Guaranteed Credit for Small Business

TARPing of Small Biz?

admin — Fri, 11 Dec 2009 16:35:56 +0000

The TARPing of small business — DailyFinance

The TARPing of small business
Douglas McIntyreDouglas McIntyre RSS Feed
Dec 11th 2009 at 5:00AM

A plan that would use part of the TARP pool of funds to aid small business is gaining momentum among Administration financial leaders. The lead story in The Washington Post on Dec. 11 says “One plan under consideration involves spinning off a new entity from the Troubled Assets Relief Program that would give banks access to federal funds without restrictions, including limits on executive pay, as long as the money was used to support loans to small businesses.”

The plan may actually work if it can overcome a modest number of high hurdles.

The first of these is that small businesses may not want to hire new workers even if they have access to low interest rate loans or tax credits. The credits are not part of the TARP proposal but have been discussed in Congress. The recession may be over in the minds of economists, but consumers and small business operators are still facing a market with high unemployment and extremely cautious customers.

Adding workers may appear to be a good idea. It increases the capacity to create goods and services for companies as the economic rebound accelerates. But if the economy stalls, it simply adds new layers of cost. Most businesses are tempted to squeeze maximum production out of the workers they already have.

Banks may be reluctant to loan money to small businesses, even if the government helps back the loans through offers of low interest rates on the money being used for small business aid. Many small businesses are big credit risks. They often rely on monthly cash flow to make payroll and other expenses and they often have modest customer bases for their revenue. Many small companies have no assets to pledge against bank loans. For banks, a loss is a loss, even if the government has provided cheap capital to help provide the loans.

Good small business financing news…making payments again

admin — Tue, 01 Dec 2009 16:44:27 +0000

Exclusive: U.S. small business loans in arrears down: PayNet | Reuters

By Ros Krasny

BOSTON (Reuters) – Delinquencies among small and medium-sized U.S. business borrowers fell in October for a third straight month, according to PayNet Inc, which provides risk-management tools to the commercial lending industry.

The improved snapshot of accounts in moderate and severe delinquency is consistent with indications that business conditions bottomed out earlier in the year.

“The financial health of these millions of companies is stabilizing and the ability to repay loans on time is improving,” said Bill Phelan, president and founder of Skokie, Illinois-based PayNet.

Accounts in moderate delinquency, or behind by 30 days or more, fell to 4.07 percent in November from 4.25 percent in October, according to PayNet.

That marked the greatest improvement in the measure since June 2004. Delinquencies were running at the lowest rate since December 2008.

Accounts 90 days or more behind in payment, or in severe delinquency, fell to 1.43 percent from 1.45 percent, a third straight monthly improvement.

Still, accounts behind 180 days or more, or in default, rose to 0.87 percent in October from 0.84 percent in September, yet another new high for the current business cycle.

More bad news for Small Biz…financing freeze

admin — Fri, 27 Nov 2009 16:56:22 +0000

US Treasury Report: Banks Are Cutting Back on Small Business Loans, $10 Billion Evaporates

US Treasury Report: Banks Are Cutting Back on Small Business Loans, $10 Billion Evaporates
Posted On Nov 27 Economy, Politics Add comments

And here is why: The Federal Reserve Doesn’t Want Banks to Increase Lending, Because of Inflation

And keep the following in mind when reading why the Fed really does not want the banks to lend:

“Difficulties in obtaining credit could hinder the expansion of small and medium-sized businesses and prevent the formation of new businesses,” Bernanke said on Monday. “Because smaller businesses account for a significant portion of net employment gains during recoveries, limited credit could hinder job growth.”
Reports to the Treasury confirm what small business owners have known all year: Banks are cutting back on Main Street lending.

Credit Card Insanity…$50,000 Balances.

admin — Sat, 21 Nov 2009 17:31:17 +0000

Entrepreneur.com Daily Dose

On the down side, an attempt to get small-business credit cards included in federal consumer protections for consumer cards recently went down to defeat, the New York Times’ Robb Mandelbaum reports. The bill sought to get businesses with fewer than 50 employees included in the definition of a consumer. This is bad news at a time when many small businesses are relying heavily on plastic: A Small-Business Credit Card Survey released by the National Small Business Association showed nearly 60 percent of members were using credit cards to fund their business, and half of those had their card racked to $50,000 or more.

Small Business Financing 101: Your Elevator Pitch

admin — Thu, 11 Jun 2009 14:58:50 +0000

We live in a 15-second world. Modern news agencies gives us news from all over the world in small sound bites. When you’re looking for a lender or investor to help finance your small business you need to craft your first presentation with this 15-second sound bite model in mind.

Investors and money people are busy. They need to filter out a glut of information every day. Make it easy on them and yourself.

With a concise capsule that captures the excitement and potential of your idea or concept you can help investors make an initial decision to pursue your project or decline because it’s not right for them.

You’ll also save time by not scheduling a full presentation of your business plan if you’re just going to get a no.

Use your well-crafted elevator pitch to quickly sift and sort through potential money sources and find the ones that make a good match.

Crafting Your Pitch…

1. What is the nature of your business idea or concept? Is it retail, wholesale, a product, a service?

2. Capture the excitement and potential of your idea. What is the most compelling elements of your business idea? Make a list then prioritize them. Use the first one or two entries on your list as the meat of your message.

3. What makes your idea different or unique? Is it a new product? Do you have a novel way to market it? Does it have a loyal following already? Any famous endorsers?

Use these three simple steps to clarify your idea then construct it into an exciting 15-second elevator pitch. Make your pitch easy to remember for both you and the investor.

Practice, drill and rehearse until you can present it without thinking. Say it out loud. Does it flow and have a nice ring? Practice it on a family member or friend – does it make sense to them?

When you’re ready find some investors and go for it.

Resource:

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