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The Federal Reserve is acknowledging the country’s economic downturn has made it harder for entrepreneurs to find and more costly to acquire the funds they need.
“Perhaps one of the most important concerns about the future prospects for small business access to credit is that many small businesses use real estate assets to secure their loans,” said Federal Reserve Board of Governors member Frederic Mishkin. “Declines in the value of real estate assets held by banks and other lenders could affect their willingness and ability to supply loans, as real estate losses use up capital that could otherwise be used for making new loans.”
The Senate Committee on Small Business and Entrepreneurship estimates that one in three small business owners depend on home equity loans to cover some business costs. In addition, the number of federal loan dollars being doled out in 2008 has dropped nearly 20 percent or more.
More than half of micro-businesses operate out of an office in the owners’ home. A recent online NASE micro-business poll found that forty percent of entrepreneurs said that they were unsure about their ability to afford their home now or in the next few years based on the type of mortgage they currently have. View the survey results here.
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With Rebates In Mail, Congress Eyes Next Stimulus Package
As the first round of stimulus payments are reaching taxpayers, congressional lawmakers are working to bring attention to other proposals aimed at boosting consumer spending. House and Senate Democrats are urging passage of a second economic stimulus package, while the White House is arguing the importance of waiting on the effect of recent tax rebates before rushing to the table.
The House Ways and Means Committee approved legislation earlier this month to boost the length of time an individual may receive unemployment benefits. The House Financial Services Committee has offered proposals that would revamp the Federal Housing Administration (FHA) and provide more support for its homeowner aid programs. The committee is also considering measures that would help low-income renters and encourage responsible home ownership.
In February, President Bush approved a stimulus effort that would offer additional tax rebates to nearly 130 million households. The package also included increased provisions for business expensing.
Stay tuned to the NASE Advocacy Web site for updates on this effort.
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Small Biz Tech Measure Passes House
House lawmakers recently approved legislation to authorize two programs that would help small businesses compete for contracts that focus on the development of new technology. The Small Business Innovation and Research (SBIR) program seeks to increase the number of small firms competing for federal research prospects. The Small Business Technology Transfer (STTR) offers funding for small businesses and research outfits.
“These programs are examples of highly successful federal initiatives designed to encourage economic growth and innovation within the small business community,” said Ranking Member Steve Chabot (R-OH). “Small businesses are uniquely qualified to respond quickly to new market opportunities, which will keep our nation on the cutting edge of technological advancement.”
The programs were established in the early 1980s to increase competition and innovation among small firms in the private sector. The Small Business Administration estimates that the STTR program alone has given out $2 billion to small high-tech businesses.
“The NASE supports efforts to increase opportunities for micro-business,” said Kristie Darien, executive director of the NASE legislative office. “Federal small business programs such as these really make an impact on the ability of the self-employed to compete for research and development contracts more effectively.”
Visit www.sba.gov for more information.
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Schedule C Filers Focus Of Educational Campaign
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In the spirit of last week’s SBA sponsored, National Small Business Week, the Internal Revenue Service (IRS) has initiated a new campaign to help start-ups and new small-business owners educate themselves about their tax responsibilities.
The campaign will consist of hosting small-business workshops and other outreach events, as well as using the IRS website to provide Schedule C filers with information on a variety of topics, including:
- Properly classifying workers as either employees or independent contractors
- Making quarterly estimated quarterly payments to the IRS to cover income tax and self-employment tax liability
- Record keeping in preparation of paying taxes
- Paying taxes electronically
- Hiring a tax professional
In 2006, one in seven taxpayers attached a Schedule C form, amounting to over 21 million Schedules C forms filed and more than $269 billion in total net profits. For more information on the IRS’s new initiative, please visit www.irs.gov.
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Promote Your Business, Be A Media Contact!
Become a media contact and get the opportunity to share your experiences as a micro-business owner. Visit www.NASE.org to fill out an informational sheet on the background of your business. Then, send it back to us at the contact information listed on the sheet. You can put your name in the hat to sound off on key legislative issues, and get some free publicity for your business in the process!
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Lawmakers and media outlets across the country rely on and regularly cite the NASE as a source of small and micro-business expertise. Help the NASE make sure the micro-business perspective is heard by taking this month’s poll. Click here to log-in and participate.
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Washington Watch Online
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Visit the NASE Advocacy Web page to view archived editions of Washington Watch. While you’re there, read the latest updates from the Washington, D.C. office, write your Congressperson, and find out how you can join the fight for micro-business.
Web site:
http://advocacy.NASE.org.
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