Free Enterprise: September 2009 Archives
Free Enterprise - The FindLaw Small Business Law Blog

September 2009 Archives

Will TARP Expire in 2009 or Be Extended?

Whether TARP's sun sets at the end of the year or is allowed to rise once again in 2010 is being hotly discussed in the U.S. Treasury these days.  The Troubled Asset Relief Program (TARP) designated $700 billion to support ailing banks, but the funds were also distributed to automakers and insurance companies.  And most recently, the U.S. Treasury plans to buy toxic assets using private and public funds.

All in all, about $128 billion TARP funds are still on the table.  And the funds could mean big investment in small business.  The U.S. Treasury is reportedly developing initiatives to use that money on bolstering small businesses and community banks.

Senate Drafts a Tougher Climate Bill

Climate change emerged as a hot political topic even on the presidential campaign trail.  And with President Obama's election, the movement for environmental law reform has only gained momentum.  While big businesses may have an infrastructure to adapt and conform to proposed changes in the law, small businesses will bear a heavier burden to become 'as green' as the bills specify.

So what environmental law changes can small businesses expect from Washington?

5 Ways to Protect Customer Information

Consumers often face a choice in supporting a small business or larger corporation for products and services.  And while small businesses know they are evaluated on price, customer service, reliability, and quality; they may not realize that the tech-savvy public is also evaluating how businesses secure customer service in making consumer decisions.  Sloppy handling of valuable personal and identifying information can be devastating to a small business.  It can lead to personal identification theft of customers, can open the company up to liability, and can damage goodwill within the community that a small business works hard to build.

So, how can your small business take proactive steps to protect customer information?  Below are 5 ways small businesses can cover their bases when it comes to protecting customer information.

Sole Proprietorship Bankruptcy: What's at Stake

In the excitement of driving a new business off the lot, many entrepreneurs gloss over the different business organization types available.  This is especially true for individuals looking to start a small business or home-based venture who turn to sole proprietorship as a way to get started quickly and avoid the expense of incorporation, legal fees, and other filing considerations.

And for many sole proprietorships, the combination of insurance coverage, keeping overhead costs low, and generating consistent revenue is enough to survive and even flourish.  However, when the economic forecast delivers storms, small businesses may find making ends meet to be an insurmountable challenge.  And many sole proprietors do not realize that, when it comes to bankruptcy for small business, their personal assets can be seized.

Here are some important facts about sole proprietorship and sole proprietorship bankruptcy that you should know:

Wells Fargo, the Small Business Bank

The results are in, and the winner can be announced.  In a tally of the amount of loans that banks made to small businesses in the past year, Wells Fargo came in fchart_sba_lenders.gifar ahead of its competition. 

Wells Fargo upped its loaning from $583.4 million in 2008 to $605 million in 2009-- a 4% increase.  In fact, it was the only bank to post an increase in lending to small business.  In comparison, CIT and JPMorgan Chase & Co. decreased loan amounts to the small business sector by over 70%.  For CIT the decrease has been staggering.  In 2008 CIT loaned nearly $700 million to small business, whereas in 2009 it did not even cross the $100 million mark.

So, how did Wells Fargo manage to stay ahead?

CNNMoney reports that Wells Fargo was able to keep ahead of the economic downturn and resist waving off small business loan requests by not reselling loans on the secondary market, a popular action taken by other banks.  The problem with the resale, was that after the fall of Lehman Brothers' last year, the secondary markets froze and banks who had offered up the loans could not find buyers.  Without buyers, the banks were left without a funding source to be able to offer new loans geared to small business.

Wells Fargo is also credited with zeroing in on offering 7(a) loans--that can be taken out for up to $2 million.  Best of all the 7(a) loan is a type of small business loan that the Small Business Administration (SBA) guarantees--reducing the liability of the lender.

All in all, Wells Fargo appears to be lone lender voice for small business for 2009.  And as other banks learn from Wells Fargo's success---2010 might just prove to be the comeback year for small business banking.                                                                                            

Related Resources:


IRS Gives Small Businesses A Little More Time

The Internal Revenue Service announced this week that it has extended the grace period allotted for small business owners to pay certain tax-shelter penalties.  It is the second time the IRS has extended the deadline, the first time being in July when the deadline was set for the end of September.

The extensions have less to do with the ability or inability of small businesses to pay the penalties and more to do with passage of potential new law that will change small business responsibility regarding the tax-shelter penalties.  The initial delay in collecting the penalty fees was enacted in order to afford Congress a extra time to pass legislation that would actually create long-term protection for small business owners from being responsible for the penalties.

SBA's New Role: YouTube Star

Just when you thought YouTube was for quirky home videos of people's cats, catching up on what happened at the latest primetime awards show, or following the newest post of a video blog you are following, the Small Business Administration (SBA) is on the scene to remind you that it is a voice for small business, in real-time and in Web 2.0. 

The independent government agency has started a YouTube channel, www.youtube.com/sba, featuring videos about the history of SBA, public service announcements, press conference briefings, and SBA awards programs.  The channel is already home to over a dozen informational videos and has experienced favorable initial interest.

Expanding Small Business Roundtable

The U.S. Senate Committee on Small Business and Entrepreneurship this week held a roundtable discussion addressing the issue of how the federal government can expand the number of federal government contracts that are awarded to small businesses.  The roundtable was hosted by Lousiana Senator Mary Landrieu, who also chairs the committee.

Landrieu has become a leading voice for small business on Capitol Hill.  She helped secure funding for SBA Economic Injury Disaster Loans for businesses affected by Hurricanes Katrina and Rita-- to the tune of $25 million.  She worked on initiatives to reduce fees on SBA loans while laso increasing the SBA loan guarantee on 7(a) loans to 90%, making risk-averse lenders more likely to loan money to small business ventures. And she continues to take a leading role in increasing small business government contracts.

What is a 501(c)(4) Non Profit Organization?

With all of the attention paid to 501(c)(3) non-profit organizations, many have not ever heard of the numerous other 501(c) organizations that qualify for some form of federal tax exemption.

One prime example is the 501(c)(4)-- Civic Leagues and Social Welfare Organizations.

Curious about what makes it different?  Here are a few notable features and characteristics of the 501(c)(4):

4 Steps to Planning a Charity Raffle

Conducting a charity raffle may be an ingenious cash flow solution for your non-profit organization.  Especially if a generous supporter has donated an item of value such as real estate, a vehicle, or vacation package, the cause and work supported by your 501(c)(3) or 501(c)(4) non-profit organization could stand to benefit substantially from ticket sales. 

However, before you start making fliers and planning a gala event to feature the drawing of the winner, you should investigate the particular state and federal laws that dictate rules on charity raffles. 

Here are 5 steps you can take to plan a charity raffle:

Employers: 6 Ways to Protect Against Workplace Violence

The recent devastating homicide of bright, accomplished, and to-be-wedded Yale graduate student Annie Le is being termed an act of workplace violence.  The incident sheds light on the dark side of workplace safety and the threat and danger of workplace violence.

Are there steps employers can take to protect their employees and safeguard their workplace? 

Non-Profit "Soft Money" Contribution Limit Rejected

What inspires the formation of a non-profit? Often, it is the desire to address a cause, support specific reform, and make a statement.  Well, non-profits who choose to make themselves heard by funding state and local candidates received a nod from the U.S. Court of Appeals of the District of Columbia this week.  

The case was brought by Emily's List, a 501(c)(3) non-profit organization that backs female Democratic candidates who support abortion.  The D.C. court held that Federal Election Commission (F.E.C.) rules restricting  the amount of "soft money" contributions-- unlimited donations by companies, individuals, unions, and political action groups to non-profits-- used to fund candidates violated the First Amendment.

Wall Street's New Clothes: SEC Strives for Transparency

The SEC has been getting down to business this week, and it could mean a whole new fall wardrobe line for Wall Street.  In striving for transparency, the SEC voted to require credit agencies to disclose more ratings history and to require banks to reveal data used to rate financial products to all credit agencies.  And the rules promise to affect businesses big and small who either invest in companies or, themselves, are the subjects of investment.

Mary Schapiro, head of the SEC, reiterated the need for increased transparency, in stating that investors often rely on ratings in making investment decisions, and for that very reason, the increased regulation of the rating agency industry is needed. 

Congress Votes to Cut ACORN Funding

Government funding can provide the means for sustenance for non-profit organizations.  And any non-profit would agree that the thought of it being yanked could pose a substantial setback.   

Non-profit or not, it's not easy being ACORN these days.  And the House of Representatives' resounding vote to deny federal funding to the Association of Community Organizations for Reform Now (ACORN) this week is case in point.  And, with votes totaling 345 to 75 in favor of the funding cut, the numbers also signal a deliberate effort by the government to distance itself from the longtime community organizing institution.

H1N1: Is Your Small Business Ready for Swine Flu?

It's not every day that the federal government issues guidelines to small businesses in preparation for flu season.  But then again, not every flu season carries with it the danger of extending the reach of a world pandemic.  Through the website appropriately labeled, Flu.gov, the federal government is offering guidance to businesses and employers in anticipation of the 2009-2010 flu season.

Below are highlights from the small business guidance offered by the U.S. Department of Health and Human Services' (HHS) Centers for Disease Control and Prevention (CDC), with input from the Department of Homeland Security (DHS):

The Underinsured Small Business: A Game of Russian Roulette

Insurance is an important consideration for any small business.  It takes just a quick look at headlines to begin to envision the likely and unlikely circumstances that could put your enterprise in a tenuous financial position.  Wild fires, robbery, earthquakes, freak accidents, flooding, and lawsuits could threaten the daily functioning of your business as well as tie up your resources and time in jumping through legal hoops. 

Getting small business insurance is a first step.  But just signing the dotted line isn't enough.  Small businesses must be informed and aware in choosing the appropriate amount of coverage for their needs.  Filing for bankruptcy can become a tough reality for the uninsured business facing unexpected circumstances, but it can also be the ultimate fate for the underinsured business that is not able to bridge the gap between insurance payouts and out-of-pocket expenses.

Here are some tips to ensure that your business has the right amount of insurance:

Top 4 Checklists for Closing a Small Business

There are many reasons for closing a small business.  It may no longer be profitable to continue, you may have found an enticing job offer, or you may just want to cut your losses and avoid incurring additional debt.  Whatever your reasons may be for taking down the "open" sign, by the time you are sure you want to call it quits, you are likely looking for a quick and painless exit strategy.

The good news is that you are not alone.  You just have search online to find dozens of tips, checklists, and notes of advice to guide you through the process.  No matter how you choose to approach it, remember that just as setting up your business takes planning and legal forethought, so will closing it.  Here are our picks for top checklists for closing a small business.

U.S. Senate Unveils New Small Business Website

There's a brand new webpage in town created for small business, and brought to you by the U.S. Senate Committee on Small Business and Entrepreneurship.  Small business champion, Senator Mary Landrieu and fellow colleague Olympia Snow announced the launch this week along as a "valuable tool" for entrepreneurs that would be "one-stop shop"  for small businesses to interact with government agencies and research resources to grow and expand their ventures.

Small businesses can subscribe for news updates and information from the website: https://sbc.senate.gov.

5 Tips to Finding the Perfect Small Business Attorney

Whether you are at the early stages of launching a small business, are facing a legal dilemma, or have decided to throw in the towel and close shop, there usually comes a time in every entrepreneur's tenure when he or she commits to hiring an attorney.  If that day is today for you, we congratulate you on taking steps to seek quality legal guidance and offer these tips on how to find the perfect small business attorney.

1. Consider your small business legal needs.  Why contact an attorney now? What are specific things you want the attorney to work on? What time frame do you need them by?

Here are some common issues that small businesses engage an attorney for.  Some are items that you can file for yourself, and others require legal representation.

  • incorporation questions, shareholder and directorate queries, ongoing legal requirements, creating a separate corporate identity to avoid personal liability.
  • registering a trademark, patent, or copyright for creative, technical, or unique ideas, logos, brands, and products. 
  • enforcing protected intellectual property, collecting delinquent payment for goods or services delivered, defending against cases against the business.
  • drafting employment contracts, independent contractor agreements, service agreements, liability waivers.
  • tax considerations, closing a business, relevant federal, state, municipal codes.

Obama Health Care Speech: Small Business Excerpts

After much anticipation, President Obama delivered his speech on health care reform to a joint session of Congress last night.  And what things did small businesses take note of during his address?

Here are some direct quotes from President Obama's speech that relate to health care reform and small business:

Cass Sunstein: Closer to Regulatory Czar Status

Harvard Law professor Cass Sunstein inched one step closer to being anointed as head of the White House Office of Information and Regulatory Affairs (OIRA) yesterday after Democrats succeeded in breaking the filibuster against the candidate.  Sunstein was tapped by President Obama for the position-- known as the "Regulatory Czar"-- which is responsible for reviewing effectiveness of federal regulations.  And that could be big news for for small business. 

The role Sunstein is in line to fill, Regulatory Czar, is another in the number of "czars" appointed in the new administration's government.  As head of OIRA in particular, Sunstein would be charged with evaluating the effectiveness of various federal policy and regulation through cost-benefit analysis. 

Cass Sunstein is known in academic and economic circles for furthering the field of "law and behavioral economics" that looks to adapt law and policy to fit how people actually behave.  Tailoring small business policy on how entrepreneurs and start-ups actually act as they try to bring an idea to market, could help to better meet unique needs such as opening avenues for procuring funding, clarifying trademark and patent laws, and supporting growing technological and security considerations on Main Street.

FMLA Rules: What Small Business Employers Should Know

Employers are required to protect the jobs of eligible employees who take time off for medical reasons as covered under the Family Medical Leave Act (FMLA).  Not knowing about this federal law is no excuse--and won't hold up in court--so as your small business is hiring, be sure to get cued in to the FMLA rules.

E-Verify Starts Today: What Federal Contractors Need to Know

According to E-Verify, a law that goes into effect today, federal contractors and subcontractors must enroll in an electronic verification system to confirm the identity and employment status of employees.  The law was first passed by Department of Homeland Security under the Bush Administration but has faced fierce opposition from small business.  In fact, there have been four delays in a lawsuit brought by the U.S. Chamber of Commerce to squash the bill.

So what do federal contractors need to know about E-Verify?

"McCurry" Infringing on an International McTrademark?

McFlurries, McNuggets, McMuffins, and the latest McCafe, McDonald's has built an identity behind A big M and little c. And the prefix has found its way into popular culture with references to McMansions, McSteamies, and McDreamies.  But is the "Mc" a protectable trademark for McDonalds?

A Federal Court in Malaysia doesn't think so.  In a case first brought by McDonald's in 2001, alleging that a local restaurant "McCurry" infringed on the famous trademarked "Mc", the court held that there was no evidence that McCurry was attempting to emulate the Golden Arches.  And it ordered the U.S. franchise to pay 10,000 Malaysian ringgit (approximately $2900) in costs.

Office Space: Buying, Leasing, Negotiating

If your small business has moved on from existing on your computer desktop, can no longer be contained at your desk, and is even testing the limits of a home office, you may be ready to move the show to an actual office space. It is a big leap that can ultimately help your business grow, but can also involve higher overhead costs.  Below are considerations as you prepare to make the move.

  • The rent or buy question.

Considering the favorable renting and buying conditions with the current economy, deciding whether to rent or buy is not black or white.  Buying a location can allow more flexibility on how you use the space or if you need to build or tear any part of a structure down and can offer tax incentives to your small business.  Likewise, in many parts of the country it is a buyer's market for commercial real estate.  If your business can afford to invest in purchasing a property, consider buying one that will allow you to lease space to other small businesses.  Their lease payments will lower overhead costs, and could potentially cover the entire mortgage payment.

If there is not enough cash flow to merit purchasing a property, then look closely at your company's leasing potential.  The economy has created a strong commercial leasing market and you should be able to negotiate a competitive deal for your small business. 

Cash for Clunkers: Cash Due to Dealers September 30

Processing time and technical difficulties have had auto dealers wondering, "but where's the cash?"  The Cash for Clunkers phenomenon, formally known as the CARS program, ended for consumers last month-- but only 20% of the rebate checks have been mailed.  With $2.8 billion left to be distributed, there is plenty going on behind the scenes to make good on the program.

The Obama Administration announced this week that it hopes to process the majority of the rebate applications by the end of the month, on or before September 30th.  That means distributing rebates to dealers who fronted rebates to consumers.  An estimated 700,000 cars were sold under the CARS program and the federal government is processing rebates for nearly 600,000 cars.

"Life Guard" - Trademark Protected or Not?

We have covered interesting instances of trademark infringement including scenarios involving In-N-Out, Gucci, and Fender guitars,  but this is something intriguing even for our team.  The phrase "Life Guard" -- trademark protected or not?

When Polo Ralph Lauren printed a series of T-shirts with that very phrase the company likely did so in the vein of so many other popular shirts with snappy, suggestive, or quirky phrases.  Besides occupation-related tees sporting "Firefighter", "Undercover Cop", "M.D." or any number of phrases, a stroll in D.C. will undoubtedly lead you to street vendors willing to give you a deal if you buy all three flavors of their printed wearables, "FBI'", "CIA", and "Secret Service".  

So, have you logged in your vote yet?

California Small Businesses: Health Care Reform OK

President Obama is back from vacation and back on the campaign trail for health care reform.  And while he prepares to give a primetime speech to Congress next week, promising to provide firmer details on what he supports in a health care reform, small businesses are already weighing in on the need for reform.

The San Francisco Chronicle reports that 61% of 700 businesses surveyed in California said that health care reform is a must to restore the economy.  The random poll also reported that 55% of the small businesses do not provide healthcare coverage, with the vast majority citing the high cost of small business health care plans as the reason.  And the small business complaint of high health care costs is not invalid.  The U.S. small business sector pays a reported 18% more on small business health care plans than their big business counterparts pay for the same coverage. 

Free SBA Course: How to Win Federal Contracts

Scoring a business contract with the government can not only lend stability to a small business but can also lead to future federal contract opportunities.  It is no wonder, then, that small businesses are always actively seeking ways to become more successful in contracting with Uncle Sam.  

In its latest contribution to supporting small business, the Small Business Administration (SBA) is offering the 'inside track' to federal contract awards.  The SBA this week released a new online training video entitled "Recovery Act Opportunities: How to Win Federal Contracts" as part of the federal government's focus on supporting small business. 

How To Lay Off Employees: 5 Things to Know

Being a small business owner can be difficult in even the best of times. You are called upon to be the finance department, marketing specialist, head product developer and human resources expert all at once. But, when the economy takes a turn for the worse, running a small business becomes even more challenging. For example, in these difficult economic times, you may be wondering how to lay off employees. Here are five things you should think about when you are considering laying off employees:

1. Small business employers should consider alternatives to layoffs. 
Layoffs are always difficult because they are often due to external forces such as budget cuts or periods of economic slowdown.  For small businesses, laying off employees can have a major effect on productivity and morale.  Alternatives such as reducing hours and implementing non-monetary incentives can help a small business weather a rough patch while also retaining talented and skilled employees.  However, employers should be wary about changing an employee from full-time to contractor status for cost savings, because if the worker's job duties remain essentially the same, the employer could be penalized for misclassification.

Could Your Small Business Use a Kickstart?

Kickstarter.com is an innovative way to find funding for small business.  The site, created to aid artists, has been pegged by emerging, expanding, and struggling small businesses as a creative way to communicate project ideas to potential investors.

The concept is easy.  Small businesses create an online profile explaining their project and setting a minimum total needed to fund the project.  Then, it is open to the web-surfing public to "pledge" for the project.