SBA 504 Loan Total $19.3 Million in AZ
There is a great sign that the Arizona economy is bouncing back Bizjournals.com reported, as SBA 504 loans jumped to $19.3 million in Feburary, up from January’s $12.7 million and December’s $7.5 million.
SBA 504 financing helps small business owners purchase commercial real estate, including buildings and large real estate. The loan aids businesses in conserving working capital and helps them retain liquidity. The program was developed for entrepreneurs looking to expand by purchasing real estate for new businesses, thus stimulating growth and ultimately the economy.
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Daylight Savings
As we approach spring, the snow melts with the warm weather, the birds begin to chirp, and people begin to crawl out of their winter holes with sunglasses to see daylight. Most likely, we will see a renewal of business, as people’s mood improve and consumers begin to spend again. Additionally, daylight savings adds an extra hour of sunlight to our days and we can pack more work which means more productivity in those hours of sunlight. Restaurants will once again place their tables outside, and bars and nightclubs will see an increase in business.
According to a study done at University of Michigan Ann Arbor, warm sunny weather improves mood, memory and creativity. With this, we can hope to see that the “mood” of the financial market will also improve as investors will begin to invest back in small businesses, and those merchants who have survived the difficult winter will see an opportunity for expansion and growth. The question is whether large and small banks alike will begin to loan to small businesses again.
Despite the fact that small businesses employ more than 50% of the workforce in the United States, they have been hit the hardest in this economic recession as banks scaled back their funding to them. Most small businesses rely on banks for financing while large businesses obtain funding from private investors, selling stock, and large banks.
Obama’s Small Business Loan Fund Stalling
Obama’s Small Business Lending Fund was proposed in his State of the Union address last January 27th, and yet more than a month later, business owners still do not know the details of the plan. Mr. Obama claimed that local banks are more supportive for small businesses, and thus they will receive the $30 billion in repaid TARP funds to help continue to prop up small businesses suffering from a poor economy and a lack of credit.
According to the White House, community banks comprise 20% of banking assets and yet provide over 50% of the small businesses in the United States with funding.
Yet on the other hand, many small banks are rejecting the tarp money as they view it as tainted aid. AZbiz.com reported John P. Lewis, Southern Arizona Community Bank President saying, “We voiced our concerns in the board meeting. We reacted very negatively to the message coming from the Treasury. We made it crystal clear that having access to $30 billion does not create any new loan demand. Most community banks don’t need money. Loan demand is flat and applications from credit-worthy borrowers are thin. We considered it to be a stigma-stained TARP program.â€
Small banks are telling the Obama administration that it isn’t they are lacking financing, but they are lacking strong small businesses that are worthy of receiving a bank loan.
Technorati Tags: State of the Union address, business, Obama, banks, small business, TARP, White House, banks, funding, small banks, financing
Richest Man in the World – Carlos Slim Helu
The richest man in the world, Carlos Slim Helu has positive projections for Mexico and the Latin American economy Forbes reported this past Thursday. With more than 200 different types of businesses from telecommunications, energy and tourism, the billionaire tycoon worth a whopping $53.5 billion, has taken upon himself the civic responsibility for creating additional wealth from wealth to help drive the world’s economy.
“Wealth, either public or private, should be managed with efficiency, promoting through reinvestment economic growth,” he said to Forbes. “Managing wealth means responsibility and commitment to create more wealth and, through more employment and the generation of tax revenues, boost the distribution of the fruits–that is, of income.”
While the average income per capita is $12,000, Mr. Helu claims that Latin America’s internal and external resources, tourism, commodities, and modern industrialization will help spread wealth and raise the standard of living in the near future.
Big Banks to Increase Small Business Loans in 2010
Big Banks have started to answer to the government and the nation, claiming that they will significantly increase small business loans this upcoming year in 2010. However, no information has been released on how the banks plan to do this, or what requirements they will have. Furthermore there is a question of what qualifies as a small business as there is no standard for this.
JPMorgan Chase & Co. plan to extend an addtional $10 billion to small businesses, along with Wells Fargo & Co. and Huntington Bancshares Inc. who plan to increase loans to small businessesto $16 billion and $1.2 billion respectively.
The majority of small businesses rely on banks for funding as opposed to large companies which can rely on stocks and bonds in addition to banks. Furthermore, banks are more secure in lending to larger businesses as it is a safer investment.
Small businesses employ over half of the private sector, and many are having difficulty obtaining additional capital from their banks.
For the original New York Times article
New York State adds Small Business Loan Funding
Governor Patterson proposed two new state stimulus packages which would have to be approved by the state Assembly and Senate: a $25 million Small Business Revolving Loan Fund and a $25 million New Technology Seed Fund.
The New York Power Authority would begin with the initial contribution for the revolving loan fund and would be sustained as business began to pay back their loans. The money would be distributed to non-traditional lenders development corporations and credit unions. Furthermore women and minorities would have priority access to the money.
The technology seed fund would provide small businesses who have promising products to bring to the market place and would be funded by the Empire State Development Corporation. Stephen R. Cohen, deputy commissioner of the state’s ESD claimed that the program is geared, “…to get more capital into the hands of small businesses who are having trouble with receiving financing.”  The goal is to “create another Silicon Valley here in terms of a robust network of investors to fill the gap at the seed stage.”
For the original Watertown Daily Times article.
To learn about small business loans
Obama Backs SBA $1.8 Billion in Small Business Loans
The Small Business Association announces this week, that Mr. Obama has signed off on a $1.8 billion initiative to continue to help provide higher guarantees and waive fees on SBA backed small business loans .
Loan applications from the SBA queue will receive funding followed by new applicants. The program is intended to resume on March 10th.
Initially the banks received $730 in government stimulus money to help guarantee 90% of the loans and also waive fees for applicants. The funds for this program were depleted on November 23rd, but another $125 million were made available in December which ran out in February.
SBA Administrator Karen Mills said, “These key loan programs have been successful in helping jump-start the economic recovery for America’s small businesses. The increased guarantee and reduced fees on SBA loans helped put almost $22 billion into the hands of small business owners and brought more than 1,100 lenders back to SBA loan programs.â€
For the original San Fransisco Business Times article.
States and Cities Help Small Businesses
While Washington is debating what it can do to help small businesses in the tight economy, States and local municipalities have stepped up their efforts to help struggling businesses.
San Fransisco has launched a new offensive to help stimulate employment, Jobs Now, which reimburses owners for 100% of some new hires. The $25 million campaign has helped restaurants, cafes, and even law firms. Employers have to pay for social security and for benefits, but the program obviously had huge incentives for businesses to hire.
In the Cleveland area, a small business counsel has implemented a program to help promote local businesses instead of larger chain companies and Internet companies. According to Dan Roman, the councils director, 68 cents to every dollar stays in the community when purchases are made locally.
Many laid off workers from the automobile industry in Michigan have turned to the Michigan Small Business and Technology Center where laid off workers are encouraged to enroll in the course where they come with a businesses idea. The program is geared to help them develop the idea and find them the correct funding for the business.
Connecticut has devoted $250,000 to helping small manufacturers in the airspace industry with loans ranging from $5,000 to $25,000.
North Carolina has diverted $600,000 in their BizBoost plan which is geared to help small businesses with 10 or less employees. The program offers financial consulting. The governor has expanded the plan to $2.4 million of State and Federal money to further add financial advisers to help small businesses with mange cash flow better.
The St. Louis County Economic counsel has devoted $5 million of a PNC Bank credit line to help business owners purchase land, equipment and machinery for businesses that do not possess large credit lines.
Florida has launched GrowFL last year, which is aimed at helping business establish new markets and maximize their use of social media. The program is for businesses with less than 10 employees and who have a gross annual income of over $1 million.
For the original NYTimes Article.
Learn more about small business loans
Declined Small Business Loan
Veronica James, a Nashville Tennessee resident seeking a small business loan for her new business start-up, Urbandillo, was declined a bank loan from her recent bank the Nashville Business Journal reported on March 3rd. Ms. James decided to take to the streets, and stood outside while snow flurries drifted across her face, with a sign, “Will Work for Business Loan.” She has one patent already in existence and another pending on her product line that includes bags, clothing, and blankets that fold up and turn into a sack with their own drawstring.
At this point, it seems that the media has taken this economic crisis to a whole new level. Granted lending has tightened up, and it is more difficult for small business owners to obtain loans from their banks, but since when do banks fund start-ups? That seems to be in the 3 F’s arena – friends, family, and fools. Banks are having difficulty lending to established businesses; it doesn’t make sense that they would take that kind of a risk and lend to an unestablished one. Perhaps the idea will take off, perhaps not. It’s just a plain risky investment. When I first saw Crocs, I thought it was the silliest and ugliest looking foot apparel ever and that it would never take off. Boy was I wrong. So who am I to judge?
Learn more about small business loans