Hector Barreto hosts Ask the White House

Hector Barreto

Hello and welcome to Ask the White House. I am SBA Administrator Hector Barreto and look forward to discussing Small Business issues with you today during Small Business Week, a celebration of America's entrepreneurial spirit.

During Small Business Week, more than 100 outstanding small business owners from around the country will be honored in our Nation's capital. Small business honorees reflect the full range of business products, services and innovations offered by America's entrepreneurs.

Let's get started!

Dennis, from Chicago, Illinois writes:
Can you get a SBA loan to open a franchise, like a Starbucks?

Hector Barreto
Yes, you can get an SBA loan to open a franchise. Unfortunately, Starbucks is not a franchise, but there are plenty more businesses out there that are.

There are primarily two forms of franchising: Product/trade name franchising and Business format franchising.

In the simplest form, a franchisor owns the right to the name or trademark and sells that right to a franchisee. This is known as "product/trade name franchising." The more complex form, "business format franchising," involves a broader ongoing relationship between the two parties. Business format franchises often provide a full range of services, including site selection, training, product supply, marketing plans, and even assistance in obtaining financing.

Robert, from Beltsville, Maryland writes:
Can we eliminate taxes for small businesses? I find that corporate and business taxes violate the fundamental principles of tax policy: they must be uniform and transparent. Business income taxes violate the transparent prong. We know all taxes go back to an individual. This results in businesses raising the price of goods to incorporate the business tax into the cost of the good. This tax is concealed from the consumer. It is fundamentally flawed.

Hector Barreto
President Bush is committed to helping small businesses grow and succeed. As part of his pro-growth and small business agenda, the president has created tax cuts to help small businesses.

By cutting individual income-tax rates, taxes were also lowered for small businesses, most of which pay taxes at individual income-tax rates. Because of the tax cuts, small businesses now have greater incentives to expand their businesses and add jobs. In 2006, 25 million small business owners will receive an estimated $93 billion in tax relief.

President Bush feels strongly that small businesses need tax relief, which why we need to continue to work closely with Congress to make small business tax relief permanent.

Daniel, from Lakeville, CT writes:
What is the outlook for jobs being created by small businesses in the next year? Are you seeing a lot of hiring? Thank you.

Our nation’s economy is strong, due in large part to America's entrepreneurs. More than 5.1 million jobs have been created since August 2003 – 211,111 of those created just last month. The unemployment rate is 4.7 percent – lower than the average of the 1960’s, 1970’s, 1980’s and 1990’s.

According to Employment Consulting Firm Challenger, Gray & Christmas, College Graduates face the best job market in five years.

Small businesses account for 99.7% of all employer firms in America and the Office of Small Business Advocacy within the SBA estimates that small businesses create between 60% to 80% net new jobs in the economy.

Joel, from Superior, WI writes:
Mr. Barreto, What can Future Business Leaders of America (FBLA) students do to help promote small business week, and what advice do you have for future business leaders?

Hector Barreto
Thank you for question, Joel. The President declares a Small Business Week each year and we are celebrating it here in Washington, DC this week. In fact, President Bush will be speaking at the Small Business Week Conference tomorrow.

You also have the opportunity to participate in Small Business Week events happening all over the country and the best way to find out about these activities is to contact your local district SBA offices.

As far as advice, SBA has tremendous resources to help a future business leader. Please go online to www.sba.gov or work with one of our great resource partners like the Small Business Development Centers, the Service Corps of Retired Executives to get free, one-on-one counseling.

Bradford, from Phoenix Az. writes:
I have an opportunity to run a cafe in a federal court house in Phoenix, but do not know where to start my search of a government loan specifficly for minorities.

Hector Barreto
The SBA offers many different types of loans of different sizes. For example, we have working capital loans as low as $2,000 to $3,000 all the way up to $2 million to $4 million.

It sounds like the SBA’s 504 loan program may be an option for you, although you obviously wouldn’t be able to purchase the federal building. However, you would be able to buy equipment or make improvements with the loan dollars.

Proceeds from 504 loans must be used for fixed asset projects such as: purchasing land and improvements, including existing buildings, grading, street improvements, utilities, parking lots and landscaping; construction of new facilities, or modernizing, renovating or converting existing facilities; or purchasing long-term machinery and equipment. The 504 Program cannot be used for working capital or inventory, consolidating or repaying debt, or refinancing.

Last year, fully 1/3 of all SBA loans went to minority owned businesses. So, I invite you to call the local SBA office in Phoenix or talk with your local bank. The SBA distributes it’s loan programs through 6,000 individual banking companies in the United States, so that is another option for you to obtain information about how to apply for a loan.

Joseph, from Pomona, CA writes:
Hi Mr. Barreto. I am 14 yrs old. I have a small business idea, but as I am so young, I do not have the resources to pursue this. What does the SBA offer to people my age to assist in our business "dreams"? Thank you, and I appreciate all your organization has done to improve the economy in the U.S.

Hector Barreto
Congratulations, it’s never too early to start thinking about pursuing your dream about being a small business owner. The SBA has been fortunate to work very closely with groups like Junior Achievement and I have had the opportunity to meet some very young entrepreneurs.

Most of our programs, especially our mentoring programs, requires a small business person to be of age but there is a tremendous amount of information that we can provide, as well as assistance, when you are ready to start your small business.

In addition, please check out the Web site: mindyourownbiz.org - where you can find the links to turn your entrepreneurial dreams into reality. Created by the U.S. Small Business Administration and Junior Achievement, this site walks you through five easy steps of business ownership - whether you've just had a brainstorm for your first business venture or you've been at it a few years.

Jeff, from Encino, CA writes:
I recently started a small business with my wife. We are senior citizens, I am 67, and we both made the transition from a busy career to a work at home business selling. What assistance does the SBA offer to old folks trying to get a business started, those in my position?

Hector Barreto
Again, congratulations! Not only are you never too young to start a business, but I also believe that you are never too old and it certainly sounds from your email that you are young at heart and full of energy.

One of the programs that the SBA offers is the Service Corps of Retired Executives. This is an organization that we work closely with that consists of over 11,000 executives that are retired. These are individuals who have achieved great success in their careers and would like to give something back.

I recommend that you contact the local chapter in Los Angeles and set up an appointment to meet with someone who can assist you in starting up your business. One of the great advantages is that many of these individuals have the experience and knowledge you may be looking to gain which would be an excellent first step.

Chavon, from West Palm Beach writes:
I am trying to find out where I can apply for government grants to assist me in expanding my small business. I have previously tried to get the correct information via the web and books, but nothing seems to give me accurate information and not try to steal my money in the process. How can I spot the scams so I can stop wasting my time and get the resources that I am after?"

Hector Barreto
The U.S. Small Business Administration, for fifty-three years, has facilitated important tools such as access to capital, technical assistance, even government contracting in addition to a whole host of loan programs. See http://www.sba.gov/financing for more information.

While SBA does not offer grants to small businesses, we offer many other resources. In addition, there may be opportunities outside of the SBA to work with other non-profit organizations for other funding resources. I would contact the local economic development offices of your city or state.

I also suggest that you reach out to one of our regional SBA offices in Florida. We have branches in Miami, Orlando, Tampa and Jacksonville.

Ada, from Miami, Florida writes:
How can I get help in funding from our goverment to start my own business. I have studied my profession,finished school and have the motivation to start my own business.where can I go, who can help or guide me. I don't have the money avaiable to start-up, but is there a program available that can help me with this. Thank you for your time, Ada.

Hector Barreto
The good news, Ada, is that it really doesn’t take a lot of money to start a small business. The first step is to have a comprehensive business plan. The SBA, and it’s resource providers, can help you create a quality business plan that you can take to banks and other financial assistance providers in order to getthe kind of money you, depending on the business.

Many small business owners start with a very small amount of capital and gradually increase that with larger loans or other types of capital infusions.

In addition, there is small business guide available on the SBA website by visiting http://www.sba.gov/starting_business/startup/guide.html. This guide is intended to serve as a roadmap for starting a business. It is both comprehensive and easy to use. It also includes numerous electronic links for additional information.

Again, I encourage you to call the SBA district office in Miami (305) 536-5521 and they will assist you in starting your successful business.

Michael, from Powell, TN writes:
What advice do you have for people starting a small business? Thank you.

Hector Barreto
As I just discussed with Ada above, start with a business plan. There’s an old saying that no business plans to fail but most businesses fail to plan. Unfortunately, this is one of the reasons why 50% of the businesses in the U.S. don’t make it past four years.

If you’d like to avoid that statistic, the best thing you can do is start developing a plan that can not only help you in starting the business, but in sustaining and growing the business in the long term.

The SBA regional office in Nashville is an excellent resource for you, as well. Their contact information may be found online at http://www.sba.gov/tn/.

Hector Barreto
Your first step is to determine what kind of a loan and how much capital you need. I suggest that you sit down with an SBA lender in your area or a technical assistance provider who can walk you through the whole process and provide counseling on the best way to move forward.

For example, you don’t want to apply for a loan that’s bigger than what you can service or one too small to meet your needs. Sometimes when we work with small business owners, we find that they really don’t need the loan they thought they needed but rather something else such as identifying what type of technology their business requires or what kind of employees they need, information about markets or networking opportunities to help grow their business, or perhaps gaining access to a center of influence inside a procurement agency. So, you never know what your needs will be until you actually sit down and have that conversation.

Fred, from Irvine, CA writes:
Hi, Mr. Barreto:Thanks for your government service. As you know, while the economy is doing well, the national deficit, and the federal national debt, are both higher than ever. (I tend to think that the growth in government is spurring economic growth, kind of like living well on a VISA card. What do you think will be the long-term impact of those deficits on small business, and our children?

Hector Barreto
Fred, thank you for your question. Many small businesses have similar concerns which is one of the reasons the President has been so focused on fiscal responsibility in government. He realizes that every dollar that comes into the federal treasury is important and we must use it wisely.

The President has asked Congress to approve his fiscally responsible budget so we begin the process of decreasing the national deficit. There is no doubt that if we do that, the prospects for ourselves and our children will be much better in the future and small businesses deserve to have that assurance. We are working very diligently at the federal level to make that a reality.

Thanks for logging on to Ask the White House - it's been a pleasure and an honor hearing from America's entrepreneurs and potential small business owners. President Bush believes that the American people can spend their hard-earned money better than the Federal government can - he has said it is not the role of the government to create wealth - but to create an environment where entrepreneurs can flourish - and the SBA is here to help.

If you should have any additional questions about learning to start or grow your business, please contact your local SBA office. You can find where the office nearest to you is located by going to sba.gov and clicking on your state on the map.

You can also call us at 1-800 U ASK SBA. We can answer your questions on the phone and we can send you a small business start up kit. Small businesses need the same thing that all businesses need. You need capital, technical assistance, contract opportunities, etc.