Last year I reported in this column on a great federal loan program aimed at helping small businesses that were struggling to make debt payments during this economic downturn (see S&DG, August 2009). The America’s Recovery Capital (ARC) loan program allowed small businesses to borrow up to $35,000—interest-free, with payments deferred for five years, fully guaranteed by the Small business Administration—to provide temporary financial reliefⁱ, so they could meet their debt obligations and get their cash flow back on track. The deal was a slam-dunk for borrowers, as well as for participating banks since the SBA paid them the interest and fully guaranteed the loans in case of defaults.

 

That was all fine and dandy—and thousands of business took advantage of the program. At least they did until the program money ran out last November. And—surprise, surprise—commercial credit is still nearly as tight as it was when the program was first introduced. Unfortunately, that means that as the economic downturn drags on, many small businesses are still struggling, and finding it more difficult than ever to get a loan.

 

Fortunately, the U.S. Senate voted in late December to re-fund some of its stimulus relief programs, temporarily extending funding for two popular stimulus provisions that reduced fees and boosted guarantees on SBA-guaranteed loans. With the new funding extension—included in the Defense Appropriations bill—the government’s maximum guarantee on SBA loans is restored to 90 percent, compared to pre-stimulus levels of 75 percent— fees that the agency normally charges banks are also waived.

 

According to SBA officials, the program has already directed $16.5 billion to small-business owners and brought more than 1,200 lenders back to SBA loan programs. And in the three months ended Dec. 31, the SBA’s lending program processed 12,393 loans totaling $3.8 billion, according to preliminary data released Jan. 4 by the agency. That’s a sharp increase from the 9,070 loans, totaling $1.9 billion, processed in the year-earlier quarter. Still, lending remains far behind pre-recession benchmarks. Two years ago, in the last calendar quarter of 2007, the SBA backed more than 20,000 small business loans.

 

But not all sign and commercial graphics businesses are in need of a financial lifeline. True, things are not great, but for some businesses, things are picking up enough that there are notes of optimism in the air—hopefully by spring those notes will resolve into a symphony. 

 

To survive, the smartest ones have adopted tactics such as intensive marketing to let clients know they’re ready to do business, market diversification, workflow streamlining and providing high-valueⁱ products and services. And it seems the guys who have been hiding under their desks all this time are emerging to find their lack of courage has sapped them of resources, lost them market presence and market share and left them in a weak position as the economy rights itself.

 

One of the places I go to hear from industry members and learn about are they are doing is on professional social networking sites such as LinkedIn (www.linkedin.com). One thing I do like is the immediacy of communication. We’ve set up a Group site on LinkedIn for Sign & Digital Graphics where we’ve already seen some lively discussions on the state of the economy as it affects our industry, and how businesses are coping during this downturn. I invite you to join our discussions on Linked In, or start one of your own.

 

Okay, back to work.