Last week I attended a statewide small business crisis summit sponsored by the California Reinvestment Coalition, with the main audience being nonprofit providers of business services and financing, including many community development financial institutions. One of the purposes of the summit was to create a unified voice around the need for the federal stimulus package to address the needs of small businesses in California, and, eventually, in the U.S.

The main problem that small businesses here are facing is the lack of financing. This is especially true of the credit typically used for cash flow - line of credit and credit cards, where maximums are being dramatically reduced. Thus business-owners are at their maximum allowable on their credit cards; forcing down their credit scores and making it even harder to secure financing.  Financial institutions are concerned about the next bubble to burst, the commercial real estate market, so they are not lending even if they received TARP.

Small business development providers are needing to teach businesses, including very well established businesses, survival techniques and crisis management. Saving a small business could save dozens of jobs, even if a few employees need to be cut in the meantime. While this is the worst climate to start a business, many unemployed people are forced to start microenterprises as a matter of survival and there is a need to provide services to these folks. While financing for existing businesses has dramatically declined, it is basically non-existant for start-ups.

One point that the summit stressed, and that I strongly concur with, is the need to ensure that the stimulus package and the associated public contracting and procurement process:

• have unbundled contracts and small-sized RFPs that M/WBEs are able to bid on, whether as a prime or sub.
• maintain affirmative procurement measures per federal guidelines, while money going to states and local governments should also include those provisions. (Unfortunately, the first federal bailout waived most federal procurement standards.)

I add my voice to the summit leaders who will be telling Congress that federal support needs to include:

• "Operating funds for nonprofit community-based organizations to run programs in danger of severe cutbacks or elimination due to the cuts in previous funding.
• Investment funds for nonprofit community lenders’ loan pools and loan loss reserves [as well as for credit unions]. (These lenders are not able to access any of the TARP funds.)
• Authorizing nonprofit community lenders as SBA guarantors since few financial institutions are fully utilizing their SBA 7(a), Community Express, or Micro Loan programs.
• A secondary market for small business loans from community lenders to enable continued lending."