Business Credit Cards At Risk
A large majority of small businesses have credit cards issued in the name of the business. According to the National Federation of Independent Business (NFIB), 85% of small businesses have at least one card issued to the business. A recent report by the SBA, indicates that business credit cards represent about 70% of small-business lending by banks.
Moreover, a poll by the National Small Business Association (NSBA) indicated that credit cards are the top source of small-business capital.
That is why it is very timely that the Credit Card Act passed by the current session of Congress came along when it did…right?…WRONG!
It seems the new Credit Card Act conveniently excludes credit cards used for business. This means that credit card companies are free to have their way with small businesses that use their cards. Small business is still prey to the predators of big banks and finance companies.
In fact, in the same poll by the NSBA, 75% of respondents said they had been hit with higher interest rates; 60% said they had received their bills after the due date, and 15% said they had their cards cancelled for no reason, and without explanation.
A small-business owner could use their personal credit cards…except that transfers the liability from the business to the owner—and heaven help you if the IRS ever audits you. It is always recommended to not comingle business and personal expenses.
So, once again, our illustrious members of Congress have stuck it to small business—the very group of businesses that were supposed to bring this country out of recession. Yet, it seems like every time a small-business owner turns around they are being hit with higher fees, unknown additional costs for healthcare, threatened increases in taxes (expiration of tax cuts—or worse), and hidden extra costs like this exclusion from the Credit Card Act.
And everyone wonders why small business is so slow to spend money on hiring people and increasing capacity. Good Grief!
Am I the only one that is concerned about the future of small business?
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Forget Tax Incentives!
With Congress and the Administration wringing their hands over how big to make tax incentives for small business so they will hire more people; they are—as usual—totally missing the boat. Tax incentives to hire more people will do little to increase jobs. As one small-businessman said in an interview the other night, “Tax incentives are nice and I’ll take them, but they do not encourage me to hire more people. Why would I hire someone that I have no work for and then turn around and lay them off again?”
What is really needed is more work! When small business owners have more work for their workforce, don’t think for a minute that they won’t hire the people they need to do that work—whether there are any tax incentives or not. That’s why they are called “business” owners.
All this haranguing and carping in Washington simply proves even further just how far out of touch with the real world our politicians actually are. Until demand for small business products and services increases, small business owners will NOT hire more people. It’s as simple as that.
Healthcare Madness
In following the furor created by the heated debate over the House healthcare bill (H.R. 3200), I began to wonder—“who has read this bill?” So, I acquired a copy and began to read it myself. You can get your copy (with all 1,017 pages numbered) here.
Now, keep in mind that our elected representatives do not actually write bills—they are written by their staffs. That’s why politicians have staffs…to read and/or write the mountains of paperwork that pass through their office. Consequently, it is highly unlikely that any member of Congress has actually read the bill they are promoting. They work off of “papers” prepared for them by their staffs.
Likewise, it is highly unlikely that many other people have actually read the entire bill. First of all, it is written by lawyers, in the form of a legal document (like all bills), so it is difficult for a layperson to understand much of what it says. HR 3200 also contains amendments to existing laws—which also have not been thoroughly read by most lawmakers and laypersons. This opens up unlimited possibilities for interpretation…and misinterpretation.
(Just for fun, I picked a paragraph at random from the bill, and included it below):
(C) TECHNICAL AMENDMENT TO CORRECT DUPLICATE SUBSECTION DESIGNATION. —Subsection (d) of section 226A of such Act (42 U.S.C. 426–1), as added by section 201(a)(3)(D)(ii) of the Social Security Independence and Program Improvements Act of 1994 (Public Law 103–296; 108 Stat. 1497), is redesignated as subsection (d).
(This was taken from page 422, but I wonder how many people actually followed this thread to determine what the impact was?)
The legalese notwithstanding, I looked for references to the infamous “Death Panel.” Even though the bill is written so a layperson cannot understand the real meaning, I did find an area that was rather disturbing. Somewhere around page 427 (in the “Advance Care Planning” section), there is a reference to a “coalition of stakeholders,” guiding life sustaining treatment. This coalition is made up of people from government and quasi-government agencies and associations—but excludes the patient and any family members. It is easy to see where the term “Death Panel” came from. It will take a great deal of study (and maybe a great deal of explanation) of this area of the bill to figure out exactly what is meant.
In fact, no one should probably comment on HR 3200 until they have read the bill and understands what it really means. There is no question about badly needing healthcare reform, but this bill affects every person in the U.S. and it is much too important to be rushed into law within such a divisive atmosphere. So, why doesn’t everyone just take a breather and stop the madness.
Certainly, Congress needs to acknowledge the concerns voiced by many people, and address those concerns in the bill. They then need to mount an educational program to get the truth of the bill out in language that regular people can understand.
Likewise, those in opposition need to back off and allow changes to be made and education to occur. Jumping to ill-informed conclusions from a difficult-to-read document is not going to help anyone. (And I won’t even mention politics and lobbyists.)
COST?
This is very interesting, and something that every business owner and wage earner needs to pay attention to. Watch this blog for a future post containing some numbers from Congress’s “fuzzy math.”
Veteran Owned Small Businesses Shorted
Congress authorized the creation of a non-profit corporation (National Veterans Business Development Corp.) to help veterans start or grow small businesses–and provided $17 million taxpayer dollars to the corporation since 2001. Interestingly (but not surprisingly), only 15 percent of the funding has been spent on business resource centers that are supposed to provide business assistance services to veterans. This is what a recent report from the Senate Small Business and Entrepreneurship Committee is telling us.
It gets better. The report found that the corporation wasted money on excessive compensation for executives, on expensive dinners for employees at high-priced restaurants in Washington, and on questionable charges on company-issued credit cards. The compensation for the top two executives in fiscal 2007 ate up 22 percent of the funding for that year–more than was spent on the business centers. Does any of this sound familiar?
Senators John Kerry, D-Mass., and Olympia Snowe, R-Maine, are now recommending that no more money go to the corporation. Instead, they want any future federal money, to assist veterans in small business, to go to the Small Business Administration’s Office of Veterans Business Development.
Unfortunately, this seems to be the way our government operates when they dabble in the private sector. I shudder to think what will happen if our government nationalizes our banking system.
Maybe our elected representatives would like (or not) to hear what we think about this waste of money, and how they need to better support small business–especially veteran-owned businesses–to get our economy back on track. What do you think?
Pay Raises for Congress
Well, I guess it is appropriate for members of Congress to give themselves a pay raise this month—after all, it will only cost taxpayers a mere $2.5 million. After the billions (soon to be trillions?) Congress has been handing out, this is simply “pocket change.”
Of course, it might not set too well with the millions of American workers who are giving up their cost-of-living raises in an effort to save their jobs—if they still have them.
If you think this might not be a good time for your elected officials to take a pay raise, you might let them know how you feel.
Back to Work
The inauguration is over and President Obama started his new job today. Pundits galore have emphasized the tremendous challenges he is facing, so we are all aware that he has a big job ahead of him. In his approach to some of his tasks, I heard (then) President-elect Obama say, a few days ago, that he wanted to retain certain tax cuts to help small businesses, because “…they are the backbone of our economy.” I like that—our President understands what makes our economy run and where recovery and future prosperity will come from. That’s the way it has been in prior recoveries, and that is the way it will be in this one. Now is not the time to raise taxes on small business.
Unfortunately, the President must deal with a recalcitrant Congress, and Congressional leadership that promote their own agenda. Nancy Pelosi clashed with President Obama’s stand for small business even before he took the oath of office. She made it clear that she wanted to raise taxes now, not reduce them. I am afraid that President Obama’s job will not be to lead an august group of Congressional members to implement well thought-out plans for recovery—his work will be more like (as I’ve said before) “herding cats through a forest.”
If, for a moment, you can visualize the process of “herding cats”, you will quickly realize that the job will take a lot of herders. That’s where we can (and must) be of help to the President. I think it is the responsibility of every small business owner to tell our elected representatives in Congress, that we (small businesses) are the ones who will lead the economic recovery. Furthermore, that more restrictive rules and regulations (including hampering the normal functions of sound banks), and increased taxes will only make our jobs that much more difficult…and take that much longer.
President Obama “gets it”—why can’t our elected representatives?
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