Obama Announces Initiatives to Help Small Businesses Grow

In July 2012, encouraging news came from the White House for companies that participate in federal contracts or would like to do so. This announcement detailed President Obama’s ideas to help with the start-up and operation of small businesses that participate in government contracts. We expect that the president’s initiatives, which the White House referred to as immediate executive actions, will help these small businesses expand, thus creating jobs and having a positive effect on the economy.

The SLA 2.0, which is an extension of the Small Business Administration’s (SBA) Small Loan Advantage Program that was implemented in early June, is a significant part of the President’s proposals. SLA 2.0 raised the maximum loan amount from $250,000 to $350,000 and made these loans easier to process by expanding the pool of lenders to include those outside of the SBA’s preferred lenders and allowing them to use their own underwriting processes.

In addition to SLA 2.0, the President, through the Office of Management and Budget, has provided an accelerated timeline to which agencies must adhere when making contract payments to prime contractors. This will reduce the payment turn-around time by nearly 50 percent, allowing prime contractors to pay their small business subcontractors more quickly.

Contractors will also benefit from the streamlined application process for surety bonds that the SBA has been working on since April. Contractors with a need for bonds up to $250,000 will now be able to submit one application, instead of five as previously required, and surety agents will be allowed to submit all other necessary forms. The sooner a contractor is able to secure a bond, the easier it will be for the contractor to bid on and win additional contract business. More contracts mean more jobs and more business opportunities to those small entities that deal in contract work.

The SBA’s Disaster Loan Program will also have a streamlined online application that will help small businesses bounce back more quickly when misfortune strikes.

Together with these changes, President Obama called Congress to allow small businesses to write off up to $250,000 in capital investments in 2013. These investments will allow construction contractors to increase efficiency with new machinery and equipment. This may provide an opportunity for those contractors who rent their equipment to increase long-term profits that result in the purchasing and owning of their own equipment.

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