In a letter posted on thehill.com, IFA President and CEO Steve Caldeira highlighted the fact that though there has been an uptick in small business lending this year, many aspiring or existing franchise owners are still being held back. According to IFA data, lending to franchise businesses in 2011 will fall short of the forecasted demand for growth by 20%, a shortfall causing 82,000 new jobs not to be created as well as keeping 8,000 - 10,000 new franchises from opening. Caldeira said much of this is due to “the regulatory pendulum” swinging too far toward entrepreneurs who have strong credit histories and proven track records of owning and operating a successful business, but now are unable to obtain loans. To fix this, Caldeira announced the IFA has been working with the Financial Services Roundtable, the Consumer Bankers Association, and the National Association of Government Guaranteed Lenders, to identify private sector solutions that spur small business lending and create jobs.
Read More
After settling a class action lawsuit earlier this year alleging they falsely advertised their product improved athletic performance, Power Balance is not only bankrupt, but may be forced to repay every customer.
If you had lent money to Power Balance, the company who sells the silicone bracelets worn by athletes and celebrities, you might have been feeling pretty good about it. In its short time in business, the company had profited so much that last March they purchased the naming rights to the Sacramento Kings’ basketball arena.
But, that success is over. Power Balance has now filed for bankruptcy protection, and may have to repay millions to customer who bought it’s product, the Sacramento Bee reports.
Weeks before the company signed it’s naming deal with the Kings, Power Balance was sued by customers alleging that it falsely claimed that its bracelets improved athletic performance. The class action lawsuit was settled in federal court, and the not-yet-finalized terms of the agreement could provide that anyone who bought a wristband would be eligible for a refund of the $30 purchase price, plus $5 for shipping, according to court documents.
Power Balance estimates that its debts total between $10 million and $50 million, while its assets are somewhere between $1 million and $10 million. According to the article, if every customer were to demand a refund, the settlement could cost Power Balance $57.4 million.
The obvious lesson here, is be sure that the product your borrower is selling is actually what they say they are selling. Otherwise, you could be left with someone who is not only in debt, but may have to repay every cent of profit ever sold.
Read MoreAlan Bridges, a Tampa local who purchased or invested in some of the area’ most exclusive penthouse condos during the 2000s housing boom, has filed for Chapter 11 bankruptcy for his core business, racks and shelving, Tampa Bay Online reports. Allpoints Warehousing Equipment Co. and Bridges personally filed for bankruptcy last week; Allpoints does business as Got Rack and Got-Rack.com. Bridges’ bankruptcy attorney said the condos are not really a factor of the filings, although Bridges is giving back a condo to Regions Bank in St. Petersburg. Bridges was forced to seek bankruptcy because his business’ loans from Regions Bank had matured and he wasn’t able to refinance them. The bank had filed a foreclosure lawsuit against Allpoints last year, and says it is owed at least $5.5 million. Allpoints lists estimated assets of $1 million to $10 million and liabilities of the same amount.
Read MoreDays after UK Chancellor George Osborne proposed his new plan to free up credit for banks to lend, British small business owners are tempering their expectations. How could you blame them? Project Merlin hasn’t worked, the Enterprise Finance Guarantee hasn’t produced the expected lending. According to an article by Sarah Smith of Channel 4 News, small business owners’ concerns are that the big banks have become so risk averse that no government scheme which still hinges on bank lending can be made to work. Smith echoes that sentiment as she writes, “Whether the government promises to underwrite business loans or whether it tries to get the banks to participate in a bond market for SMBs, the result will still be the same.” It surprises me, especially after the robustness of the SBA was proven through our economic downturn, that countries with similar situations haven’t started their own versions of the Administration. Especially if your citizens aren’t buying any of your original ideas.
Read More
The failure of the "SuperCommittee" to reach a consensus means a lot more than cuts to defense and non-defense programs, the cuts could reach all the way down to small businesses.
By now you should have heard about the bipartisan Congressional “supercommittee” that vowed to trim over a $1 billion from the deficit between 2012 and 2021, but ailed to reach a consensus by its November 23 deadline. As a result, cuts to defense and nondefense programs in that amount are scheduled to go into effect in 2013, including the SBA. An article on entrepreneur.com lists five ways the current proposed cuts could hit small business:
1. Fewer funds for Small Business programs: Congressional Budget Office estimates about 71% of the total savings from the cuts would come from lowering the caps on discretionary programs such as those that subsidize small business loans.
2. Government Contracts Dry Up: Contractors who rely on doing business with the government could face fewer opportunities to work.
3. Consumers Have Less Money to Spend: Lack of a deal allows the payroll tax holiday and insurance benefits for the long-term unemployed to expire at the end of the year. If lawmakers fail to act to extend the current payroll tax cut, the average family earning $50,000 a year would see its taxes rise by $1,000 at the beginning of next year, an unwelcome addition to the already sluggish economic conditions. The nonpartisan Economic Policy Institute has stated the failure to continue the tax holiday and emergency unemployment benefits could lead to 1.8 million fewer US jobs in 2012.
4. Grad Student Lose Loan Subsidies: Students possibly studying entrepreneurship in graduate school or programmers in training and hoping for financial aid could find limited access.
5. Another Debt Downgrade: Although the failure of the supercommittee isn’t likely to spur a downgrade, unraveling the automatic spending cuts might. If that happens, interest rates could tick up, which could raise the cost of borrowing and force the dollar lower. A lower dollar could make it more expensive for those who have operations abroad to meet their payment obligations.
Read More
Chancellor George Osborne said of his new plan the aim is "to use the fact that the government can borrow money very cheaply to help small business to borrow money more cheaply."
According to Juliet Samuel of City A.M., the United Kingdom’s government will guaranty £20 billion of UK bank debt over the next two years in an attempt to unfreeze credit market.
Chancellor George Osborne announced yesterday the Treasury’s credit easing program will underwrite portions of lenders’ debt to bring their borrowing costs down, in return for which they will cut the costs of their loans to small businesses by up to 1%. Osborne said the aim is “to use the fact that the government can borrow money very cheaply to help small business to borrow money more cheaply.”
The Treasury has promised to audit the program so that the drop in price of risk is passed on to small businesses and does not benefit the banks.
Backing for the plan comes from cancelling £40 billion worth of guarantys to the Bank of England’s asset purchase scheme (APS). The APS will still be underwritten by £10 billion, but the Treasury will deploy £20 billion of guarantys on credit easing and keep another £20 billion on standby to boost to £40 billion if needed.
Read MoreLast Thursday, Cuba announced a new credit system that will offer loans to small business owners, independent farmers and other citizens beginning December 20. According to the Associated Press, the lack of a lending system has been a big complaint amongst the expanding class of entrepreneurs running independent businesses as part of President Raul Castro’s economic overhaul. Economists have also said credit is necessary if private businesses are to grow beyond sustenance levels. Applications will be evaluated using people’s “legal personal income” as the most common source of repayment. Financial institutions authorized by Cuba’s Central Bank will offer the loans in Cuban pesos, (~24 to US $1), rather than the stronger convertible currency, which is on to the dollar. The Central Bank will also set minimum and maximum interest rates.
Read More
There were probably a lot of peaks and valleys during Warner Co.'s 144 years in business, but the latest slump was too big to overcome.
A 144-year old Fresno, California jeweler that filed for Chapter 11 Bankruptcy protection in September, is now shutting its doors for good.
Warner Co. Jewelers informed customers through various means last Wednesday, announcing a “total stock liquidation sale” next week.
“It’s really sad for Fresno that such a longtime, local company is going out of business. Generations bought from Warner. We’re going to end up with nothing but chain stores; that’s why it is so sad,” 25-year Warner customer Mitzie Scelzi told the Fresno Bee.
Warner’s largest creditor, WestAmerica Bank, moved to have a receiver appointed to liquidate the company in September, spurring the initial bankruptcy filing. When Warner filed, it owed WestAmerica about $2.8 million and other creditors another $1.1 million.
The bankruptcy comes only a year after the company moved back to it’s original location after a failed attempt at operating a larger store.
Read MoreDaddy’s Junky Music store on the outside seems no different than the small business closings we’ve become accustomed to over the past few years. The New Hampshire-based chain abruptly closed all 12 locations on October 26. According to the Nashua Telegraph, a total of 52 full-time and 14 part-time employees lost their jobs in New Hampshire, as did others at the eight stores in Massachusetts, Vermont, and Connecticut. But, the special thing about this small business’ bankruptcy woes, is it brings to light the issue of unspent gift certificates. Customers will have to be listed as a creditor of Daddy’s Junky Music in bankruptcy court, and then it would be determined by the court how the money is distributed. All of that to get a $25 gift card refund…what a nightmare.
Read MoreThere are 2,500 different, active franchise options in the United States, and the recently unemployed are finding a new start with them. According to the Post and Courier, there are about 785,000 franchised businesses across the nation; 2.5% more than in 2010. Franchises provide 7.8 million hobs and produce around $740 billion for the economy. To read some of the success stories, click here to read the rest of the story.
Read MoreSign up for our free daily email
Boefly
Multifunding
Lendio
FranFund
Borrego Springs
-
