Background
Access to capital is
a major problem for start up businesses and
businesses trying to expand. As a result many start
up businesses end up using credit cards which is a
very expensive way to get capital.
While there are some
programs available like the Small Business
Administration 7A and 504 programs. The federal
government has eliminated all subsidies in these
programs increasing the cost to small business
borrowers. As a result of this change, 50% of the
banks making SBA loans when the subsidies existed
are no longer making loans. They also have
centralized the processing of many of these loans
making it more difficult for small businesses to
explain the unique circumstances of their business.
Another problem small businesses are facing is that
with the mergers and acquisitions of banks, small
business loans are decreasing.
At the state level
there are a number of programs like the Small
Business Loan Guarantee Program, California Capital
Access Program, Industrial Development Revenue Bond
Financing Program, Small Business Pollution Control
Tax Exempt Bond Financing Program, Replacement of
Underground Storage Tank Loan Program, etc., but
there is very little funding and the needs of small
businesses are clearly not being met.
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Our Position
Small Business
California is supporting two ways to increase
capital to small business. First, Small Business
California believes that money should be made
available through Cal Pers. This is already being
done to some degree for businesses that provide
solutions to environmental problems. It should be
expanded to other small businesses.
A second area that
Small Business California is working on is through
its On Bill Financing Program. This
would make capital available to small businesses to
reduce their energy costs. |
