Small Business Majority's Illinois webinar presentation. This webinar provided tips about accessing traditional bank loans and state and federal programs that may be right for small business. We also talked about some long-term policy solutions that could ensure that small businesses get the credit they deserve. We also discussed what the new healthcare law, the Affordable Care Act, means for Illinois small business.

1. A Small Business Approach To
Accessing Credit
&
Healthcare Reform in Illinois
January 11, 2012

2. About Small Business Majority
• National public policy advocacy organization –
founded and run by small business owners
• Research and advocacy on issues of top
importance to small businesses (<100
employees) and the self-employed
• Areas of focus: clean energy, healthcare, access
to capital, jobs and the economy

3. 3
Current Challenges Small
Businesses Face in
Accessing Capital and
Health Insurance
Marianne Markowitz
SBA Regional Administrator
IL, IN, MI, MN, OH, WI

4. U.S. Small Business
Administration
 Mission: Our mission is to help small
businesses start and succeed
 SBA’s 3Cs: Capital, Counseling, Contracting

5. Small Businesses Concerns
 Access to Capital
 Healthcare

6. Access to Capital
 Small Business Jobs Act
 Higher Loan Limits

7. Access to Capital
 Loan size raised from $2 million
to $5 million
 Microloans from $35,000 to $50,000
 Record increase in Illinois lenders using
SBA loan programs

8. Access to Capital
President’s National Export Initiative
 Export Express Pilot
 STEP grants: $90 million
competitive grants

9. Obama Economic Policy
Affordable Care Act
---
Success of Jobs Act
 22 straight months of job growth=2 million jobs
 More private sector jobs created in 2011 since 2005

10. Obama Economic Policy (cont’d)
American Jobs Act
 Support for returning veterans
 Payroll tax cut=tax cut for260,000 Illinois firm
 Unemployment insurance reformation
 Infrastructure Investment= $1.8 billion for Illinois

11. Healthcare
 Healthcare is a MAJOR concern for small business
owners – in fact according to an NFIB study it’s been the
number one concern of small business owners every
year since 1986.
 Small businesses currently pay as much as 18 percent
more for the same coverage as big companies under the
current system.
 Job Lock

12. Affordability and Accessibility
• Tax Credits
• Insurance Market Reforms
• State Exchanges

13. Contact Information
SBA Illinois District Office
500 West Madison, Suite 1150
Chicago, IL 60661
(312) 353-4528
www.sba.gov
Follow us on www.twitter.com/SBAgreatlakes
www.facebook.com/SBAGreatLakes

14. Your Bottom Line:
Access to Capital

15. The Big Credit Squeeze
• Higher reserve requirements mean less money to
lend for banks.
• Banks would rather lend to larger companies
because the effort is the same, and a perception
that small business lending is more risky.
• Traditional collateral assets have been degraded
(real estate and receivables).
• FDIC used to approve 300 new bank charters
annually replacing the churn of failing banks.
FDIC has approved only three new national bank
charters in the last two years.

16. Who cares and why?
• Business and policy makers
• Banks are doing what’s right for them, but
that’s hurting small business and the
economy
• In many recessions, small businesses
produce all of the jobs that lift the
economy to recovery

17. What should I do?
• Talk to your Bank
o Ask your bank if they have someone who has
worked with clients to get loans from the
Small Business Administration (specifically
the 7(a) or 7(m) loan programs), and ask to
be directed to that person.
o If your bank has refused you credit, tell them
you will leave for a lender that offers credit.

18. Who offers small business credit?
• Smaller banks and community banks with
a more local or regional footprint are the
place most small businesses access
credit.
• Banks with dedicated SBA specialists.

19. SBA Loans
• 7(a) - Lending Program
o Loan guarantee program
o Financing up to $750,00 from qualified
lenders
o Working capital, asset purchases and
leasehold purchases
o Personal guarantees required from owners with
20% stake or more
o 10-year term
o Available only to people with no other
resources

20. SBA Loans (cont’d)
• 7(m) - Microloan Program
o Loans funded entirely by SBA
o The program not fully funded
o Smaller, microloans
o Funds are unrestricted and available to start
-ups
o Typically loans come with required enrollment
in technical assistance classes

21. Small Business Lending Fund
• Treasury Department initiative to deploy
$30 billion in small bank investment to
free capital for lending (part of 2010 Jobs
and Credit Act)
• Limited to small lenders
• http://www.treasury.gov/resource-center
/sb-programs/Pages/sblf-map.aspx
– In Illinois, 22 institutions in 251 locations have
received funds
– 78% of participating community banks have
increased their small business lending

22. Factoring
• What is factoring?
o Using your sales receipts as collateral
for a loan, which the lender collects.
This takes the focus of the loan off
your business and puts it on your
customer.

23. What is Small Business Majority
working on?
• Working with alternative lenders to find
new sources of capital.
• Working with state and federal agencies to
ensure smooth capital deployment.
– SBA
– Treasury Department

24. SBA
Resource
Partners
Women’s
Business
Centers
(WBC)
SCORE
Small
Business
Development
Centers
(SBDC)
Illinois
Small
Business
Development
Center
Services
-­‐ one-­‐on-­‐one
confiden)al
business
advice
and
technical
assistance
-­‐
up
to
date,
relevant
business
informa)on
and
management
training
-­‐
strategic
business
planning
and
financial
analysis
-­‐
access
to
capital
iden)fica)on
and
prepara)on
assistance
-­‐
marke)ng
research
and
marke)ng
plan
development
-­‐
export
development
and
interna)onal
trade
guidance
-­‐
government
contrac)ng
assistance
-­‐ technology,
innova)on
and
entrepreneurship

25. Illinois
Small
Business
Development
Center
Business
Informa?on
Center
800-­‐252-­‐2923
www.ilsbdc.biz

26. Your Bottom Line:
Health Care

27. The New Health Reform Law
• Provides immediate tax credits for most small
businesses ($40 billion in credits by 2019)
• Provides immediate access to a Preexisting
Condition Insurance Plan for the self-employed
• Establishes a
competitive marketplace
for small businesses and
the self-employed in 2014

28. Small business tax credits
• Available to businesses with employees
• Takes effect immediately (tax year 2010)
• Which businesses are eligible?
 Fewer than 25 full-time employees
 Average annual wages <$50,000
 Employer pays at least 50% of the premium
cost

29. Small business tax credits
Our report: 159,900 Illinois small businesses are
eligible (78.5% of all IL businesses); 48,400
businesses eligible for the maximum credit

30. Small business tax credits
• Tax credits on a sliding scale:
o Up to 35% of premium expenses for 2010–13
o Up to 50% of premium expenses for any two
years beginning 2014
• Tax credits do not cover premium expenses of
owners or their families
• Tax credits can not be claimed by the self-
employed
• Still available for those who filled extensions
or as an amendment to your 2010 taxes

31. How to claim the small business
tax credit
• Small employers (businesses or tax-exempt) will
use new Form 8941, available on www.irs.gov
• Small businesses will include the amount of the
credit as part of the general business credit on
their income tax returns
• The credit can be reflected
in determining estimated
tax payments for a year
• The credit applies towards
income tax, not
employment tax

32. Preexisting Condition Insurance
Plan (formerly high-risk pools)
• Available to individuals -- incl. self-employed
• Takes effect immediately
• Eligibility: People who have been uninsured for six
months and have been denied for a preexisting
condition or have a letter from a physician
• Plans = lower premiums due to federal funding
($5 billion until 2014)
• Available until full implementation in
2014 (no gap in coverage)
• http://insurance.illinois.gov/IPXP/

33. State Health Insurance
Exchanges: Coming in 2014
• Large marketplace to shop for health coverage
o Purchasing pool to increase buying power and reduce
administrative costs
o Small businesses with fewer than 100 workers eligible
• Private insurance plans will compete
o Improved competition will increase employer choice
o Exchange will negotiate with insurers on behalf of small
businesses to ensure higher quality and lower costs
• RAND Study
o Exchanges will expand coverage to 85.9% of small
business employees, up from 60.4% today, an increase of
10.5 million workers

34. State Health Insurance Exchange
• One-stop shop web portal o Compare plans and get
detailed information
about price, quality and
Small Business Exchange service
INSURANCE PLANS o Plans organized by
category: bronze, silver,
EXCHANGE gold, platinum
Choice
Comparison o Calculator to compare
Billing
Tax Credits costs across plan
options
SMALL BUSINESSES
o Streamlined billing
process

35. State Insurance Exchange:
Other Benefits
• Many small business workers and self-employed
entrepreneurs will receive affordability tax credits
towards their premiums
o Up to 400% of federal poverty level (approx.
$90,000 for a family of four)
• Ensure that more $$ go to medical care – reduced
administrative costs
• Other incentives for administrative efficiency and
modernization
• Expanded coverage and individual responsibility
requirement – reduce hidden tax

36. State insurance exchange:
Other Benefits
• States determine whether to keep the individual
and small group markets separate or merge them
• Insurance will still be sold outside exchange
• Members of Congress must use the exchange

37. What does this all mean for your
bottom line?
Changes in average employer contribution per person covered

38. Exchange – key issues
• Active vs. passive (can the exchange negotiate?)
• Regional exchanges
• Role of brokers
• Expanding exchange to large firms in 2017
• Incorporation of wellness and prevention programs
• Administrative issues:
billing, payment, web, etc.
• Effective education and outreach

39. Shared responsibility
• Businesses with fewer than 50 workers – 96% of all
businesses – are exempt from any requirement to
offer insurance

40. Accessible
• Insurance plans must have a range of costs to ensure
affordability.
• Include provisions to help small businesses and their
employees understand how to enroll, compare plans, and
obtain personal assistance, as through a toll free hotline.
• Is easy for small businesses, employees and providers to
use and reduces paperwork

41. Quality
• Must be a choice of several plans with different benefit
levels.
• Small business must be represented on the Illinois
Marketplace Governing Board, along with a diverse mix of
expertise related to health care.
• The Governing Board must be independent
• Ensure ethnic, racial and cultural diversity in the
membership Governing Board.

42. Contains Costs
• Must have the same rules for plans inside and outside of the
competitive marketplace to ensure that risk sharing is fair for
all.
• Governing Board and all procedures must be created to
protect against Conflicts of Interest
• Transparency and consumer interests are fully integrated
into the insurance marketplace, such as with a Small
Business and Consumer Advisory Committee to the
Governing Board.

43. Questions and More Information
Joyce Harant 309-648-3035 JHarant@cbhconline.org
Small Business Web page:
http://www.cbhconline.org/infocenter/small-business/
Your Guide to Health Reform:
http://www.cbhconline.org/infocenter/your-guide-to-health-care-reform/
Illinois Legislation:
Amendment to SB 1313, Illinois Health Benefits Exchange Law:
http://www.cbhconline.org/infocenter/small-business/sb1313/
Competitive Market Place- Senate Bill 1729 :
http://www.cbhconline.org/action/advocacy-day/
Insurance Rate Review- House Bill 1501:
http://www.cbhconline.org/infocenter/rate-review/

44. Resources
• National HHS website: www.healthcare.gov
• Our website: www.smallbusinessmajority.org
o “What’s in Healthcare
Reform for Small
Businesses”
o Detailed FAQ
o Tax credit calculator

45. Join Our Network
Contact
• Erica Dowell, Network Coordinator
• Email: edowell@smallbusinessmajority.org
• Direct: (202) 535-3244
Ways to Get Involved:
Connect with us! • Receive a monthly newsletter
@SmlBizMajority • Share your story for media requests
• Letters to the editor/Op-eds
Small Business Majority • State events/Roundtables
• Fly-ins
• Webinars for business organizations