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Panel: Stimulus could bring relief for small businesses; questions remain

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Speakers at the San Diego North Business Forecast '09 on Wednesday shared a variety of perspectives on the current economy and what it means for local businesses.

While some of the news was uplifting about what different entities from the public and private sectors will do for small businesses, not everyone on the four-man panel was cheery about what the future holds.

The panel was composed of Ruben Garcia, U.S. Small Business Administration district director; Bruce Gordon, Wells Fargo’s senior vice president of business banking; ecomomist Kelly Cunningham, of the National University System Institute for Policy Research; and Cameron Durkel, director of the San Diego Governor’s Office.

The Daily Transcript’s Executive Editor George Chamberlin moderated.

The panel discussed a range of topics including the stalemate over the California budget, how the stimulus will help current and potential small-business owners, lending standards and the housing market.

Garcia pointed out seven different components of the stimulus package that will directly help small businesses:

* $375 million for temporary fee reductions or elimination of Small Business Administration (SBA) loans and increase guarantee shares up to 90 percent for certain loans.

* $255 million for a new loan program to help small businesses meet existing debt payments. Some of the loans will be guaranteed 100 percent. This is the first time in SBA history it is guaranteeing loans at 100 percent.

* $30 million to expand the SBA Micro-Loan program. Micro-Loans can be for up to $35,000, but the average loan is $13,000.

* $20 million to streamline the SBA lending process.

* $15 million for expanding SBA’s Surety Bond Guarantee Program, which provides bonds for small and emerging contractors who cannot obtain surety bonds through regular commercial channels.

* $25 million for new-program staffing.

* $10 million for the office of the inspector general.

“These programs are really going to gear up business,” Garcia said.

While Garcia was mainly positive about the stimulus package and how it will affect businesses, Cunningham said he was not sure that the government doling out who gets what money was the best way to help the economy.

“It’s thought we shouldn’t give tax breaks or rebates to consumers because all the consumers are going to do is go out and buy a new TV or car, or else they’ll just pay off their credit cards or put it in the bank for savings,” he said. “Well what’s wrong with that? I see absolutely nothing wrong with that. Let consumers decide where they can put their money.”

Cunningham said by giving consumers money, it would increase consumer spending if they make purchases or put liquidity into the banks through paying off their loans or putting cash into savings.

Some banks have received Troubled Asset Relief Program (TARP) funds, including Wells Fargo (NYSE: WFC). However, Gordon said lending standards for small businesses at his bank have not changed.

“There really hasn’t been a change in the process in how one applies for the loan,” he said, “but less stable banks are being more cautious about what industries they’re lending to and who they’re lending to.”

Gordon added that maintaining open lines of communication with one’s bank is more important than ever.

Durkel replaced scheduled speaker Ana Matosantos, the chief deputy director of budget for the California Department of Finance.

Given the current challenges California legislators are facing with the budget, Matosantos could not leave Sacramento.

Durkel said the main problem with the budget is that the state spends $470 more than it takes in per second. That equals a deficit of $1.7 million per hour or almost $15 billion each year.

One of the state’s biggest concerns is creating a budget to deal with temporary monetary shortfalls rather than fixing the central problems with California spending.

Currently, one of the provisions to the budget is a sales tax hike scheduled to last two years only.

While Durkel described the “temporary” increase in sales tax, he got a laugh from some members of the audience.

“Now having said that, I know history does not necessarily support a ‘temporary’ sales tax increase, but as it stands now, the increases in those packages are temporary,” he said.

While Durkel’s focus was on Sacramento, Mayor Jerry Sanders, who attended the event and gave a short speech at its beginning, said state and federal decisions will shape San Diego’s future.

The San Diego North Chamber of Commerce hosted the event.

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