If you are a business owner in this upside down economy, you are looking for every source of available capital. But slow down a bit. Whenever a hot topic hits the news, the con artists crawl out from under their assorted rocks and jump into high gear. Make sure you don't take the bait and become snared in one of their deceptive traps. Here is the true skinny on what is going on with Obama's American Recovery and Reinvestment Act of 2009.
As far as small businesses, the stimulus bill has the following general benefits: 1) a smattering of various tax deductions of which I'm not qualified to espouse, 2) billions of dollars allocated to states for infrastructure rebuilding (highways, bridges, rail, hospitals, schools, water treatment, alternative energy, etc. ) which indirectly helps small businesses, especially contractors, and 3) making more attractive SBA loans through private lenders by boosting up the guarantee percentage to 90%, reducing SBA fees completely, and streamlining the funding process. In other words, making the existing programs "new and improved".
Now for what is not in the stimulus plan:
o No Government direct loans. Except for such programs as disaster relief, the government is not loaning any money. It will be the SBA licensed private lenders.
o No small business bailout monies. I'm sure you already guessed this one. The only bailout money goes in boxcars of billions of dollars to the large corporations, including Wall Street and the big bank's.
o The government is not mailing out stimulus checks. Sorry, but the U.S. Treasury is not cutting checks to small businesses. What is most sad is I have received dozens of calls by people asking when they're going to receive their checks. I don't fault them, as there is a plethora of vague innuendo floating out there through gossip mills. And that is the problem in the first place. There hasn't been a very good job explaining to the American small business owner exactly what is and is not in the stimulus package.
o There are no special small business programs or resource centers being setup. Any such assistance is being handled by existing programs, including the U.S. Small Business Administration and the Veteran's Administration. One ad claimed they were a "Recession Assistance Program" which does not exist.
o There's no such thing as a "government stimulus loan." The SBA is still working on the new $35,000 ARC loan (America's Recovery Capital), but the regulations have not yet been promulgated. This will be the subject of another article when those loans become available.
And then, my favorite: THERE IS NO FREE GRANT MONEY TO INDIVIDUALS OR SMALL "FOR PROFIT" BUSINESSES. In fact, there never was. People are confusing grants or blocks of moneys distributed to the states for infrastructure improvement. There never has, and probably never will be, free grant money given to small business owners who operate restaurants, day care centers, retail outlets, and consulting businesses on Main Street. Almost exclusively, grants are given to government entities, educational institutions, research facilities, or nonprofits. Small business owners have always been ignored in the process.
So what are the snake oil sales people doing? They are propagating false representations primarily through the hype of Internet sites. And they are not bashful in their assertions. They claim there is government monies in the hundreds of billions of dollars for loans and Smile giveaway programs. Millions of dollars a week. The sites are usually dressed up with American flags, pictures and tapes of Obama speaking, and unabashed promises that you need only to sit back and wait for your check to come in the mail. They have created fake testimonials of smiling faces claiming they got their first $330,000 grant check in 30 days.
The sites typically promise to send you a C. D. which details exactly how to get your hands on this quick money. If you use your credit card, they also tend to bill you for worthless monthly newsletters, some as much as $80 a month, as updates on new non-existent government programs. Or they could simply be an Internet portal site which has generalized information about government programs and is loaded to the gills with Google ads referring you out to other scam programs (each time you click they get a fee). Typically, the site has a vague reference to the U.S. government or Treasury Department, making you think it is a government agency dispensing the funds. In fact, some of them use the designation ".org", which would be a illegal for such a business and applies only to nonprofit organizations. There is rarely a street address or a bio of who is behind the web site.
Here is an example, paraphrased, of what such an internet site might be promoting:
Obama's Free Grant Money
"Get your free stimulus money before it is too late. The Federal government is giving out billions of free grants to people just like you. Everyone qualifies. There are no credit checks. But the longer you wait, the harder it is. Funds will eventually dry up. Remember, everyday people like you are qualifying. This is unlike previous programs in the past. It is hard to believe, but it is the absolute truth. Your check will be on its way in a matter of days. Sign up now to get access to your grant money."
Enough said. Be very careful.