From the July 1998 issue of Startups

Need to borrow $100,000 or less? Skip the lengthy loan applications and weeks of waiting for an answer. The Small Business Administration's (SBA) LowDoc Program reduces paperwork to one page and cuts response time to as little as two days.

Upon receipt from lending institutions, the simple applications are processed quickly by the SBA, usually within two or three days. Best of all, the decision process relies heavily on the strength of the borrower's character and credit history.

"In essence, we've developed a character loan," says Mike Stamler of the SBA. "LowDoc is an ideal vehicle for any small business that needs to borrow less than $100,000 with minimum effort."

The minimum loan amounts are established by individual lenders, not by the SBA, Stamler says. The SBA, which guarantees up to 80 percent of the loan, requires start-ups to submit comprehensive business plans with LowDoc applications; existing businesses need not.

Since the program's inception in 1994, banks and other lenders have made more than 76,000 LowDoc loans totaling nearly $4.3 billion. For more information about LowDoc loans, contact your local lender or the SBA office nearest you.


Paul DeCeglie is a former staff reporter for Journal of Commerce and American Banker. He can be reached at MrWritePDC@aol.com

Sound Advice

Small businesses overpaid about $185 billion in taxes last year, according to Sandy Botkin, a CPA who wants to end such rip-offs by showing U.S. and Canadian business owners how to take advantage of tax breaks they routinely overlook.

In his set of audiocassettes, "Tax Strategies for the 1990s," the former IRS legal specialist points to good tax laws enacted to help small businesses. "But most small-business owners don't know these laws exist or how to benefit from them," Botkin says. Among his tips:

  • Do you own two cars? Increase your tax deductions by alternating the use of each car in your business from month to month.
  • Hire your children at fully deductible wages with no Social Security or Federal Employment tax; they can earn $4,250 annually, tax-free.
  • Entertain clients at home? Deduct 50 percent of everyone's meal. If a sales presentation is involved, you can deduct 100 percent.
  • Travel much? Sandwich a weekend between business days, then deduct expenses incurred on Saturday and Sunday as well.
  • Dry-cleaning and laundry expenses on a business trip are deductible; so is your first dry-cleaning bill after returning home (but only for clothing soiled on the trip).

Replete with dozens of tax reduction strategies and a 175-page workbook and reference guide, the audiotape set costs $195 and offers a money-back guarantee if you don't save at least $5,000 in new deductions.

It Takes Two

How many credit cards do you need? If you're in business, you probably need two: one for personal expenses and one for business expenses.

"A lot of start-ups charge business expenses on personal credit cards," says Richard D'Ambrosio, spokesman for American Express Small Business Services in New York City. "They don't realize the advantages of a business credit card: ease in tracking expenses, division of business and personal expenses at tax time, plus [discounts and other] benefits."

"A card with your company name on it reduces the risk you'll commingle personal and business expenses," agrees Dean Klassman, owner of Klassman Financial Services in Northbrook, Illinois. "And it provides a detailed record of business expenses to show the IRS, should you get audited."

Any card will do, as long as you use it exclusively for business expenses. "Interest and annual fees are tax-deductible when the card is used for business only," Klassman says. "But you derive that benefit whether you use a personal card for business or actually have something called a `business credit card.' "

Contact Sources

American Express Small Business Services, richard.dambrosio@aexp.com

Sandy Botkin, c/o Tax Reduction Institue of Germantown Maryland, 13200 Executive Park Terrace, Germantown, MD 20874

Klassman Financial Services, (847) 714-0606, fax: (847) 509-9263

Small Business Administration, (800) 8-ASK-SBA, http://www.sba.gov