Here is an interesting article by Robb Mandelbaum of the New York Times transcribing SBA Chief Administrator Karen Mills’ responses to reader questions. “The economy is improving, unemployment is falling, and SBA lending is back to pre-recession levels,” the article prompts, “Ms. Mills’ agency, however, still faces pressing challenges. Fewer SBA loans are reaching the smallest, underserved businesses. And both the agency and the Obama administration are under intense pressure to show that they are creating jobs, even as the White House proposes new cuts to the SBA budget.” The questions were submitted by You’re the Boss readers. Read More.
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Washington Mutual has exited bankruptcy and completed it's transformation to WMI Holdings.
Seattle Times – Washington Mutual has made it’s final exit from bankruptcy, and transformation from a giant thrift to a small mortgage reinsurer, the Seattle Times is reporting.
Now known as WMI Holdings, the company said its reorganization plan became effective Monday and will begin distributing some $7 billion to creditors. The company said its initial business will be managing WaMu’s old mortgage-reinsurance business as it runs down. However, the new company will have $75 million in cash and access to a $125 million credit line, which could enable it to acquire other businesses and build new ones.
One of WMI Holdings’ new directors said in a statement that the board would “begin exploring opportunities available to the company to enhance the value of the reorganized company’s assets for the benefit of the company’s new shareholders.”
Read MoreWall Street Journal – Ahern Rentals Inc. said it needs more time to develop a plan to get out of bankruptcy, as the construction equipment renter continues to deal with the effects of the housing market collapse. In court papers filed, Ahern’s CFO said the company “has quickly transitioned into Chapter 11 with no impairment of its operations, and continues to generate positive cash flow on an operational level.” He also cited a recent improvement in the housing market, the sustained recovery of which will play a vital role in any Ahern restructuring. Earlier this year, Ahern borrower a $350 million bankruptcy loan from its lenders. Ahern needing the financing to, among other things, pay off more than $250 million revolving loan. Ahern rents out heavy construction equipment like fork lifts, boom lifts and backhoes as well as merchandise like compressors and generators. The downturn was damaging enough for Ahern to force it to file for Chapter 11 protection in December after talks with lenders about how to restructure more than $600 million in debt fell apart.
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Mobile banking through your smartphone is starting to become a reality.
You already use your Apple products for everything else, so why not have your personal banking with Apple as well? It could happen as the mobile banking trend continues and our iPhones and iPads become ever more inseparable.
According to a Huffington Post article, Apple is already serving as a digital “bank branch” for many iPhone and iPad users. All Apple needs to do now, the article says, is provide their own virtual teller-like services; which may be happening sooner than you think.
Earlier this month, the company filed a patent for an iWallet, which would allow you to manage all of your financial accounts and make payments directly on your iPhone. This technology won’t replace all of the traditional bank services, but could offer enough transactional features to replace basic checking accounts. And Apple customers want more. Among current Apple users, 43% said they might stash their cash with the company if it offered banking services. Overall one in 10 people said they’d consider ditching their current bank to bank with the tech company. Want some scarier statistics? One in five Americans are accessing their bank accounts via mobile devices and nearly half of all Americans own a smartphone.
Read MoreConnecticut is growing a federal program offering small businesses alternatives to bank financing, the Hartford Business Journal reports. The Hartford Economic Development Corp became the third SBA micro lender in March, providing loans of up to $50,000 to companies struggling to raise capital through bank lending. The program offers SBA term loans, usually around $13,000, for companies to buy assets or enhance their business plans. SBA provides the money, but does not act as the lender. That role is performed by an intermediary organization. Offering SBA loans with HEDCo are Connecticut Community Investment Corp and Connecticut Economic Development Fund. Among the three agencies, the state has $2 million to loan annually. “The idea is to serve the underserved market,” said Sam Hamilton, CEO of HEDCo, “Serving those that find it more difficult, especially in this Great Recession, to have access to capital.”
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A recent report says that the majority of successful borrowers use their money for R&D, not job creation and expansion.
Entrepreneur.com released an article last week titled, “Six Keys to Boost Your Business in 2012.” Using a recently released study from the Guardian Life Small Business Research Institute, which polled SBO’s about their management habits, the results show what the successful small businesses are doing to thrive in this downturn.
What was most interesting, was Key #3: Use Borrowed Money Better. According to the article, the majority of successful firms used loans for research and development, while the unsuccessful firms used borrowed money to open offices, add capabilities, or make hires.
This is contrary to what most of us have been led to believe, which is that small business’s need for working capital isn’t to create new jobs, at least among the successful ones. Both sides of the aisle tout small businesses as the job creators of America, yet the numbers show the more successful business borrowers used their loans elsewhere.
Do you agree with this analysis?
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A guilty Iowa hog farmer blames rising commodity and feed prices versus lower meat prices for leading to fraud.
An Iowa hog farmer has admitted to scheming his bank out of nearly $7 million over a two year period, KCRG.com of Cedar Rapids, Iowa reports.
David LeClere plead guilty to one count of bank fraud and now faces up to 30 years in prison and a $12 million fine. He admitted giving his bank inflated reports on the number and weight of his hogs and claiming packing plants owed him more money than they actually did. The fraud occurred between March 2007 and May of 2009, costing the bank $6.9 million.
The rise of commodity prices is being felt by more than just restaurants and franchises; higher feed prices and lowered meat prices are now driving America’s heartland to fraud in order to survive.
Read MoreTimothy Potendyk, who lied about having a military contract for orthotics, was sentenced to a little more than five years in federal prison this week, according to the Peoria Journal Star. Potendyk is also ordered to repay $1.52 million to banks and individuals. According to court documents, as the founder of Neo Orthotics Inc. Potendyk obtained a loan from Morton Community Bank in March 2009. He told bank officials he got a $1.9 million military contract to make insoles and needed a short-term loan of $850,000 to pay for raw materials. He used the bogus contract as well to other representations to borrow money. Most of the loans were used to keep the failing business afloat and to make attempts to repay other investors. Two investors, who were told the government contract was valid, each provided personal loan guarantees of $100,000. Potendyk later acquired another $385,000 loan. He used some of that money to pay off the initial loan and yet another loan, in part by producing forms and documents that indicated the contract was legitimate.
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Senator Mark Udall (D-CO) plans to introduce his Small Business Lending Enhancement Act this week.
This week, Senator Mark Udall (D-CO) vowed to introduce his bipartisan Small Business Lending Enhancement Act as an amendment to the Jump-Start Our Business Start-Ups (JOBS) Act. The legislation would raise the business lending cap credit unions currently face, Business Insider reports. What is unique about this proposal, is that it would help to create jobs without spending any taxpayer money.
“There continues to be a phenomenon in this country where small businesses are starving for credit, yet federal government is still standing in the way,” Senator Udall said, “I’m talking about the smallest of small local businesses. Small business owners know credit unions in their community that have money to lend, and truly want to help. They probably see each other at little league games, church, or play cards together.”
The JOBS Act that the House passed last week seeks to increase the availability of credit to start-up companies by expediting and easing the process of making an initial public offering. The problem is that the JOBS Act is aimed at companies with revenue under one billion dollars. There is a big difference between a multi-million dollar company and a local business that needs $50,000 in working capital. Federal law limits the amount of small business loans a credit union can extend to 12% of their assets. Nearly 350 credit unions are facing their cap, and 500 of them have had to slow or stop their small business loan-making altogether. Senator Udall seeks to change this and hopes to raise the credit union business lending cap from 12.25% to 25% of total assets.
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