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Susan Armstrong and her husband, Ray, run a $1.5 million (sales) roofing and construction company in Pinckney, Mich. After 23 years in business the couple relies on a patchwork of bank lines and credit cards, with interest rates from 12% to 15%. When the housing market crashed in 2008, the Armstrongs began looking for a loan, backed by the Small Business Administration, which would allow them to consolidate at a lower rate.
Two months ago Ray Armstrong entered his contact information on a website that looked like it was affiliated with the SBA. The next day he was contacted by a representative from a South Jordan, Utah outfit called Funding Universe. The rep said that for $99 Funding Universe would assess the Armstrongs’ financial situation and connect them with one of the company’s consultants. After reviewing the initial workup the consultant said he would pair the Armstrongs–for an additional fee of $2,600–with an appropriate lender and prepare their loan application. “He said that we were in a very good position to get this loan, and it shouldn’t be a problem,” says Susan Armstrong. “They told me everything I wanted to hear.”
After putting the fee on one of her credit cards, Armstrong says she came across scores of complaints from Funding Universe clients who claimed the company was a scam. Alarmed, she tried to cancel her order the next day. After a week of back and forth on the phone, the consultant told her she could get a 75% refund. She says she hasn’t heard from the company since. “I just want my money back,” she says. Read the rest of this entry »
by Marshall Kirby, Public Policy Analyst
By and large, Americans utilize credit for a sizable percentage of all transactions. Whether it is mortgages, auto loans, student loans, personal loans, or credit cards, financing purchases is a simple fact of the current economy in the United States. There has been a lot of news during the recession about bank bailouts under TARP, high foreclosure and default rates, individuals and families immersed in credit card debt, and lack of credit available to businesses. Legislation has been passed regarding credit cards for consumers and the Obama Administration has attempted to extend lines of credit to businesses through the Small Business Administration and has urged banks to lend to qualified businesses. Despite the pleas and lines of credit available to businesses and entrepreneurs, it still has not been adequate to address the needs of business owners and managers to finance their growth and operations.
Enter credit cards. Despite the credit card reform act which was enacted in 2009, credit card companies appear to be expanding their efforts to extend lines of credit to businesses. Credit card companies under the CARD Act (Credit Card Accountability, Responsibility, and Disclosure) were forced to give relief to consumer card holders from excessive fines, fees, and interest rate hikes. As a result, many card companies have reduced consumer credit lines and have enacted more stringent lending practices which have lowered overall access to credit. However, there has been no legislative equivalent to the CARD Act for business credit cards. In fact, in October 2010, the Federal Reserve announced that neither they nor the Federal government will attempt to enact the same protections for business credit cards. Read the rest of this entry »
posted at Chamber of Commerce.com:
An idea proposed in last year’s State of the Union address, the Small Business Lending Fundproposed by President Obama in early 2010 is finally getting off the ground. The number of loans being given to small businesses has been on the decline since 2008, leaving tens of billions out of reach for businesses around the country. But the Small Business Lend Fund looks to remedy this downshift, with $30 billion being injected into community banks to jumpstart the small business lending scene that’s been in a slump for quite some time.
Response from banks has been strong, which is good news for businesses looking for loans. That said, however, the new fund may not be as effective as Congress initially hoped. Certain Congressional reports implied that banks would lend $10 for every one dollar in received capital, resulting in $300 billion worth of loans. These figures seem rather optimistic and there’s doubt that demand is that high for such loans.
The success of the fund depends heavily on the responsibility of banks, and soon enough we’ll discover whether or not they’ve learned their lessons in regards to distributing poor loans. Banks eligible for the Small Business Lending Fund must have less than $10 billion in assets, and it’s estimated that over 100 banks have already applied. The application deadline for the fund is March 31st, so there’s still time for more banks to get on board. Read the rest of this entry »
Although we offer several financing solutions through our Chamber, sometimes you are going to need a little more. However, in this tight market, venture capitalists are being careful, so perhaps some of the options in this article will help . . . (orginally posted here):
by Dileep Rao, PhD
Your small company isn’t sexy enough to entice venture capital nor does your collateral give skittish banks enough comfort. Bootstrapping aside, here are five often overlooked alternative sources of funding in this tough environment.
Local Development
This hodgepodge includes a host of intermediaries under the auspices of the Small Business Administration. Gaining prominence are Community Development Financial Institutions (previously known as Community Development Corporations); these entities have more resources to throw around thanks to sponsorship in recent years by the U.S. Treasury. Development programs tend to offer larger loans at lower rates than banks do, though you’ll be expected to create jobs (or at least maintain them) in the community.
Asset-Based Financing
A great source of working capital for companies that market to other businesses and to governments–but beware Read the rest of this entry »
Why the small business jobs bill won’t create that many jobs.
By Jill Priluck, posted at Slate
It’s rare for small business to drive headlines, but the Small Business Jobs Act, passed by Congress last week, has brought the sometimes yawn-inducing and often misunderstood sector to the front pages.
Heavy on lending and tax provisions, the legislation has been touted as a means to spur job growth. But the bill is actually a Cash for Clunkers-like Band-Aid for the intertwined scourges of chronic joblessness and stymied growth. While the aid package will help many small businesses, it won’t create many jobs because it will benefit more established firms, rather than the young ones that do the bulk of hiring. Read the rest of this entry »
By Justin Velez-Hagan
National Executive Director
Washington, D.C., September 28, 2010. Yesterday, the president signed into law the Small Business Jobs and Credit Act. The bill has been touted as one of the best ideas for reinvigorating small business and job growth and, hence, deserves an analysis by The National Puerto Rican Chamber of Commerce, a staunch supporter of small business and entrepreneurship.
The legislation itself provides temporary tax incentives as well as a general account intended to provide local community banks with funding for small business lending. Although its intent is clear, language within the bill does not guarantee funding for small business lending. While 13 democrats voted against it, only 3 republicans supported the bill. One of those democrats, the Chairwoman of the House Small Business Committee and the first Puerto Rican woman elected to U.S. Congress, Nydia Velasquez (NY), voted against the bill amidst concerns that capital from the bill would not go to its intended source.
After examining the bill, it becomes clear that the tax incentives are temporary and greater strain will be placed upon small businesses, limiting their ability to stimulate the economy. Dr. Jeffrey R. Cornwall, the Director of the Center for Entrepreneurship at Belmont University, states that small business owners “don’t need more debt, they need more customers—and the government can’t provide those.”[i]
What Makes the Entrepreneur Tick? Read the rest of this entry »
By Dr. Jeff Cornwall, Guest Blogger, Christian Science Monitor
A new poll of small business owners is out this morning, conducted by Bill McInturff and Doug Schoen for the U.S. Chamber Institute for Legal Reform (ILR), and it shows that small business owners are not in a good mood.
“This poll reveals that there is a lot of fear among business owners in this current economic climate,” said U.S. Chamber Executive Vice President and ILR President Lisa Rickard.
According to the survey of 1,000 small business owners, 78% of respondents say that the U.S. economy will either remain stagnant or get worse over the next year. This is the most pessimistic findings I have seen in recent polls.
So what should be done by Washington? It seems that most small business owners agree with me on this one. Two-thirds of small business owners (65%) say government is doing too much that is better left to businesses and individuals. Read the rest of this entry »
The National Puerto Rican Chamber of CommerceTM was created with the intention of aiding the development of entrepreneurship and innovation amongst minorities. As we innovate, we create businesses, which create jobs and increase the well-being for everyone in society.
“With unemployment hovering around 10%, and unemployment among minorities reaching as high as 16%, we can’t afford to neglect the economy, specifically the small business sector.”
In order to allow for the cultivation of innovation we believe that we must continue to build Read the rest of this entry »
by The National Puerto Rican Chamber of Commerce 