From the June 1999 issue of Startups

It's the calm before the storm. Or is it? Like most homebased business owners, my wife and I haven't got a clue how the Y2K bug will affect our business, let alone our clients. When it was safely in the distance, we were skeptical, tending to trust that any problems would be minor and transitory. Now we're not so sure.

Why this Chicken Little change of heart? Smoke signals from Washington, that's why--good news with ominous overtones. The president recently signed a special bill approved by Congress earlier this year. The measure would provide an estimated $500 million in guaranteed loans to help small businesses prepare for Y2K computer glitches. That's great, right?

Not so quick. Here's the downside: Some studies have estimated as many as 750,000 small businesses will be crippled or forced into never never land as their computers hit the 00 speed bump. Do the math--$500 million divided by 750,000. Needless to say, competition for these loans could get fierce.

According to Rep. James M. Talent (R-MO), chair of the House Committee on Small Business, many small businesses have yet to take Y2K seriously. But while they might feel safe from the Y2K time bomb, their customers and clients may be completely dependent on vulnerable computer systems for everything from production and deliveries to billing.

Under the Small Business Year 2000 Readiness Act (Public Law 106-8), the SBA can offer loan guarantees of up to $1 million through some 6,000 lenders. Michael Stamler of the SBA says the agency currently backs loans with a "total indebtedness" cap of $750,000. Under the Y2K proposal, the maximum would be raised to $1 million. "That means if a small business already has SBA-backed loans of $750,000, they could still apply for an additional $250,000 for Y2K," Stamler explains. The new program provides one year moratorium on principal payments, where it will facilitate repayment, and provides that all "reasonable" doubts about the ability to repay will be resolved in the applicant's favor.

The SBA's Web site (http://www.sba.gov) already has a lot of helpful information on the millennium issue, with a link to the Y2K area clearly marked on its home page. Check the site for updates and further instructions on applying for a Y2K-preparedness loan, or contact your district SBA office or the agency's information number, (800-827-5722). The SBA has also launched a fax-back service to answer questions at (877) 789-2565.

Hot Links
Here are some other helpful Y2K sites:
http://www.Y2Krun.com - tips and strategies
http://www.2000check.com - computer test and Y2K repair kit
http://www.year2000datasolutions.com - free tips, leads and links
http://www.tic-tocpro.com - fix for IBM-compatible computers

Contact Source
Y2K loans
Michael Stamler, SBA
Phone: (202) 205-6919 Fax: (202) 205-6913

Rep. James M. Talent (R-Mo.)
Phone: (202) 225-2561 Review copy: (Stephanie O'Donnell) Fax: (202) 255-2934

Kurt Samson is a freelance business writer and public relations consultant in Annapolis, Maryland.