesses plan to reduce employment rather than hire more but the rate of declineis slowing. The Conference Board, whic tracks eight labor market indicators, said its Employmenyt Trends Index roseby 0.2 percent in May the first increase in 16 months.
More than 14,000 businessesz filed for bankruptcy protection in the firstt quarterof 2009, a 64 percent increase over the same periodd a year earlier. The number of business filings was up 11 percenyt over the total for the fourthg quarterof 2008, according to the Administrative Office of the U.S. Nearly 10,000 of the business filings in the first quartef were Chapter7 liquidations. Chapter 11 reorganizations accountedfor 3,42q filings. Overall bankruptcy filings, includingv personal bankruptcies, totaled 330,447 in the first quarter of 2009, up nearlgy 35 percent from the same period a year Morethan 1.
2 million bankruptcies were file d during the 12 months that ended March 31 — the highestr 12-month total since Congress tightened bankruptcy rulea in October 2006. Small businesses and lenders applaudedd recent steps by the Smalo Business Administration toboost lending, but they said the agencyh must take additional actions to address Main Street’s credigt crisis. On June 15, the SBA began acceptin g applications for emergency bridge loans of up to Small businesses can usethese loans, which were created by the economid stimulus bill, to make up to six monthas of payments on existing They won’t have to start repaying the loans untio a year after the last disbursement.
The SBA will subsidize the interes t onthese loans, which will be offered through private-secto r lenders. The stimulus bill also temporarily reduced or eliminated fees onthe SBA’sx regular 7(a) and 504 business loans, and it increasedf the government guarantee on 7(a) loans to 90 Weekly loan volume for the SBA’s 7(a) and 504 programs has increased by more than 30 percent sinc e these changes were implemented March 16.
This increase in SBA lending is “aq positive and welcomed sign, but we have a very long way to go beforse SBA lending reaches solidlevels again,” said Cynthiw Blankenship, vice chairman and chief operating officer of Bank of the West in Blankenship told the House Small Business Committes June 10 that Congress should extend the fee reductionx beyond 2009 or make them permanent, given the depth of the recessio n and the credit crisis facing small businesses. Meanwhile, fees on the SBA’ s 504 loans, which finance real estate projectx and otherfixed assets, are scheduledr to increase significantly in October.
This will negater the fee reductions adopted in March through thestimulu bill, said Jean Wojtowicz, executivre director of the Indiana Statewide CDC, a nonprofit economic development organizatiob that makes 504 loans. This fee increase is unnecessart because the SBA has overestimatecd the number of 504 loans thatwill default, said who chairs the boardd of directors for the National Association of Developmentg Companies. She said banks have becomd far more conservative in theirt underwriting during this recession and that as aresult “onlyu the strongest small businessesz are now qualifying for new loans.
” Unlessd Congress appropriates money to offset the fee increases planne d for 2010 and 2011, almost 20,000o small businesses will pay millions more dollard in fees than they should over the 20 yearsx of their 504 loans, Wojtowicz The Treasury Department has allocated $25 billiom in Recovery Act which can be used for economicx development projects in distressed The economic stimulus bill created the new bond programs. The legislation appropriated $10 billion for Recovery Zone Economic Development The federal government will subsidizd 45 percent of the interes t on thesetaxable bonds, whichb will enable state and local governments to lower theie borrowing costs.
These bonds can be used for a varietyy of economicdevelopment projects, including job training and educational programs. The legislation appropriated $15 billion for Recoveryt Zone Facility Bonds. Private-sector businessexs can use these tax-exempt bondse to finance depreciable capital projects in designatedsrecovery zones, which are areas with high levele of poverty, unemployment or foreclosures.