Are you a small business? The moves being made by the US government will certainly affect you if you own or are thinking of starting a small business. Any move in the government can affect our personal lives as well as our professional lives because these decisions affect the economy. It has been announced that Obama is going to decrease the budget for 2011. You might wonder what this has to do with the small business owner.

One of the targets of this decrease is the Small Business Administration or SBA. The SBA is going to see a 45 percent decrease in their available funding. This decrease is coming after the budget request for extra funding during economic stimulus was submitted. The SBA supports several companies in a variety of different ways including loan programs. They also offer disaster assistance when needed. For 2012 it is possible they may get $985 million towards their goals, but this has been cut from the 2010 amount by 45 percent.

It is said that the budget will back about $27 billion for loan guarantees. However, it is administrative spending and funds for the Small Business Development Centers that are going to be cut. The budget is showing about $1.1 billion for disaster relief compared to the average of $837 million per year between 2007 and 2010. So while there are cuts in some areas, others are going to receive more money. The SBA works with loans to businesses for federal disaster areas. They also offer assistance to homeowners and rents where qualified.

As part of the budget there will be $427 million for salaries and expenses, which is also lower than the 2010 financial year. In 2010 $434 million was allotted to the SBA. Through the SBA it is possible to get about 85 percent of a loan from them for businesses. It is also possible that 85 percent of a default loan can be covered for these businesses.

The reason for the changes comes from the end of 2010 report showing a $3.7 billion increase in losses and subsidy costs with loans. This does not include interest. It has been decided that the program needs a little help in order to keep operating as it is meant to. This is why there will be some changes like flexibility in fees for the programs. It is also thought that a self-sustaining situation is needed. The SBA has been operating since 1953. They have offered management assistance through Federal Programs and contracts which tend to work with women, veterans, and minorities.

The SBA is not the only place one can go to for a loan. There are definitely other options. For example, small business loans can be obtained from banks should a business be in a good position to afford it and the banks willing to lend. This is the best option since the fees and interest rates will be the lowest when the SBA is unable to help.

The other option is the merchant cash advance. They have high fees and some have extremely high interest rates. How this program works is a lot like factoring. In factoring a company finds someone willing to buy an unpaid bill or more than one unpaid bill in order to give money to the company. For example, when you are a vendor and a client does not pay up right away you could sell the invoice. With merchant loans instead of invoices you are selling future credit card sales. These sales are based on your last six months of sales or longer. This gives you money that can be paid back as soon as you make credit card sales.