By Emily Maltby Business owners could face a new credit squeeze as early as next month, in what amounts to a gap period between the expiration of two popular stimulus provisions and the ramp-up of President Barack Obama’s plan to boost loans for small companies.To be sure, the stimulus provisions – which lured hundreds of banks back to the small-business lending arena – could survive past late November or December, when funding is expected to be depleted. On Thursday, the House voted to continue the measures until September 2011. The Senate has yet to consider the legislation.The stimulus provisions, which allowed the Small Business Administration to drop fees and boost its maximum guarantee on loans to 90%, bolstered lending levels and attracted more than 1,260 lenders that hadn’t made SBA loans since October 2008. In anticipation of their expiration, Mr. Obama outlined a new plan last week allowing community banks to tap TARP funds for small-business lending. The initiative also would increase ceilings on SBA loans. But the problem, those in the lending industry say, is that there isn’t enough overlap between when the stimulus measures end and when Mr. Obama’s plan – scheduled to roll out by the end of the year – kicks in. “We’re entering into an era of uncertainty,” says Bob Coleman, founder of Coleman Publishing, a firm in La Canada, Calif. that tracks and reports government-guaranteed lending activity. Previous government programs, including last summer’s emergency-loan ARC program, have taken time to ramp up, as banks must evaluate the rules and – if they decide to participate – prepare their internal systems to support it. Even if Mr. Obama’s plan successfully launches by year’s end, there could be a dip in SBA lending for weeks or months until risk-averse banks engage, Mr. Coleman says.The SBA and senior administration officials say the programs are part of a collective effort to reinvigorate small-business lending. “While we’ve been able to accomplish a lot with the Recovery Act and engineer a turn around in SBA lending, it will involve really a multi-pronged effort, not just one program replacing another,” says SBA spokesman Jonathan Swain. Banks, however, say they’d have more incentive to try the new plan if the stimulus measures – in particular, the 90% guarantee – could be extended and act as a safeguard while they adapt to the new rules and regulations. Once the stimulus funding is exhausted, the fees would return and guarantees on loans would drop back to a maximum of 75% for loans more than $150,000.The stimulus provisions “helped us from a liquidity standpoint,” says Keith Ward, president and chief executive of United Central Bank in Garland, Texas, one of the top 20 lenders in the country by SBA loan volume. “I think it’s too early to stop this program.”Bob Polito, director of government-guaranteed lending at Webster Bank in Waterbury, Conn., a smaller SBA lender, agrees. “Although bank volume was down in SBA lending, can you imagine how much worse it could have been without the stimulus?”Whether the stimulus provisions are extended could come down to the price tag. According to the SBA, extending the stimulus measures until September 2010 – about half the time the House bill proposes – would cost $479 million. “We know it’s an expensive program, but having that extra percentage guarantee is huge,” says Cece Mitchell, senior vice president at Zions Bank in Salt Lake City, one of the top 10 lenders in the country by SBA volume. “Banks are risk-averse and more comfortable if, say, there’s one change in three months, and maybe another change in three months and another change in three months, rather than all at once.”At United Central, Mr. Ward has high hopes that the stimulus program will receive additional funding. “It’s too early to think that everything is resolved,” he says. “It should go on for at least one more year and let the economy recover a bit more.” Write to Emily Maltby at emily.maltby@wsj.com

By Diana Ransom Twitter has roughly 32 million active users, while Facebook has more than seven times as many. Sign up, right? Not so fast.While business owners across the country have glommed onto social networking as a marketing tool, there are thousands of entrepreneurs who can’t seem to “get” social networking. The main reason? For all the benefits social networking delivers — simple, inexpensive and viral — it’s also time consuming. And if you’re not prepared to devote a sizable portion of your day, or, at least, ask an employee to step up, aimlessly participating in social networks can quickly become deflating.After all, successful social networking isn’t just about attracting as many followers as possible or leaving comments on people’s blog posts. “It’s about knowing why you’re there in the first place,” says Mitch Joel, president of Twist Image, a marketing firm in Montreal. “When you know the strategy and how it ties into the business, that’s where real return on investment happens,” he says. “The tactics, the ‘what,’ that will come out of the strategy.”Beyond setting up a web site and, if appropriate, making sure your company has profiles on search directories, here are five steps for developing a meaningful social-networking strategy.Grab a dry-erase marker, a few of your top employees and head to the conference room. To devise an effective social-networking strategy, you need to set some organizational goals. For some businesses, knowing what you hope to achieve via social networking is pretty straightforward. Retailers, for instance, might want to develop an online following to tempt new and existing customers with new product offerings or sales. For companies with less obvious missions, consider how social networking can help. If not to build marketing lists, maybe you want to develop a brand name — and, thus, added recognition in the offline world. Or, perhaps you want to debunk miscommunications or misinformation spreading about your company?Think, then, about how your customers interact online — or just listen to them. Small businesses should already be monitoring their brand on a variety of social networks and mobile social networks such as Gowalla and Four Square, says Jeremiah Owyang, a partner at the Altimeter Group, a technology consultancy in San Mateo, Calif. “They should also be watching these networks to understand what customers are saying about them and what they can do to improve,” he says.No matter what you hear, make contact. If on review site Yelp, for example, a customer criticizes your restaurant’s French fries, don’t just dismiss his comments. Instead, think about a constructive response, says Owyang. Perhaps you can say you will try tinkering with the recipe. Or maybe even offer a coupon and wish that his next experience is better. Either way, let your customer know that you’re working hard to keep him satisfied.To really engage in conversations with customers, you should produce your own content, says Joel. For instance, when Matt Miller, the founder of rugged tablet computer maker MobileDemand, wanted to demonstrate the resilience of his company’s products, he created videos for YouTube, in which tablets are put through the elements. In one video, MobileDemand’s computer withstood sub-zero temperatures, while in another the PC was tossed down the side of a mountain.If videos aren’t appropriate, start up a blog revolving around topics that both concern your business and are important to your prospective customer base, says Joel. The idea is to offer content that will be useful to people you’re trying to reach, he says.Although every business should avoid being pushy, the reality is: You own a business and you’re likely interested in boosting sales. But you need to communicate sincerity, not just a sales pitch, says Rachel C. Weingarten, a marketing strategist in New York. Other suggestions: avoid using the word “awesome” and steer clear of discussing food — unless, of course, that’s what you do. “I don’t want to hear 16 times in a row that you bought Greek yogurt,” she says. Instead, be engaging. “You have some idea what your customers are interested in, stick closer to home,” Weingarten says. Write to Diana Ransom at dransom@smartmoney.com

By Maureen SCARPELLI The recession has taken a beating on local businesses, but many consumers still want to support and patronize their neighborhood shops. If you’re a small retailer or service provider, highlighting your local roots can keep the regulars coming in – and even attract new customers seeking to improve their hometowns’ economic health by buying from local merchants. Here are three best ways to showcase your origins – and win community support.
1. Hold contests or events that capture local flair. Take a hint from Nathan’s, which holds one of the nation’s most famous annual events every summer at its original location on Coney Island’s Surf Avenue: the International Hot Dog Eating Contest. Thousands have packed the beach every Fourth of July since 1916 (with the exception of two years) to see dog-snarfing competitors eat as many as they can in 12 minutes.Although Nathan’s sells their dogs around the world, the company wouldn’t think of holding the event anywhere but Coney Island. “I’ll be traveling around the world and no matter where I go, someone will always come up to me and tell me how their grandparents kissed for the first time at Coney Island,” Nathan’s CEO Eric Gatoff says. “The centerpiece of our brand is that store.”On a smaller level, businesses can hosts events that show off their own signature styles and welcome members of the community to participate. Hideaway Pizza, which was founded in Stillwell, Okla., built its reputation by delivering pizzas in painted Volkswagen Beetles. Now, several of the company’s stores host “Big Stuff” fundraisers, inviting local groups such as high school teams or church groups to fit as many people as possible into VW bugs. The events raise money or awareness for local charities and causes.
2. Team up with other local businesses, especially those with complementary products or services. Galaxy Cookies of Westport, Conn., has had its labels on the pizza boxes of its next-door neighbor, Four Brother’s Pizza, since starting up in 2004. Galaxy owner Connie Grant encourages pizza eaters to sit in her store, since the Four Brothers location is small. Four Brothers also lists Galaxy Cookies on its catering menu, giving Galaxy an extra 5% in business it normally wouldn’t have since the cookie company doesn’t cater. The pairing up has made Galaxy Cookies an office favorite, says Ms. Grant, now that businesses can easily tack on a dozen or so with their pizza order. ESSpa Kozmetika, a day spa in Pittsburgh, decided to pair with a women’s retail company, Carabella, hoping to break into an older demographic. The two shops, located a 15-minute drive from one another, struck a deal: Carabella gives a spa gift certificate to anyone that buys a Cinzia Rocca coat worth 25% of the purchase price (with a cap at $150). The campaign has brought new customers to ESSpa, which co-owner Scott Kerschbaumer credits to the neighborly collaboration.”The desire for local, it’s always subconsciously been there,” says Mr. Kerschbaumer. “But recent economic turbulence has pushed it to the forefront.” ESSpa also orders lunches for customers using the services of Luma, a high-end restaurant across the street.
3. Join or start a grassroots business alliance. At least 30,000 small businesses belong to local alliances, which generally provide information, support and advocacy for independent businesses, says Stacy Mitchell, researcher and writer for the nonprofit Institute of Local Self Reliance based in Washington, D.C. Areas without alliances could be ripe for a start-up, as Lisa Boet, who owns a French bistro in Naples, Fla., discovered. She wrote a letter to the Naples Daily News called “Small Businesses are the Soul of Naples” two years ago – and when more than 25 restaurants contacted her, she decided to form the restaurant coalition Naples Originals. “The reality is that most of us are… mom and pop establishments – we can’t afford the big marketing,” says Ms. Boet. “This sort of thing has really helped our businesses.”Throughout the year, Naples Originals members contribute $50 gift certificates, which are then sold quarterly for 30% of the price on the group’s website. The group typically sells out of gift certificates within an hour of posting them and self-publishes a regional dining guide with a circulation of 50,000. Ms. Boat is hoping other industries start their own similar coalitions.”The whole idea is to strengthen in numbers,” Ms. Boat says. By “marketing ourselves as small-business owners, we’ve actually created a brand. We’ve become the voice for our business.”