Funds available to small business for Y2K efforts

by Jo Hicks

for the Business Journal

With the exception of those who recommend stockpiling food for an anticipated year 2000 catastrophe, there seems to be a lot of hoopla surrounding the event, but not much in the way of advice or help, especially for small businesses that may experience a great economic setback because of a lack of available resources.

The Y2K problem exists because some computer hardware and software used two digits to identify the year rather than four. For example, the year 1998 is input, stored and calculated as 98, not 1998.

Similarly, the year 2000 may be treated as 00 (assumed to be 1900) causing errors in data, computations and other computing functions which can cause a computer system to cease to function or corrupt data over time.

As we now live in a world guided by computers, what sort of an impact will this have? As it relates to a smaller business, will your computer view a service you completed in December of 1999 as not taking place for another 99 years and, therefore, not invoice your customer?

Unfortunately, computer chips exist in an abundance of items that everyone uses daily to effectively run his or her company.

Congress recently found that:

1. The failure of many computer programs to recognize the year 2000 may have extreme negative financial consequences in the year 2000, and in subsequent years, for both large and small businesses.

2.Small businesses are behind larger businesses in implementing corrective changes to their automated systems.

3. Many small businesses do not have many choices to access the capital needed to fix mission-critical automated systems, which could result in severe financial distress or failure for small businesses.

4.The failure of a large number of small businesses because of the year 2000 computer problem would have a highly detrimental effect on the economy in the year 2000 and subsequent years.

In response to these findings, President Clinton signed a bill allowing small-business owners access to capital to address potential Y2K problems. Small-business owners now have the option to apply for a loan that is formatted to allow for greater flexibility, facilitating a repayment schedule specific to your business needs.

These loans will be granted solely for the purpose of addressing computer-related problems associated with the year 2000 including:

?The repair and acquisition of information technology systems.

?The purchase and repair of software.

?The purchase of consulting and other third-party service and related expenses.

?After Jan. 1, 2000, to provide relief from an economic injury incurred as a direct result of year 2000 computer problems or as an indirect result caused by any other entity, such as a service provider or supplier, if such economic injury is not compensated by insurance.

You can apply for a loan through an authorized U.S. Small Business Administration lender. While the loan is made and funded by the bank, the SBA will provide a guarantee to the institution.

It's comforting to see that our government has identified a potential problem for small business owners and has taken action by making available resources to support those entities. If you're a small-business owner who felt stymied by this issue, you can sleep easier knowing resources are available.

(Jo Hicks is a vice president for Commerce Bank's business banking division, where she specializes in financial services for small businesses.)

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