Resources for Business Start- Up

1. Resources for Business Start- Up Janet Steveley Griffin-Hammis Associates jsteveley@griffinhammis.com

2. Funding Resources • Variety of sources of funding and support available to individuals with disabilities • Eligibility criteria for each • Funds and supports available must be matched with business needs • If gaps remain, team must identify ways to address CSC

3. Funding: How much do we need? • Funding requirements will be based on costs of starting and/or running the business • Start-up costs could include: • Rent/renovation costs • Equipment/supplies • Inventory • Deposits for utilities • Signage • Advertising • Licenses & permits • And more!! • Monthly expenses (time-limited) CSC

4. Sources of Funding • Personal/Family Investment • Individual Development Accounts • Loans- • family, friends, financial institutions, SBA • KS Assistive Technology Cooperative (KATCO) • Compensating Balance Loans (K-Fund) • Government funding sources: • Vocational Rehabilitation • Workforce Investment Act • Social Security Administration (PASS) • Economic Development Initiatives CSC

5. Individual Development Accounts (IDA’s) • Purpose is to help low to moderate income individual acquire assets • Primary assets: education, home ownership, self-employment • Matched savings account--you put in earned income and IDA program matches $1, $2, $3 + for every dollar you save (up to a limit), funds can be used for start-up • www.cfed.org

6. Kansas IDA’s • Kansas Assistive Technology Cooperative (KATCO) – IDA’s for Assistive Technology Devices and equipment (1:1 match, certain counties only) • www.cfed.org Click -Find an IDA program near you • El Centro • Interfaith Housing Services • The Family Conservancy

7. Loans • Family/Friends • KATCO – Loans for Assistive Technology and Employment Equipment such as office, communication, or “tools for the trade”http://katco.net/23/lending-resources • Compensating Balance Loans (K-Fund) http://www.dphhs.mt.gov/dsd/ddp/selndocuments/K-FundPressRelease.pdf

8. Vocational Rehabilitation Services • Kansas Department of Children and Families • Requires comprehensive business plans • Provide financial support to businesses • Need to establish that self-employment is a feasible goal: • Discovery! • Supports available • Business feasibility CSC

9. Examples of VR Financial Support • Tools/Equipment • Disability related items or services • Initial Stocks & Supplies • Rent, utilities, lease payments (time-limited) • Initial advertising/promotion Some items can NOT be covered (buildings, operating capital, etc.) CSC

10. Kansas VR Self-Employment Policies http://content.dcf.ks.gov/rehab/policy%20manual/rehabilitation_services_policy_manual-smfile.pdf Self-Employment Policy, Pages 153-155 Supported Employment Policy, pages 165-167

11. Workforce Investment Act (WIA) • Services provided through One-Stop Centers • 3 Levels • Core Services • job search & placement • Intensive Services • Assessment, personalized plans, counseling • Training Services • Training classes, adult literacy & education • Individual training funds may be available • The Disability Employment Initiative (DEI) grant to Kansas focuses on Customized and Self-employment (Southeast KS) CSC

12. Plans to Achieve Self-Support (PASS) Supplemental Security Income Work Incentive through Social Security Adminstrtaion

13. How PASS Works • Allows beneficiary to set aside income or resources that is reducing their SSI, or making them ineligible for SSI. • SSI work incentive, but often people with SSDI, or concurrent beneficiaries are the best candidates!

14. SSDI Basic Info SSDI = Social Security Disability Insurance • Entitlement Program (Insurance) • Based on FICA contributions - Beneficiaries with disabilities entitled to draw from: • Own record (contributions made while working) • Record of a parent who died, retired, or became disabled • “All or Nothing” – no gradual reduction • Medicare = medical coverage CSC

15. SSI Basic Information • Needs Based – must have limited income and resources to qualify ($2,000 resource limit) • Earnings gradually reduce benefit • Medicaid – medical + long-term care • 2013 Federal Benefit Rate: $710/month

16. PASS Applications • Work goal (if self-employment requires a business plan); • Education, work experience, disability information (feasibility of goal/plan) • Items/Services needed to reach that goal and costs; • Steps/milestones to reach the goal; • Other funding available

17. Goal: To work with plants. PASS = $ 21,000+ Expenses: Green house, inventory (plants, potting soils, etc.), marketing assistance. Self Employment

18. Self Employment Goal: To run a vending machine business PASS: $10,988 Expenses: Equipment (machines), training and support, on-going business expenses

19. Self Employment Goal: To create and sell handcrafted jewelry. PASS: $18, 637 Expenses: Business feasibility, vehicle, insurance, phone, lap top computer, supplies, etc.

20. What can be set aside? Any monies other than SSI • Unearned income (SSDI, other) • Earned income (wages or NESE) • Resources • Deemed income

21. Unearned Income Step 1: List total unearned income Step 2: Subtract 20 Step 3: Remainder = Countable Unearned Step 4: Subtract countable from FBR Remainder = SSI Cash Benefit CSC

22. CSC

23. Earned Income General Exclusion: $20 • Applies to recipients with no other source of monthly income Earned Income Exclusion: $65 • Applies to all working recipients • Only earned income, $85 • Earned and Unearned income, $65 CSC

24. SSI Countable Earned Income Calculation Step 1: Calculate monthly Earned Income (wages or NESE (annual/12)) Step 2: Subtract exclusions Step 3: Divide by 2 = (“countable” income) Step 4: Subtract countable income from FBR Remainder = SSI check amount (cash benefit) CSC

25. EXAMPLE – without PASS $ 685.00 Gross Wages • 20.00 General Income Exclusion = 665.00 • 65.00 Earned Income Exclusion = 600.00 /2= $ 300.00 Countable Earned Income (amount SSI payment will be reduced by) $ 710.00 SSI Federal Benefit Rate (2013) • 300.00 Countable earned income $ 410.00 Adjusted SSI check

26. Calulating PASS Contributions – SSI only Example: $ 685 Gross Wages • 85 Exclusions $ 600 $ 300 (half) • 300 PASS 0 Countable income Use it or lose it! $ ___ Gross Wages • 85 Exclusions /2 = ___ - ___ PASS contribution + ___ Countable income Countable income can be contributed to a PASS, keeping SSI at full amount.

27. Setting Aside Resources Example: • Sue receives SSI ($710/month) • Aunt Jane dies and leaves her $10,000. • She is now ineligible for both SSI and Medicaid until the money is spent down to under $2,000. • Instead, Sue submits a PASS application and funds it with her $10,000 resource.

28. Deemed Income • Parent to Child Deeming • Spouse to Spouse Deeming

29. Determining Eligibility for PASS • Answer 3 questions: • Is the individual eligible for SSI? • Does s/he have another source of income (besides SSI check)? • Does he have a work goal? • Would achieving the work goal make that person more self-supporting? (Reduce SSI or eliminate SSDI benefits) CSC

30. In Summary…. • There are a variety of sources of funding for business start-up • Start with identify start-up and on-going expenses (draft P&L and cash flow) • Identify which funding sources might cover needed items and services • Submit requests (with business plan) • Use your KSBDC and GHA consultants to work through individual needs.