Milwaukee Biz Blog

Wisconsin small businesses provide a strong structural framework for our economy: when they prosper, we all do. Nationally they comprise half of all private-sector employment, and they have created around 70 percent of net new jobs each year over the last decade.

Small businesses reflect the values we hold deeply in Wisconsin: hard work, entrepreneurship, innovation, and resilience. They anchor community and regional economies, circulating money locally and providing high-quality jobs for residents. They fuel Wisconsin's vision for economic growth.

Too many Wisconsin small businesses, buffeted by a brutal economic crisis, may perform well in tough times but still encounter difficulty securing the loans they traditionally counted on to meet payroll, expand inventory and grow in ways that create new jobs. 

On March 16, President Barack Obama signaled his commitment to help small businesses by announcing increased funding for Small Business Administration (SBA) programs and new tools to help, made available through the American Recovery and Reinvestment Act (ARRA). He made the announcement at the White House - the first SBA announcement held there in the agency's 56-year history. His goal: to mitigate the credit crunch for small businesses and reinvest in their shared prosperity.

The SBA figures three basic strategies will take them to that goal: pay loan fees to get businesses in the door and connected to the capital they need; put banks in the mood to lend by eliminating risk in loans; and shore up the secondary market for SBA loans.

To make the 7(a) loan more accessible for small businesses, ARRA provides $350 million to eliminate up-front borrower fees on loans approved by the SBA on or after February 17th and the SBA increases their guaranty to ninety percent. The 7(a) loans are a commonly used product to secure working capital, line of credit, or to buy a business or real estate.  By eliminating these fees (which can reach 3.75 percent for larger loans) and taking into account the loans' longer term, payments will be less than conventional loans and smaller still with fees exempted. Weekly loan volume for the 7(a) program is up 25 percent as a result of these enhancements.

The SBA just announced a new program within the 7(a) category - the Dealer Floor Plan Financing loan to help finance inventory for eligible auto, RV, boat and other dealers beginning today, July 1, 2009.
I recently visited Clemens Auto Repair in Racine and learned how the owner, Dwight Geisler, took advantage of an SBA 7(a) loan and the accompanying fee waiver to sustain operations at a critical time, and to quickly hire more employees as demand grew.  Dwight indicated that the loan prevented him from having to shut down his business after 33 years of successful operation in Racine. 

The SBA 504 program provides large, fixed-rate, long-term loans for fixed assets such as land or buildings. It is a job creation program in the end, creating roughly one job for every $65,000 lent out. ARRA enhances this program by eliminating program fees for participants on both sides of the equation, raising the cap to $10 million if it results in energy savings or if they are a manufacturing business. 
Where this program used to apply only to new construction or equipment, small businesses may now refinance fifty percent of debt used for fixed asset purchases.

Owners of the PM Sleep Center, a mattress and furniture store in Eau Claire, utilized the 504 loan program to increase their showroom space and move across town to a more visible location. In the first three months since this expansion, they have increased their workforce from five to eight and doubled their business. The SBA fee waiver saved their business $7,500.

The lending pool for SBA microloans expanded by $50 million, with an additional $24 million available to provide technical and individualized assistance and education to borrowers.  Historically, these maximum $35,000 loans reach low-income individuals, women and minorities in both rural and urban areas with their start-up or newly growing businesses. Wisconsin is well-positioned to benefit from this, with six microlenders operating across the state.

SBA Surety Bonds help small businesses that compete for construction and service contracts. With ARRA funds, these bonds more than doubled, increasing from $2 million to $5 million and, on a federal project, up to $10 million if the contracting officer indicates a guarantee is required. Under the partnership, SBA provides a guarantee to a participating surety company of between seventy and ninety percent of the bond amount.

I want all Wisconsin small business owners to be aware of a brand new SBA program, America's Recovery Capital (ARC) Business Stabilization Loans, available June 15th.  ARC is designed to help small businesses reeling in the turbulent wake of this financial crisis, those that could go under without targeted help. Through ARC, the SBA will make a business' loan payment every month for up to six months (a total not to exceed $35,000). The business then enjoys a twelve month grace period, followed by five year term to pay off the SBA loan with no interest charged. We want Wisconsin lenders and businesses to access this right away where appropriate: it will go fast. SBA projects only 10,000 of the 27 million small businesses nationwide will be able to participate before funds run out.

I will continue to partner with the SBA to promote these important programs across the state over the coming weeks. Small businesses in need of credit can learn more about these programs through their community bank, or by visiting www.sba.gov, or my website, www.ltgov.wisconsin.gov.

Barbara Lawton is the lieutenant governor of Wisconsin.

Last week's Earth Day celebrations and the onset, finally, of spring weather gave us pause to revel in the beauty around us - and to consider our responsibility to be good stewards of our most precious asset, the environment.

We walk down a path cleared by Wisconsin's own Gaylord Nelson, John Muir and Aldo Leopold. And we stand now in the threshold of opportunity delivered to us in the guise of global climate change and a pressing need for energy independence.

For too many of us, the prospect of a global phenomenon is so overwhelming as to be paralyzing. We don't know how to begin to act; we aren't sure anything we do as individuals can possibly have an impact and change the course of what appears to be inevitable.

Two new initiatives in my Green Economy agenda provide you an easy point of entry and a powerful way to make a difference. The first is geared to all of us in our homes. You are likely one of the 2.3 million residential electricity customers in every county in the state with access to what the utilities call "Green Pricing Programs." Those programs offer you the option to purchase renewable energy to power your home at a small premium – usually ten dollars or less per month.

When you enroll, you effectively prevent one ton of coal from being burned this year. If only one thousand of us flipped the switch, it would be the equivalent of taking three hundred cars off the road, preventing 3.28 million pounds of CO2 from filling the atmosphere. And as even greater numbers of us insist on renewable energy, we speed up development of those resources and the new jobs that go with that, even as we increase our energy independence and reduce carbon emissions.

It took me no more than five minutes to make the change. Now our apartment in Madison gets its electric power from methane gas harvested from Dane County landfills; our home in Algoma runs on wind power. Your utility may offer hydroelectric power or biogas or a combination of the rich mix of resources being developed here to power our homes and businesses.

I partnered with Wisconsin's Office of Energy Independence to provide an online resource to help you make the switch. Just go to http://power.wisconsin.gov and click on "Renewable Energy." Select your county, click on your utility provider and you will learn the cost and source of energy used, and how to enroll.

The second initiative is designed to help school districts across the state become more energy efficient and save money for hard-working taxpayers. I challenged the state's school district administrators to become Energy Star Partners in a program offered by the Environmental Protection Agency (EPA).

According to the EPA, U.S. schools currently spend $6 billion a year on energy costs, more than they spend on textbooks and computers combined. Inefficient technologies and building design rob them of an average of twenty percent of that energy purchased. With energy costs high and rising, and sure losses due to the inefficiencies of Wisconsin's aging building stock, I aim to give school districts an easy way to begin to change operations and habits, and save money doing it.

Thirteen Wisconsin school districts have already enrolled as Energy Star Partners and enjoy impressive results. One district reports avoiding over $2 million in energy costs in just three years with a twenty-five percent reduction in energy consumption. They also report improved lighting and air quality. Another district started down this path planning to save enough money to fund a new roof. For all, savings become addictive and they continue to explore new efficiencies.

With my challenge, I created a page on my website devoted to linking schools to the resources and providing the support they need to shrink their carbon footprint, improve conditions for work and study, and save your hard-earned tax dollars. They need only go to www.ltgov.wisconsin.gov and click on the "Energy Star School Challenge" button to set down that path to savings.

We in Wisconsin don't wait for change; we author it. Take advantage of these new web tools to transform utility markets and strengthen the hand of our schools to educate our children. Together, we can improve our economic outlook and leave a proud legacy.

Barbara Lawton is Wisconsin's Lieutenant Governor.

I listened to the banter - some of it coming through gritted teeth - as the legislative Conference Committee resumed work on the state budget Tuesday. It didn't sound like a lot of fun. They are all our public servants, and their work could be characterized as heroic as they negotiate a budget that must keep Wisconsin citizens safe and healthy and our economy moving forward.

There are many points of interest, large and small, but one miniscule line provides a window that opens onto a larger view of the danger of false economies in assembling a document of this nature. The Assembly version of the budget would cut all funding to the Wisconsin Humanities Council (WHC) - that is, cut $72,600 or just one one-hundred-thousandth of 1 percent of the governor's biennial budget and, in so doing, lose more than $700,000 in federal money that attaches to that agency.

We have few ways to draw $10 down from the federal government with only $1 invested by the state, fewer avenues still to assist communities in every corner of Wisconsin in bolstering their education opportunities through WHC programming offered in the schools, libraries, small museums and historical agencies. To cut funding where we are guaranteed that every single penny goes into critical programming and serves as a powerful magnet for additional grant dollars makes no sense at all.

But then, it makes no sense either to cut schools by $127 million and school aids by $85 million when a recent report indicates more than one-quarter of state school districts have been forced to consider consolidation or dissolution because of mounting financial woes - before the Assembly's proposed cuts.

As we account for and consider the implications of allocation of our hard-earned tax dollars, we must bring higher education into this equation as well. The Assembly proposal would significantly reduce UW System faculty compensation reserves, a near guarantee of a mass exodus of the central asset of this institution that drives our state economy. Additional cuts to UW campuses totaling $125 million and $13 million axed from direct support to technical colleges certainly presage problems of access at precisely the time the business community is wondering where to find more college grads to fuel their growth.

We are living through an extraordinary time, all of us with a front row seat for a sea change in the economy. In Wisconsin, we bring our strong agricultural and manufacturing base to a competitive position in a 21st century global economy with the kind of innovations that are the hallmark of what is now primarily a knowledge-based economy. Knowledge replaces physical resources as the driver of growth.

We create the matrix of opportunity for business here - the new infrastructure for growth - by investing in strengthening the programs and number of graduates of our institutions of higher education. Government's role and need for investments here is no longer debatable: now we must decide the best strategies to enroll and graduate more students, retain them in our state and reverse the brain drain.

In the end, it is all about developing the workforce we need to hold our competitive edge in this 21st century economy. Encourage our legislative leadership to resist the seduction of false economies, cuts that are destined to set us back. Why can't we be the first state in the nation to move people from the liability to the asset side of the balance sheet?

Wisconsin Lt. Gov. Barbara Lawton is a member of the executive committee of the National Lieutenant Governors Association.