Saturday, July 25, 2009

President Obama: Health Insurance Reform Will Strengthen Small Businesses

In his weekly address, President Barack Obama [pictured] cited a report released this morning by the Council of Economic Advisers in explaining how health insurance reform will strengthen small businesses in America. With small businesses paying up to 18 percent more for health insurance than large businesses, too many small businesses are forced to cut benefits, law off workers, or close down entirely. Health insurance reform will support small businesses by allowing them purchase plans through an insurance exchange and by providing tax credits to help them provide benefits.

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Following, is the full text of President Obama's remarks:

I recently heard from a small-business owner from New Jersey who wrote that he employs eight people and provides health insurance for all of them. But his policy goes up at least 20 percent each year, and today, it costs almost $1,400 per family per month -- his highest business expense besides his employees’ salaries. He’s already had to let two of them go, and he may be forced to eliminate health insurance altogether.

He wrote, simply: "I am not looking for free health care. I would just like to get my premiums reduced enough to be able to afford it."

Day after day, I hear from people just like him. Workers worried they may lose their coverage if they become too sick, or lose their job, or change jobs. Families who fear they may not be able to get insurance, or change insurance, if someone in their family has a pre-existing condition. And small-business owners trying to make a living and do right by the people they employ.

These are the mom-and-pop stores and restaurants, beauty shops and construction companies that support families and sustain communities. They’re the tiny startups with big ideas, hoping to become the next Google or Apple or HP. And, as shown in a new report released today by the White House Council of Economic Advisers, right now they are getting crushed by skyrocketing health care costs.

Because they lack the bargaining power that large businesses have and face higher administrative costs per person, small businesses pay up to 18 percent more for the very same health insurance plans -- costs that eat into their profits and get passed on to their employees.

As a result, small businesses are much less likely to offer health insurance. Those that do tend to have less generous plans. In a recent survey, one-third of small businesses reported cutting benefits. Many have dropped coverage altogether. And many have shed jobs, or shut their doors entirely.

This is unsustainable, it’s unacceptable, and it’s going to change when I sign health insurance reform into law.

Under the reform plans in Congress, small businesses will be able to purchase health insurance through an "insurance exchange" -- a marketplace where they can compare the price, quality and services of a wide variety of plans, many of which will provide better coverage at lower costs than the plans they have now. They can then pick the one that works best for them and their employees.

Small businesses that choose to insure their employees will also receive a tax credit to help them pay for it. If a small business chooses not to provide coverage, its employees can purchase high-quality, affordable coverage through the insurance exchange on their own. Low-income workers -- folks who are more likely to be working at small businesses -- will qualify for a subsidy to help them cover the costs.

And, no matter how you get your insurance, insurance companies will no longer be allowed to deny you coverage because of a pre-existing condition. They won’t be able to drop your coverage if you get too sick, or lose your job, or change jobs. And we’ll limit the amount your insurance company can force you to pay out of your own pocket.

To view the new report and learn more about how health insurance reform will help small businesses, go to, and send us your questions and comments. We’ll answer as many of them as we can later this week.

Over the past few months, I’ve been pushing hard to make sure we finally address the need for health insurance reform, which has been deferred year after year, decade after decade. And today, after a lot of hard work in Congress, we are closer than ever before to finally passing reform that will reduce costs, expand coverage, and provide more choices for our families and businesses.

It has taken months to reach this point, and once this legislation passes, we’ll need to move thoughtfully and deliberately to implement these reforms over a period of several years. That is why I feel such a sense of urgency about moving this process forward.

Now, I know there are those who are urging us to delay reform. And some of them have actually admitted that this is a tactic designed to stop any reform at all. Some have even suggested that, regardless of its merits, health care reform should be stopped as a way to inflict political damage on my Administration. I’ll leave it to them to explain that to the American people.

What I’m concerned about is the damage that’s being done right now to the health of our families, the success of our businesses, and the long-term fiscal stability of our government. I’m concerned about hard-working folks who want nothing more than the security that comes with knowing they can get the care they need, when they need it. I’m concerned about the small-business owners who are asking for nothing more than a chance to seize their piece of the American Dream. I’m concerned about our children and grandchildren who will be saddled with deficits that will continue piling up year after year unless we pass reform.

This debate is not a political game for these Americans, and they cannot afford to keep waiting for reform. We owe it to them to finally get it done -- and to get it done this year. Thank you.

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To read and/or download the Council of Economic Advisers' report, "The Economic Effects of Health Care Reform on Small Businesses and Their Employees," go directly to:

SOURCES: Council of Economic Advisors, The White House

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Thursday, July 23, 2009

SBA Offers $10 Million Surety Bond Guarantee; Aids Recovery in Construction and Service Sectors

Building on Recovery Act provisions implemented earlier this year, the U.S. Small Business Administration [SBA] announced today that it can now provide surety bond guarantees on federal contracts valued at up to $10 million -- if the contracting officer certifies that the guarantee is in the best interests of the government. An interim final rule is available for public inspection at The Federal Register.

Currently, under a related provision of the Recovery Act that was implemented in March, SBA can provide bond guarantees up to $5 million through September 2010 on all public and private contracts, and subcontracts. SBA partners with the surety industry to help small businesses that would otherwise be unable to obtain bonding in the traditional commercial marketplace. Under the partnership, SBA provides a guarantee to the participating surety company of between 70 and 90 percent of the bond amount.

"Raising the surety bond limit is a critical step in making sure that small businesses in the construction and service sectors have access to federal contracting opportunities that will help drive economic recovery," SBA Administrator Karen Mills [pictured] said. "These changes support small and emerging businesses nationwide -- particularly construction contractors who have seen their markets hurt by a poor economy and lagging construction."

Additional program enhancements published in the rule include:

* A new small-business size standard for this program;

* Authorization for SBA to exercise discretion in deciding bond liability issues; and

* A definition of "order" issued under an indefinite-delivery contract.

The new size standard [which will be in effect until Sept. 30, 2010] temporarily replaces the current size standard for the surety bond guarantee program. It states that a business is small if the business, combined with its affiliates, does not exceed the size standard designated for the primary industry of the business combined with its affiliates. The North American Industry Classification System [NAICS] Codes contained in 13 CFR Part 121 establishes size standards for all industries.

Through its Surety Bond Guarantee Program, SBA will also help by guaranteeing bid, payment and performance bonds to protect the project owner against financial loss if a contractor defaults or fails to perform.

Finally, the rule adds a definition for an "order" issued under an indefinite-delivery contract to clarify that SBA bond guarantees apply to individual orders, as well as contracts.

SBA assistance in locating a participating surety company or agent, and completing application forms, is available online.

For more information on SBA’s Surety Bond Guarantee Program, including surety office contacts, go to; or, call 1-800-U-ASK-SBA.

SOURCES:, U.S. Small Business Administration

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Wednesday, July 15, 2009

Senate Unanimously Passes Kerry Small-Business Innovation and Technology Funding Plan

Senator John Kerry [D-Mass.], a senior member of the U.S. Senate Committee on Small Business and Entrepreneurship, applauded yesterday's unanimous Senate passage of two small-business research programs that Kerry originally sponsored as the committee’s former chairman.

The Small Business Innovation Research [SBIR] and Small Business Technology Transfer [STTR] programs, administered under the Small Business Administration [SBA], offer competitive awards to innovative small businesses. Reflecting Kerry’s original legislation, yesterday’s vote will reauthorize the SBIR and STTR programs for eight years, making the new sunset date for both programs Sept. 30, 2017.

"This is a shot in the arm for small businesses in Massachusetts and throughout the country," said Kerry. "This vote ensures that these programs do not lapse, so that small, high-tech firms, from Springfield to Newburyport, can continue to utilize them to develop technologies to keep our military strong, advance medical breakthroughs, and develop energy sources that are renewable and clean."

Small businesses awarded funding through SBIR or STTR work through three incremental phases. Yesterday’s legislation will increase the awards from $100,000 to $150,000 for Phase I, and from $750,000 to $1 million for Phase II.

SOURCES: Library of Congress, Sen. John Kerry's Online Office, U.S. Small Business Administration

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Friday, July 10, 2009

Recovery Act Changes to SBIC Program Mean Increased Funding Available for Small Businesses

Effective today, small businesses that would otherwise have difficulty securing private equity or venture capital may find funding easier to get as a result of changes made as part of the American Recovery and Reinvestment Act to the U.S. Small Business Administration’s Small Business Investment Company program.

"The Recovery Act expands SBA’s venture capital program to increase the pool of investment funding available to the Small Business Investment Companies licensed by SBA," said SBA Administrator Karen G. Mills. "We believe those companies will be better equipped by these changes to help sustain and grow small businesses for their next important growth steps."

SBICs are privately owned and managed venture capital firms which are licensed and regulated by SBA. SBICs use a combination of funds raised from private sources and money raised through the use of SBA guarantees to make equity and mezzanine capital investments in small businesses. There are approximately 338 SBICs, with $17.4 billion in capital under management.

The changes made as part of the Recovery Act are:

* The Recovery Act makes SBICs eligible for greater SBA guaranteed funding, and requires SBICs to invest 25 percent of their investment dollars into "smaller" businesses. Also, the amount of funding an SBIC may invest in a single small business is set at 10 percent of an SBIC’s total capital, rather than the previous limit of 20 percent of an SBIC’s private capital only. This translates to an effective 50 percent increase in funding available to a single business by an SBIC.

* Maximum SBA funding levels to SBICs will increase up to three times the private capital raised by the SBIC -- up to a maximum of $150 million for single SBICs, or up to $225 million for multiple SBICs that are under common control.

* The cap for all licensees was set at $137.1 million before the Recovery Act.

* These limits are even higher for SBICs that are licensed after Oct. 1, 2009, which certify that at least 50 percent of their investments will be made in small businesses located in low-income areas -- up to $175 million for single licensees, and up to $250 million for jointly controlled multiple licensees.

* Changes made to the SBIC program under the Recovery Act are permanent.

Industry associations have commended SBA for these changes, and SBA continues to encourage new SBICs to apply for licensing and actively participate in the program.

The SBIC program was created to stimulate the growth of America’s small businesses by supplementing the long-term debt and private-equity capital available to them. Since the SBIC program’s formation in 1958, it has invested approximately $56 billion in more than 106,000 small businesses in the United States through April 2009.

For more information about the SBA’s Investment Division and SBIC program, go to; e-mail; or, call 1-800-U-ASK-SBA.

SOURCES:, U.S. Small Business Administration

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