This webinar provided tips about accessing traditional bank loans and directed small business owners to state and federal programs that may be right for their business. We also talked about some long-term policy solutions that could ensure that small businesses get the credit they deserve.

1. David Chase, Small Business Majority
A Small Business Approach To Accessing
Credit
&
Healthcare Reform in California

2. About Small Business Majority
• Public policy advocacy organization – founded
and run by small business owners
• National – based in California – with offices in
Bay Area, Sacramento, Washington, DC and New
York
• Research and advocacy on issues of top
importance to small businesses (<100
employees) and the self-employed
• Very focused on access to credit and healthcare
costs – top concerns in our recent research

3. The Credit Squeeze
• Higher reserve requirements mean less money to
lend for banks
• Banks 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 approving very few new banks. Fewer banks
means less credit.

4. Who Cares and Why?
• Small business owners want to create
new jobs, but need loans to get them
going
• Banks are being cautious – right policy for
them, but that hurts small business and
the economy
• Policymakers trying to jumpstart the
economy know small businesses typically
produce the jobs that lead to economic
recovery

5. What Should Small Employers Do?
• Talk to your existing bank
o Ask to speak to a lending specialist or
business loan consultant
o If your bank has refused you credit, tell them
you will leave for a lender that offers credit.
• Shop for a new bank
• Small or medium sized community bank
• Large bank that is small-business friendly
• Banks with dedicated SBA specialists

6. SBA Loans
• 7(a) - Lending Program
o Loan guarantee program
o Financing up to $750,000 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

7. SBA Loans
• 7(m) - Microloan Program
o Loans funded entirely by SBA
o Financing up to $35,000
o Funds use unrestricted; available to start-ups
o Typically loans come with required enrollment
in technical assistance classes
o Program not fully funded

8. Small Business Lending Fund
• Treasury Department initiative to deploy
$30 billion to small and medium sized
banks (part of 2010 Jobs and Credit Act)
• Funding is based on lending practices
(the more they lend, more $$ they will
receive)
• Participating banks listed at
www.treasury.gov
o 31 banks (186 locations) in California

9. Factoring
• What is factoring?
o Using your unpaid invoices as collateral for a
loan, which the lender collects
• Ideal for new businesses or firms with
strong client base
• Dependent on credit history of clients
• Beneficial for a quick-start

10. Main Street Partnership Banks
Legislation
• State tax dollars usually held by Wall Street
banks
• A partnership bank is established by the state
and keeps those dollars in the state to be used to
develop local business
• Partnership bank acts like a banker s bank; no
direct-to-consumer loans.
• Purchases loans exclusively from local banks to
provide them liquidity.
• Leads to more and stronger local banks; more
lending to small businesses

11. How does a state bank work?
Main Street
Partnership
Bank
Bank of Small
Town
Friends Bank Local Bank

12. North Dakota and Vermont
Vermont N. Dakota
Population 622,000 647,000
General Fund budgets (2009) $1.1 b. $1.56 b.
Unemployment (%, 2010) 6.2 3.2
Budget deficit ($24 m.) $400 m.
Banks (2009) 22 102
Deposits held by out-of-state banks (%,
2009)
65 24
Total state loan portfolio (2009) $3,100 m. $2,619 m.
Commercial/Econ. Development
lending (2009)
$102 m. $1,333 m.
Net state banking revenue (2009) ($21 m.) $30 m.

13. Partnership Banks in California?
• California estimated to take in $120B in
2011-12; most will sit in out-of-state bank on
Wall Street
• Assembly Bill 750 passed September 2011
o Bi-partisan support
• Would have created blue ribbon commission to
study issue of Partnership Bank in California
• Bill vetoed by Governor Brown
• Governor asked the Legislature study the issue
themselves, not create a new commission

14. Healthcare Reform for California
Small Businesses
• Tax credits available to most employers who cover
their workers
• California high-risk pool that sells insurance to
individuals with pre-existing condition
• Grandfather provisions to allow employers to keep
plans they already have
• Employer responsibilities for healthcare benefits
• Cost containment provisions to cut waste and improve
efficiency
• Open marketplace to maximize choice and
competition
• Your questions and comments

15. Small business tax credits
• In effect now (as of tax year 2010)
o $40 billion in credits by 2019
• Which businesses are eligible?
 Fewer than 25 full-time employees
 Average annual wages <$50,000
 Employer pays at least 50% of the premium
cost

16. 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

17. Small business tax credits
Our report: 456,500 CA businesses are eligible
(80% of all businesses); 135,900 CA businesses
are eligible for the maximum credit

18. Preexisting Condition Insurance
Plan (formerly called high-risk pools)
• Available to individuals -- incl. self-employed
• Takes effect immediately (accepting applications
now at www.pcip.ca.gov)
• Eligibility: People who have been uninsured for six
months and have been denied for a preexisting
condition
• California plan runs on federal funding ($761
million over 5 years) – No state dollars spent
• Available until full implementation in 2014 -- no
gap in coverage

19. Grandfathering: If you like what
you have, you can keep it
• A grandfathered plan is a health plan in which a
small business was enrolled on March 23, 2010
• Grandfathered plans do not need to comply with
several insurance reforms, but do need to comply
with some provisions
• Regulations allow for making several changes
(adding employees, changing carriers) without
jeopardizing grandfather status
o Significant changes (dropping benefits, etc.) is cause for
losing grandfather status

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

21. • As of 2014, businesses with > than 50 employees +
not offering minimum coverage + at least one
employee receiving a subsidy = must pay a fee
• Two options on how the fee is calculated
o $2,000 per # of employees minus 30
o $3,000 for each employee receiving subsidy
Shared responsibility

22. Cost Containment – Cutting costs
saves small businesses money
• Exchanges leverage pooled purchasing power to
lower premiums
• Ensure that more $$ go to medical care
• Premium increases are now reviewed by state
• Incentives for prevention and wellness
o Grants for up to 5 years to small employers that establish
new wellness programs
• Other incentives for administrative efficiency and
modernization (e.g. pay for performance)
• Expanded coverage and individual responsibility
requirement – reduce hidden tax

23. What is a Health Benefit Exchange?
• One-stop shop web portal
Small Business Exchange
INSURANCE PLANS
EXCHANGE
Choice
Comparison
Billing
Tax Credits
SMALL BUSINESSES
• Large marketplace to
shop for commercial
insurance
• Compare plans for
information about price,
quality and service
• Plans organized by
level: bronze, silver,
gold, platinum
• Calculator to compare
costs across plan
options
• Streamlined billing
process

24. What is a Health Benefit Exchange?
• Opening on January 1, 2014
• Voluntary
o (Unless you re a Member of Congress!!)
• Individuals and small businesses eligible to
participate
• Exchanges designed by states -- or by federal gov t
if a state so choses
• State-based exchanges mean increased flexibility and
more input from small businesses and other
stakeholders
• Not a new concept - Business groups, non-profits
and state gov t already run similar programs in CA,
CT, MA, NY, OH, UT

25. California s Key Decisions
• Bi-partisan legislation in 2010 created CA Exchange
• Separate individual and small business pools
• Exchange acts as active purchaser which will negotiate
with insurers
• Standalone government agency; exempt from some
state personnel and procurement requirements
• Governed by five member board: Secretary of the
Health and Human Services Agency, two gubernatorial
appointees and two legislative appointees
• Strict conflict of interest requirements; unpaid

26. California Health Benefit Exchange
• Current status:
o Held several public meetings and webinars
o Hired former business leader as Executive
Director; hiring more staff now
o Received $39M for planning; no state dollars
spent
o Stakeholder advisory panels providing input from
small business owners and business organizations
o Planning meetings around the state in 2012 to
collect feedback from employers et al.
o Will focus more on small business issues in
January 2012

27. Decisions still to be made
• Additional administrative services – Should the
exchange offer other human resource department
type services?
o COBRA administration
o Section 125 plans
o Flexible spending accounts
o Wellness plans
o Eligibility determination for tax credits and public
programs
• Brokers/agents - What role should brokers/agents
play? How should they be compensated?

28. Decisions still to be made
• Employee choice – Can employees select their own
plans?
• Risk management – How do we ensure a well-
balanced risk pool?
• Web portal – What features for the web portal?
o One-stop shopping
o Streamlined billing
o Tax credit calculator
Your input is essential now!

29. For more information
• Our website: www.smallbusinessmajority.org
o Information Summary
o Detailed FAQ
o Tax Credit Calculator
• CA Healthcare Coverage Guide:
healthcoverageguide.org
• California Health Benefit Exchange
www.healthexchange.ca.gov
• National HHS website: www.healthcare.gov

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