A Small Business Approach To      Accessing Credit             &Healthcare Reform in Illinois           January 11, 2012
About Small Business Majority•  National public policy advocacy organization –   founded and run by small business owners•...
3Current Challenges Small      Businesses Face in   Accessing Capital and        Health Insurance                   Marian...
U.S. Small Business            Administration  Mission: Our mission is to help small   businesses start and succeed  SBA...
Small Businesses Concerns     Access to Capital        Healthcare
Access to Capital Small Business Jobs Act   Higher Loan Limits
Access to Capital    Loan size raised from $2 million               to $5 million  Microloans from $35,000 to $50,000 R...
Access to CapitalPresident’s National Export Initiative        Export Express Pilot      STEP grants: $90 million       ...
Obama Economic Policy              Affordable Care Act                         ---              Success of Jobs Act    22...
Obama Economic Policy (cont’d)               American Jobs Act            Support for returning veterans   Payroll tax c...
Healthcare  Healthcare is a MAJOR concern for small business   owners – in fact according to an NFIB study it’s been the ...
Affordability and Accessibility• Tax Credits• Insurance Market Reforms• State Exchanges
Contact Information         SBA Illinois District Office       500 West Madison, Suite 1150            Chicago, IL 60661  ...
Your Bottom Line:Access to Capital
The Big Credit Squeeze  •  Higher reserve requirements mean less money to     lend for banks.  •  Banks would rather lend ...
Who cares and why?  •  Business and policy makers  •  Banks are doing what’s right for them, but     that’s hurting small ...
What should I do?  •  Talk to your Bank     o  Ask your bank if they have someone who has         worked with clients to g...
Who offers small business credit?  •  Smaller banks and community banks with     a more local or regional footprint are th...
SBA Loans  •  7(a) - Lending Program    o  Loan guarantee program    o  Financing up to $750,00 from qualified        lend...
SBA Loans (cont’d)  •  7(m) - Microloan Program     o  Loans funded entirely by SBA     o  The program not fully funded   ...
Small Business Lending Fund  •  Treasury Department initiative to deploy      $30 billion in small bank investment to     ...
Factoring  •  What is factoring?     o  Using your sales receipts as collateral       for a loan, which the lender collect...
What is Small Business Majorityworking on?  •  Working with alternative lenders to find     new sources of capital.  •  Wo...
SBA	  Resource	  Partners	                           Women’s	  Business	  Centers	  (WBC)	                                ...
Illinois	  Small	  Business	  Development	                        Center	          Business	  Informa?on	  Center	        ...
Your Bottom Line:   Health Care
The New Health Reform Law •  Provides immediate tax credits for most small    businesses ($40 billion in credits by 2019) ...
Small business tax credits•  Available to businesses with employees•  Takes effect immediately (tax year 2010)•  Which bus...
Small business tax credits  Our report: 159,900 Illinois small businesses are  eligible (78.5% of all IL businesses); 48,4...
Small business tax credits•  Tax credits on a sliding scale:   o  Up to 35% of premium expenses for 2010–13   o  Up to 50%...
How to claim the small businesstax credit •  Small employers (businesses or tax-exempt) will    use new Form 8941, availab...
Preexisting Condition InsurancePlan (formerly high-risk pools)•  Available to individuals -- incl. self-employed•  Takes e...
State Health InsuranceExchanges: Coming in 2014•  Large marketplace to shop for health coverage   o  Purchasing pool to in...
State Health Insurance Exchange •  One-stop shop web portal   o Compare plans and get                                 deta...
State Insurance Exchange:Other Benefits•  Many small business workers and self-employed   entrepreneurs will receive affor...
State insurance exchange:Other Benefits•  States determine whether to keep the individual   and small group markets separa...
What does this all mean for yourbottom line?Changes in average employer contribution per person covered
Exchange – key issues•  Active vs. passive (can the exchange negotiate?)•  Regional exchanges•  Role of brokers•  Expandin...
Shared responsibility•  Businesses with fewer than 50 workers – 96% of all   businesses – are exempt from any requirement ...
Accessible• Insurance plans must have a range of costs to ensureaffordability.• Include provisions to help small businesse...
Quality• Must be a choice of several plans with different benefitlevels.• Small business must be represented on the Illino...
Contains Costs• Must have the same rules for plans inside and outside of thecompetitive marketplace to ensure that risk sh...
Questions and More Information       Joyce Harant 309-648-3035 JHarant@cbhconline.org                    Small Business We...
Resources•  National HHS website: www.healthcare.gov•  Our website: www.smallbusinessmajority.org  o “What’s in Healthcare...
Join Our Network  Contact  •  Erica Dowell, Network Coordinator    •  Email: edowell@smallbusinessmajority.org    •  Direc...
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Your Bottom Line: A Small Business Approach to Accessing Credit and Navigating Health Reform in Illinois

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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.

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Your Bottom Line: A Small Business Approach to Accessing Credit and Navigating Health Reform in Illinois

  1. 1. A Small Business Approach To Accessing Credit &Healthcare Reform in Illinois January 11, 2012
  2. 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. 3Current Challenges Small Businesses Face in Accessing Capital and Health Insurance Marianne Markowitz SBA Regional Administrator IL, IN, MI, MN, OH, WI
  4. 4. U.S. Small Business Administration  Mission: Our mission is to help small businesses start and succeed  SBA’s 3Cs: Capital, Counseling, Contracting
  5. 5. Small Businesses Concerns  Access to Capital  Healthcare
  6. 6. Access to Capital Small Business Jobs Act  Higher Loan Limits
  7. 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. 8. Access to CapitalPresident’s National Export Initiative  Export Express Pilot  STEP grants: $90 million competitive grants
  9. 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. 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. 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. 12. Affordability and Accessibility• Tax Credits• Insurance Market Reforms• State Exchanges
  13. 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. 14. Your Bottom Line:Access to Capital
  15. 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. 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. 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. 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. 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. 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. 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. 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. 23. What is Small Business Majorityworking 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. 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. 25. Illinois  Small  Business  Development   Center   Business  Informa?on  Center   800-­‐252-­‐2923   www.ilsbdc.biz    
  26. 26. Your Bottom Line: Health Care
  27. 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. 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. 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. 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. 31. How to claim the small businesstax 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. 32. Preexisting Condition InsurancePlan (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. 33. State Health InsuranceExchanges: 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. 34. State Health Insurance Exchange •  One-stop shop web portal o Compare plans and get detailed information about price, quality andSmall 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. 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. 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. 37. What does this all mean for yourbottom line?Changes in average employer contribution per person covered
  38. 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. 39. Shared responsibility•  Businesses with fewer than 50 workers – 96% of all businesses – are exempt from any requirement to offer insurance
  40. 40. Accessible• Insurance plans must have a range of costs to ensureaffordability.• Include provisions to help small businesses and theiremployees understand how to enroll, compare plans, andobtain personal assistance, as through a toll free hotline.• Is easy for small businesses, employees and providers touse and reduces paperwork
  41. 41. Quality• Must be a choice of several plans with different benefitlevels.• Small business must be represented on the IllinoisMarketplace Governing Board, along with a diverse mix ofexpertise related to health care.• The Governing Board must be independent• Ensure ethnic, racial and cultural diversity in themembership Governing Board.
  42. 42. Contains Costs• Must have the same rules for plans inside and outside of thecompetitive marketplace to ensure that risk sharing is fair forall.• Governing Board and all procedures must be created toprotect against Conflicts of Interest• Transparency and consumer interests are fully integratedinto the insurance marketplace, such as with a SmallBusiness and Consumer Advisory Committee to theGoverning Board.
  43. 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. 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. 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

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