Kansas City, here I come

Now here’s something you won’t often hear from me.

Good job, Blue Cross and Blue Shield!

No, I’m not talking about BC/BS of South Carolina. It’s BC/BS of Kansas City deserving the accolade.

The health insurance industry was the loudest opponent of national health care reform but once it passed BC/BS of Kansas City decided to use the reform to its advantage.

I have been telling every insurance agent I have run into since the legislation passed in March that they ought to be using the new health insurance tax credits for small businesses as a marketing tool.

BC/BS Kansas ad

BC/BS of Kansas City had the same idea. They launched a campaign called “Health Care Reform May Have Saved You 35% on Your Health Insurance”. The company ran newspaper, magazine, radio and online banner ads. It partnered with H&R Block to offer an online calculator for small businesses to estimate their tax savings. BC/BS of Kansas City reached out directly to current and potential customers as well as engaging the participation of insurance brokers.

The result?

Sales for BC/BS of Kansas City during the first three months of the campaign nearly doubled in the small group market compared to the previous year. The campaign resulted in over 5,000 workers from new small businesses customer being enrolled in BC/BS group insurance products. The company gave all the credit for this success to the new tax credit.

This is exactly what the new law was to do—make health insurance more affordable for small businesses to encourage them to offer the employee benefit.

Fortunately, BC/BS of Kansas City ignored the disparaging comments that continue to come from the pretender small business organization—the National Federation of Independent Businesses.

The NFIB has been very vocal in its dismissive opinion of the new tax credit program saying that it is not enough, it doesn’t include all businesses and it expires.

What the NFIB really is saying is that it can’t come out and oppose the tax credits because that would be a PR disaster. But they don’t want them to succeed either because if they do, Congress will never repeal the new health care law. And that means that the NFIB, which opposed the reform law, will lose a revenue stream from the health insurance it sells when the exchanges are in place in 2014.

Well, BC/BS of Kansas City has demonstrated that the tax credits do work to make health insurance more affordable for small businesses. And according to a report released last week from FamiliesUSA and the Small Business Majority, 88.1 percent of South Carolina’s businesses, those with fewer than 25 employees, are eligible for the tax credits and 15,900 are eligible for the maximum tax credit of 35 percent. Remember that small businesses with 50 or fewer full-time employees are not required to offer insurance so the tax credit program is pure carrot—no stick.

So my challenge to South Carolina’s Blue Cross and Blue Shield, as well as to all the other health insurance companies serving our state, is this. If you haven't already, are you going to follow BC/BS of Kansas City’s free market example of using a government provided tool to increase profits? Or are you going to continue to fight the lost political battle and hope for a Hail Mary ending?

Hoping for a George Graham and George DeMint

This past Thursday at 10 p.m. the U.S. Senate voted to include a proposed Small Business Lending Fund as part of a larger bill called the Small Business Jobs Act. The purpose of the overall bill is to increase private sector lending and provide tax breaks to small businesses.

All the national data shows that small businesses are being frozen out of access to capital as a result of the economic meltdown. Smaller financial institutions simply are not lending to small businesses because regulators are telling them to improve their balance sheet and warning them not to make loans that have any risk—i.e. small business loans. Without this access to capital, small businesses cannot grow and hire the workers we need to lift our economy according to economists.

One important way of breaking this log jam is the Small Business Lending Fund in which the Federal government would infuse $30 billion into community banks to improve their financial position and doing so in a way that strongly encourages them to make small business loans again. Supporters argue that this $30 billion will result in $300 billion in loans.

Sen. Mary Landrieu (D), LA

The S.C. Small Business Chamber has been an active proponent of this Lending Fund that was proposed by President Obama back in January.

Senator Mary Landrieu of Louisiana and chairwoman of the Senate Small Business Committee has been one of its strongest advocates in the Senate and a sponsor of the overall Small Business Jobs Act.

Before the vote Thursday night, Landrieu said, “This is something that we want to do to help Main Street, to help small business. This isn’t about Wall Street. It’s not about bailouts. It’s not about troubled assets. It’s not TARP. It’s a small business lending fund, a strategic partnership with community banks.”

In spite of the tremendous need for opening the spigot on small business lending, Senate Republicans continued to oppose the needed solution objecting to government assistance and calling the measure TARP-2. Only two GOP Senators voted for the amendment that enabled it to be approved 60 to 39—George LeMieux of Florida and George Voinovich of Ohio.

LeMieux pushed back on his Republican colleagues. “This has nothing to do with (TARP). These are small banks. This is the banker you know down the street – the banker who’s at your rotary, who you see at church or synagogue. This is not some Goldman Sachs banker. This is the community banker who loans to the tailor, to the construction business, the folks that employ people in your hometown.”

And for Senators concerned about increasing the deficit, there is a solution to that also.  Last Tuesday I joined Senator Carl Levin of Michigan and Representative Lloyd Doggett of Texas in a press teleconference coordinated by Business and Investors Against Tax Haven Abuse. In that press conference we discussed how to completely pay for the Lending Fund.


For all the talk by Republican Senators, including our two, about how they LOVE small business and want to help us, they just can’t set aside their partisanship to actually put their votes where their mouths are.

I had sent letters to Senators Lindsey Graham and Jim DeMint asking them to support the Small Business Jobs Act in general and the Lending Fund in particular. But our organization that represents thousands of small businesses across South Carolina received neither a response nor the votes we sought.

Hopefully the Small Business Jobs Act will come up for a full Senate vote very soon and let’s hope that the 60-39 vote will hold to break a Republican filibuster. If it does, not only will the Lending Fund be established but also SBA loan limits will be increased and business owners will be allowed to deduct the cost of health insurance for themselves and their family members in the calculation of their self-employment tax.

Send a message to Senators Graham and DeMint and ask them to put down their GOP flag for the sake of our small businesses and our economy. Ask them to be more like George (LeMieux and Voinovich) and vote for the Small Business Jobs Act.

July News and Updates

In This Issue:

•  Wall Street Reform Passes
•  Next Up: Small Business Lending Crisis
•  SCE&G Rate Hike Cut 49%
•  Helping Small Business Conserve Energy
•  Get On Board the “BuySC” Campaign
•  Upcoming Health Care Forums In Marlboro & Dillon Counties
•  9.8% Drop in WC Costs Approved
•  Looking for Answers from Gubernatorial Candidates
•  SCSBCC Partners with 3 National Biz Organizations

Wall Street Reform Passes

The U.S. Senate has given final approval to a major financial reform bill that was needed to address the greed on Wall Street and within other financial institutions. This greed led to the nation’s worst recession in our lifetimes and dried up loans and lines of credit for small businesses. Read a summary of the bill here. 


The S.C. Small Business Chamber of Commerce (SCSBC) has vigorously supported Wall Street reform as a prerequisite for getting our economy back on its feet. A strong and successful push-back against the U.S. Chamber of Commerce, which opposed reform, was needed to demonstrate that big business did not speak for small business. Read Frank Knapp’s blog on this issue. You can also view a video of his remarks at an April press conference held at the U.S. Capitol here.


Next Up: Small Business Lending Crisis: Call Graham & DeMint

Graham

With Wall Street reform under our belt, the SCSBC is turning to the small business lending crisis. Since March, the SCSBC has been calling on Congress to take action to spur loans and lines of credit to small business. 

In April, SCSBC president Frank Knapp led a delegation of other national business organizations to the halls of Congress for meetings on this issue. 

The message: small businesses will grow us out of the recession just as we did in the last three recoveries, but we need access to capital to hire the new employees to make this happen.

DeMint

The cries of small businesses have now been heard, and the U.S. Senate is preparing to debate the “Small Business Jobs Act” filed by Senators Baucus and Landrieu. Click here to read a complete summary of this bill. 

This bill has many provisions that will be beneficial to the financial health of small businesses. Three extremely important benefits would be: 

1. The creation of a Small Business Lending Fund that will both enable and encourage small financial institutions to make more small business loans.

2. An increase in SBA loan limits.
 
3. Allow small business owners to deduct the cost of health insurance for themselves and their family members in the calculation of their self-employment tax.
 
Contact South Carolina Senators Lindsey Graham (202-224-5972) and Jim DeMint (202-224-6121). 

Ask them to support the “Small Business Jobs Act.” Also ask them to support amendment S.A.4443 by Senator Udall; it will help unleash the ability of the nation’s credit unions to make more small business loans at no cost to the taxpayer. It would do this simply by increasing the Credit Union Member Business Lending Cap from 12.25% to 25% of a credit union’s assets.

Call Graham and DeMint today!


SCE&G Rate Hike Cut 49%

Small business customers of SCE&G are breathing a little easier now that their 9.52% electric rate hike request has been nearly cut in half to 4.88% by the S.C. Public Service Commission. That will be over $96 million dollars a year less in utility payments across the board. The president of the SCSBC, Frank Knapp, intervened in the rate hearing and played an instrumental role in reducing the rate hike. Read his blog explaining how it came about and what extra benefits he was able to get for small businesses.  The rate increase will phase in over three years. Small business customers of SCE&G will see a 1.35% increase in the first year, 2.52% the second year and 1.01% the third year.


Helping Small Business Conserve Energy

Small business customers of SCE&G also recently received some extra consideration in the company’s plan to encourage energy conservation. This plan has been approved by the S.C Public Service Commission. SCE&G agreed to SCSBCC President Frank Knapp’s request that small businesses be included in a pilot program to test an “Energy Information Display” that will give real-time feedback on the price of energy being used in a building and the cost of energy used in the month. This program had originally been planned only for residential customers. In addition, SCE&G agreed to have a representative from the SCSBC on an Advisory Group that will review the company’s energy conservation program. This program will include financial incentives for small businesses to purchase common energy efficient technology such as high-efficiency lighting, lighting controls, motors, HVAC systems and food service equipment.


Get On Board the “BuySC” Campaign

The statewide “BuySC” campaign is about to be launched by the SCSBC. If you are a small South Carolina-owned business, we want you listed on our “BuySC” web directory. It’s easy and free. Simply e-mail Stephanie and ask her to send you the form to be included in “BuySC.” Your company’s name, service/product, address and telephone number will be listed under a page for your county. The long-term answer to growing our state’s economy is to grow our own small businesses. Big businesses recruited by our Department of Commerce come here and then move on to greener pastures. Our small businesses are here to stay and create most of the new jobs in this country. Our “BuySC” campaign wants everyone in South Carolina to understand the importance of supporting our local small businesses. “BuySC” is not just a call to action for consumers tempted by big box stores and internet purchases. It is an awakening to the desire we all have for a healthy, sustainable economy.

Please join us in our “BuySC” campaign. Help spread the word by flying a “BuySC” hyperlink badge on your website to draw more attention to our campaign to help local, small business. Just email Stephanie or call 803-252-5733 and tell her you want to participate.


Upcoming Health Care Forums In Marlboro & Dillon Counties

The SCSBCC along with its partners in South Carolina Healthcare Voices will be holding health care forums in Bennettsville and Dillon. The forums are open to the public. Since passage of the health care law this spring, several beneficial changes have already gone into effect and a many more are still to come. Make sure that you know the facts—not the fiction.

Monday, July 26th at 6 p.m., the forum will be held at the Bennettsville Community Center.

Thursday, July 29th at 6 pm, the Dillon County Chamber will host the forum at the Dillon Wellness Center.

Representatives from South Carolina Healthcare Voices will give the public an overview of the important changes in the health care law. Questions will be answered by representatives from the SCSBCC, SC Appleseed Legal Justice Center, AARP-SC and SC Fair Share.


9.8% Drop in WC Costs Approved

Workers’ compensation insurance premiums will soon be dropping for many South Carolina small businesses. The S.C. Department of Insurance recently approved an overall decrease of 9.8% in “loss costs” in the voluntary workers’ compensation market. The “loss costs” for insurance companies is the difference between premiums collected and the cost of claims including court costs. So insurance companies overall were on a path to collect more premiums from South Carolina businesses than they could justify, leading to the industry’s filing that will—on average—reduce premiums.

This is very good news. The SCSBCC has successfully fought giant proposed workers' compensation rate increases over the years and has saved the business community approximately $200 million in premiums since 2006. This downward trend in the cost of claims is a sign that the business community is doing a better job in worker safety.


Looking for Answers from Gubernatorial Candidates

The SCSBCC does not endorse candidates nor give campaign contributions, as explained in a recent blog. However, we have sent a questionnaire to each of the three candidates who will be on the ballot for Governor in November. Senator Vincent Sheheen, Representative Nikki Haley and Dr. Morgan Reeves each received our questionnaire earlier this month covering the issues of healthcare, energy, taxation and economic development.

We’ll report to you and the public how the candidates answered our questions and our comments on their responses, which are due on August 2nd. We are also examining the legislative voting records of Sheheen and Haley to compare how they voted on bills of interest to SCSBCC.


SCSBCC Partners with 3 National Biz Organizations

SCSBCC’s success over the last year in being actively and successfully engaged in federal legislation to reform health care, Wall Street and now small business lending has been made possible by our formal alliance with several national organizations:

• Small Business Majority—A national non-profit, nonpartisan organization, founded and run by small business owners, that brings the voices of America’s 28 million small businesses to the public policy table.
• Main Street Alliance—A national network of state-based small business coalitions. The Alliance creates opportunities for small business owners to speak for ourselves in key public policy debates.
• American Sustainable Business Council—A coalition of business networks committed to public policies that support a vibrant, just and sustainable economy. Partnering organizations represent over 48,000 businesses and social enterprises and more than 150,000 entrepreneurs, owners, executives, investors and business professionals.

SC Small Business Chamber of Commerce
The Advocate of South Carolina Small Business
1717 Gervais Street • Columbia • SC • 29201
http://www.scsbc.org/ • 803-252-5733



Interested in advertising in an SCSBCC newsletter?
E-mail us at: sbchamber@scsbc.org

Become a Friend or Supporter of the SCSBCC and we will link your BuySC listing to your business' website!  Call us at 803-252-5733 for more information.

Big Business Comes a-Snoopin’

What do you think are the odds that this is only a coincidence:

Just days after I slam the U.S. Chamber of Commerce and its president Tom Donohue in the media across the country, and in the Congressional newspaper The Hill, I get a mysterious visitor looking for tax records?

How about zero chance?

An Innocuous-Looking Visitor

Last Friday afternoon, a college-looking guy walks into my office.  (That’s right. No guards or layers of office personnel to go through. You want to see me, just walk right in.)  

He said that he was out collecting information from businesses for a class project at the University of South Carolina and wanted to get a copy of our 990 tax form.  “It’s supposed to be public information” he reminded me.  

I was a little taken back by his request, not because I wasn’t going to give it to him, but because since I co-founded the Small Business Chamber over 10 years ago nobody has ever asked for the tax return.

Duplicity vs. Transparency

Obviously, my curiosity was engaged. As I walked him down the hall to my membership coordinator Stephanie’s office, where the returns are kept, I started to ask some innocent questions about what he was going to do with the information and what other “businesses” he had called on.

As I quickly figured out, my new friend wasn’t very good at deception and he started changing his tune with every question I asked.  His story quickly turned from general information collection to specifically being instructed to obtain our tax return.  When I asked him for the name of the professor who gave him his assignment, he first said he wasn’t supposed to tell me, then he gave me a name and then just as quickly he said it was all a lie.  He wasn’t supposed to tell us what he was really doing or who he was working for.

OK, But Who Are You, Really?

He seemed relieved that he had put his deception behind him and told me that he was a USC law student clerking for the McNair Law Firm.  He understood that someone from out-of-state had asked McNair to obtain information on us.  He said that he didn’t know which McNair attorney put the order in for one of the students in the clerking pool to call on us but he did give us the name of his supervisor. (We called her and verified that he had been sent by McNair.) 
 

McNair Law Firm, at 1301 Gervais (photo: omk_489)

The Powers Behind the Ruse

The McNair Law Firm is one of the largest and most politically powerful law firms in South Carolina.  If you’ve got deep pockets, the McNair Law Firm will move mountains to get you what you want.  Its website proclaims, “McNair is the go-to law firm that gets things done for business, government, organizations and individuals throughout the Carolinas.”

With McNair’s connections far and wide, it is easy to imagine a phone call from the U.S. Chamber (or someone representing the Chamber) asking the firm for a simple favor: get some intel on this Knapp guy and the S.C. Small Business Chamber.

Now, the U.S. Chamber and Tom Donohue have a very good reason to be ticked off at me and our non-profit chamber.  After all, in my press teleconference call last Monday (with a U.S. Chamber person listening) I all but called Donohue’s U.S. Chamber a prostitute for big business.  “Show them the money and they’ll do anything you want.”  Read the revealing in-depth story on Donohue in the current edition of Washington Monthly.

Liar, Liar

But why is the McNair Law Firm teaching our future lawyers to lie when they do their jobs?  Why did the McNair Law Firm feel it was important not to let me know who wanted our public tax records?  I wonder how the USC Law School feels about the “real life” education their students are receiving.  If nothing else, there are some McNair lawyers who need a refresher course in ethics (and common sense, too).

As I handed our tax return to my young friend, I asked that he convey a message to those who wanted our information: “Tell them to grow a pair and just call me next time.” 
 

Next: The Cover of Newsweek

Wall Street Reform Passes the U.S. Senate
First, thanks to everyone who contacted the targeted U.S. Senators asking them to support Wall Street reform. The Senate voted for cloture this morning and then voted 60-39 this afternoon to pass the bill.  Congratulations to all!  Now all that remains is for the President to sign the bill into law.

The SCSBCC Hits the National Media
On this issue, we seemed to have hit a chord with some national media. It all started this past Monday with the press conference on Wall Street Reform (see my last blog post, "Help Us Pass Wall Street Reform").

I turned that press statement into an opinion editorial, and with the help of some national organizations (Americans United for Change, Business For Shared Prosperity and the American Forum), the piece below has run this week in the following: The Hill, Pittsburgh Post-Gazette, The Deming (NM) Headlight, NJ Today, Complinet, and The Augusta Free Press.

Advocating for small business is our focus at the South Carolina Small Business Chamber of Commerce. Let us know what you think of this op-ed using the comment form below, or contact us via email, on Facebook, via Twitter, or otherwise — supporting a dialogue within the small business community is an integral part of our mission.

Restoring balance between Wall Street and Main Street
by Frank Knapp Jr., CEO of the S.C. Small Business Chamber of Commerce

The South Carolina Small Business Chamber of Commerce and small business organizations and owners across this country want Wall Street Reform. But you wouldn’t know that from the attention the media gives to the U.S. Chamber of Commerce, which is the mouthpiece for the big financial institutions that oppose reform.

The U.S. Chamber purports to represent small businesses. However, the reality is quite different. The July/August edition of the Washington Monthly features an eye-opening story on Tom Donohue, the CEO of the U.S. Chamber, who has a plaque on his desk that reads, “SHOW ME THE MONEY.” In 2008, a third of the Chamber’s revenues came from just 19 big companies.

When big oil, insurance and other companies are out of favor because of their greed, they turn to the U.S. Chamber to convince Congress and the public that the needed reforms are bad for business in general and small business in particular. This is exactly what is going on regarding Wall Street reform.

It’s clear that the U.S. Chamber does not represent the interests of small businesses that have suffered because of the irresponsible actions of the nation’s biggest banks. The greed of these financial institutions collapsed our economy and shut down loans and credit lines to our small businesses. We hear macro and micro stories every day about small businesses not getting access to the money they need. And every economist acknowledges that small businesses must hire the employees we need to lead us out of this recession just as they have in the last three economic recoveries.

But ironically, the only business sector that’s apparently hiring is Wall Street, as the New York Times explains in a recent piece. Greed is still alive and well on Wall Street. And we all know that without Wall Street reform, greed will bring our economy down again and tear apart our small businesses — if we can ever get them back on their feet.

Yet, the U.S. Chamber still wants Congress and the public to be afraid — very afraid. Wall Street reform will dry up loans to small business, the U.S. Chamber warns. That’s wrong. Their big bank donors are doing pretty well right now and they aren’t doing that by making small business loans and investing in our communities. They’re making money gambling on Wall Street.

The U.S. Chamber pretends to be a friend to Main Street worried that Sam the Butcher, Joe the Orthodontist and your local car dealer will be regulated out of business. That’s not in the Wall Street reform proposal.

What the butcher, orthodontist and car dealer want are customers – the customers who lost their jobs because of Wall Street greed.

Small business supports this reform because it will restore balance between Wall Street and Main Street through fair and commonsense policies and create a stable, transparent financial environment in which community banks and credit unions can once again feel secure in making loans.

We at the South Carolina Small Business Chamber of Commerce have been strong supporters of a Consumer Financial Protection Bureau to better protect consumers, which includes small businesses. We’re not afraid of good regulation that keeps our customers and us safe from financial predators.

We’re in favor of making banks be banks and not gambling houses. We have been strong supporters of the “Volcker Rule” to put the brakes on proprietary trading by banks — the practice that largely is responsible for bringing us to the brink of another Great Depression.

Congress should just say no to the U.S. Chamber. The financial health of our country and our small businesses depends on it.

Help Us Pass Wall Street Reform

Dorfman (left) in action

This morning I joined Congressman Jim Himes (D-CT) and Margot Dorfman, CEO of the U.S. Women’s Chamber of Commerce, in a press teleconference call on why passing Wall Street Reform is important to small businesses. You can read my prepared statement below and hear the entire press conference by clicking here.

The U.S. Senate might vote as early as today on cloture which would enable a final Senate vote on Wall Street reform. The House has already passed this conference committee bill so we are very close to victory.

Below are the names of U.S. Senators we are asking you to call on this issue. Please help.

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Statement by Frank Knapp, Jr., president and CEO of The South Carolina Small Business Chamber of Commerce. July 12, 2010.

The last time Margot and I were together pushing for Wall Street reform, it was April 21st of this year, in a press conference at the U.S. Capitol with Senators Dick Durbin, Jack Reed and Michael Bennet. You can watch the video of this at the bottom of this post.

Back then, we were fighting against the misinformation coming from the big financial institutions and their mouthpiece, the U.S. Chamber of Commerce, and we’re still doing it today. Even though we’ve been successful moving the ball down the field very close to the goal line, there’s one more play needed to finish.

The U.S. Chamber of Commerce does not represent the interests of small businesses that have suffered because of the irresponsible actions of the nation’s biggest banks. The greed of these financial institutions collapsed our economy and shut down loans and credit lines to our small businesses. I don’t need to recite the statistics to you. We hear macro and micro stories every day about small businesses not getting access to the money they need. And every economist acknowledges that small businesses must hire the employees we need to lead us out of this recession, just as they have in the last three economic recoveries.

But ironically, the only business sector that is apparently hiring, according to Nelson Schwartz’s New York Times story yesterday, is Wall Street. Greed is still alive and well on Wall Street. And we all know that without passing the reform that is in front of the Senate this week, greed will bring our economy down again and tear apart our small businesses if we can ever get them back on their feet.

Yet, the U.S. Chamber still wants Congress and the public to be afraid. Wall Street reform will dry up loans to small business, Tom Donohue warns. No, Tom, you’re wrong. Your big bank donors are doing pretty well right now and they aren’t doing that by making small business loans. They’re making money on Wall Street.

The U.S. Chamber pretends to be a friend to Main Street, worrying that Sam the Butcher, Joe the Orthodontist and your local car dealer will be regulated out of business. Sorry, Tom, that’s not in the legislation. What the butcher, orthodontist and car dealer want are customers—the customers who lost their jobs because of your buddies on Wall Street.

Small business supports this reform legislation, because it will restore balance between Wall Street and Main Street through fair and common sense policies. Furthermore, it will create a stable, transparent financial environment in which community banks and credit unions can once again feel secure in making loans.

We at the South Carolina Small Business Chamber of Commerce have been strong supporters of a Consumer Financial Protection Bureau to better protect consumers, which includes small businesses. We’re not afraid of good regulation that keeps us and our customers safe from financial predators.

We’re in favor of making banks be banks and not gambling houses. We have been strong supporters of the “Volcker Rule” to put the brakes on proprietary trading by banks, the practice that largely is responsible for bringing us to the brink of another Great Depression.

The South Carolina Small Business Chamber of Commerce and small business organizations across this country want the Senate to pass Wall Street Reform.

Borrowing the line from our former first lady Nancy Reagan, Congress should “just say no”—to the U.S. Chamber. The financial health of our country and our small businesses depends on it.

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Please Help By Calling These Senators Today

Below are the names of targeted Senators we are asking you to call today. Tell their offices that passing Wall Street reform is very important to small businesses. Ask the Senators to vote for cloture on the House bill.

Thanks for your help.

Grassley (R-IA) (202) 224-3744


Lugar (R-IN) (202) 224-4814

Government can purchase locally

Today's edition of The State ran my op.ed on using procurement codes to aid state and local economies.

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The city of Columbia will be making needed water and sewer upgrades over the next five years to the tune of about $500 million. With this much money to be spent, City Council is wrestling with an important issue: how to make government purchases with the often conflicting goals of getting the best price for the taxpayers and spending the public money locally to help the economy.

The S.C. Small Business Chamber of Commerce first started addressing this problem in 2003. For years South Carolina’s procurement code had operated with an in-state vendor preference in an effort to help keep more tax dollars in the state. Locally owned businesses had their bids reduced by 7 percent in the competitive procurement process for comparison purposes only.

However, a report from the Budget and Control Board indicated that the program wasn’t working: 42 percent of state procurement dollars were going out of state for goods and services. That was approximately $1.3 billion of our tax dollars leaving South Carolina and not helping our small businesses and economy.

We believed that the state could do better, but we quickly discovered four impediments to our efforts:

1. Government agencies and elected officials wanted the lowest price when awarding a contract — even if they believed that buying in-state would help our economy.

2. Procurement personnel wanted to keep the selection process as objective as possible, with strict, non-arbitrary rules.

3. Lawmakers worried that other states would retaliate and adopt preferential treatment for their businesses and thus lock S.C. companies out of those markets.

4. Court rulings suggested that we could run into constitutional problems if we weren’t careful how we adjusted the in-state preference.

Our breakthrough came in 2006, when we realized that the goal should not necessarily be to award more contracts to in-state businesses but to have more procurement dollars stay in the state when purchasing goods, labor and services. Working with the Budget and Control Board, we devised a plan in which out-of-state prime contractors would be rewarded for including in their proposals substantial subcontracts with in-state businesses.

In-state vendors would still be given the 7 percent in-state preference. Out-of-state vendors could earn some of this preference by guaranteeing a significant percentage of their contract price would go to subcontracting with S.C. businesses for goods, labor or services. A 20 percent guarantee would earn them a 2 percent vendor preference; a 40 percent guarantee would earn them a 4 percent vender preference.

Procurement personnel found this proposal easy to understand and not arbitrary. It was constitutional because any business in the world could use the new rules to successfully bid on a state contract. Other states adopting the same rules would not discriminate against S.C. businesses.

And since all out-of-state contractors would include S.C. subcontractors in their proposals in order to be more competitive, contract awards should see little variation in cost compared to the current procurement system. Plus, any slight increased cost to the government would be offset by a stronger economy and additional tax revenue generated through more income and sales taxes resulting from the new subcontracting work.

This state procurement reform was enacted in 2009. It can serve as a model not only for Columbia but for all our counties and municipalities that want to grow their local economies by helping their small businesses get a bigger piece of government’s procurement dollar pie.

© 2010 TheState.com and wire service sources. All Rights Reserved. http://www.thestate.com

New Small Business Loans -- from Sam's Club?

You heard me tell you this before:

Image: SustainabilityNinja.com

All the economists say that small businesses must lead us out of this stalled economy by creating the new jobs that we need.

This obviously isn’t happening, since only 83,000 private sector new jobs were created last month in the entire country. (See Brad Warthen's tidy July 1, 2010 post on Sheheen and Haley's views on removing (or not) the Confederate battle flag from the State House grounds in an effort to "develop an environment that creates jobs.")

A Drop in Gov't-Backed Business Loans
If we want small businesses to grow and start hiring, we need to make sure that they can get the loans or credit lines they need to do that. One of those ways is to encourage private financial institutions to make more U.S. Small Business Administration (SBA) loans, loans largely backed by the federal government.

Unfortunately, since May, Congress has not reallocated stimulus money to the SBA loan programs that temporarily eliminated fees for these loans and increased the government guarantee up to 90 percent. As a result, the number of traditional SBA loans dropped significantly last month. (And this isn't a new phenomenon.)

A Break in the Clouds: The Community Express Loan Program
But there is good news. The SBA also has a Community Express loan program in which small businesses can more easily obtain loans from $5000 to possibly $50,000. The process is relatively easy and can be done online. There has not been a drop-off in these loans.

The problem is that awareness of the Community Express loan program is not what it should be.

So you have to hand it to big box stores. They’re always looking for an angle to get shoppers in the door or online. Usually the losers in their effective marketing schemes are the local small businesses. You might be saving a dollar on your purchase, but most of the money you fork over flows right out of your community.

You’re selling your local economy’s soul for a few pieces of gold.

Finally, one of those big box stores has found the SBA Community Express loan program and has a good idea that can actually help local small businesses.

The Retail Giant with a Heart of Gold?
Sam’s Club will soon launch a program to market the Community Express loans to all its members. To do this they’re partnering with Superior Financial Group, which is one of the two authorized SBA lenders actually making these loans (the big banks are also authorized, but they aren’t making the loans because they are too small and not very profitable.)

Obviously, Sam’s Club isn’t doing this out of the goodness of its heart. First, Sam’s Club will reportedly keep $50 from each loan. Second, it’s a marketing gimmick. You go to the Sam’s Club website, fill out the application and, the retailer hopes, you stay on the website and spend some money. Sam’s Club doesn’t really care if you get the loan or not. The $50 is just a bonus.

Still, Hats Off to Sam’s Club
Many small businesses that could use a loan to expand or just get them over a hump have no idea that Community Express loans exist. The SBA and other SBA lenders don’t have the marketing budget and reach of Sam’s Club. The giant retailer can’t guarantee that a small business will qualify for the loan, but through its marketing clout more small businesses will be aware of the program.

A Good Alternative to Fueling the Sam Walton Empire
However if you’re like me and don’t want to give Sam’s Club $50, you can apply for a Community Express loan online from Borrego Springs Bank. Call them at 866-644-0042 or go to to their website. There is no application fee, although they do have a package fee if you get the loan.

I’m sure that Borrego Springs Bank will be happy to match whatever discount you might think you’re getting through Sam’s Club. You should receive a response in about two days.

How SCE&G Rate Hike Was Cut Nearly in Half

The Saluda Dam

On Wednesday, the S.C. Public Service Commission (PSC) approved an electric rate hike for SCE&G that was 48.75% less than the company’s request.

The 4.88% increase instead of a 9.52% hike was good news for all SCE&G customers, including small businesses. The increase will take place over 3 years instead of the proposed 12 months.

Intervention Matters
This was my 5th time intervening in an SCE&G rate hearing and the 5th time seeing significant cuts from original rate hike filings (43% in 2002, 49.4% in 2004, 20% in 2005 for natural gas, 35% in 2007). SCE&G has had other rate increases to cover the increased cost of fuel but those are pass-throughs so the company does not profit.

Catching the Same Breaks as the Big Guns
The S.C. Office of Regulatory Staff (ORS) has been a valuable asset to the Small Business Chamber in our efforts to keep utility bills as low as possible. They were particularly instrumental in the negotiations for this case in helping with my request to defer $3 million of the rate hike for small businesses from the first year of the increase to the second year in hopes for a better economy. SCE&G had intended to offer larger utility customers this break.

Small business customers of SCE&G will now see only a 1.35% (instead of 2.23%) increase in the first year, 2.52% the second year and 1.01% the third year.

At my request, SCE&G has also stated its intention to look more favorably on small businesses in future proposed adjustments—to make our rate more equitable compared to other classifications. The new rates moved us in that direction, although we’re not there yet.

Different Factors at Play -- This Time Around
But while we have seen reductions in rate hike requests as large as this one, the contributing factors were a little different.

In my radio interview with Dukes Scott, Executive Director of ORS, he pointed out the very diverse group of official parties to the case opposing the rate hike was important.

Large industrial, big retail, small business, conservationists, non-profits, and private citizens all were at the negotiating table—a richer mix than usual.

Wide Variety at Hearings Sealed the Deal
Then there were the very important public hearings. In addition to the Small Business Chamber, non-parties to the SCE&G case—including AARP-SC, S.C. Appleseed Legal Justice Center and S.C. Fair Share—sent e-mail blasts to their members encouraging attendance at hearings. Scott particularly cited AARP’s efforts in turning out large crowds at the hearings.

“I know that the testimony from the consumers at the night hearings was so important to us for getting a further reduction than I think we could have gotten without them,” Scott told me.