This article by MarketWatch highlights one Chinese small business to showcase the myriad of dilemmas weighing down small business owners in China. According to the article, labor supplies are strained, credit access is tight, production and raw material prices are rising, and customers are as scarce as the competition is brutal. Click Here to Read More.
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A judge has dismissed a reorganization petition for one small business owner, sending his hotel to foreclosure auction.
A bankruptcy judge has dismissed the bankruptcy petition of a Executive Inn & Suites owner to reorganize the business, sending the 60-room hotel to the auction block. The bankruptcy filing automatically prevented United Central Bank, who is owed $1.6 million, from foreclosing on the property. Now that the petition has been dismissed, the bank has permission to pursue the foreclosure.
In its December reorganization filing, Global Enterprises of Baker (the hotel’s owner) asked the bankruptcy court to give it control of the hotel, which had been under the management of a court-appointed keeper since May. That is when United Central filed a foreclosure lawsuit, alleging that Global had defaulted on a $1.6 million loan as well as a second mortgage, held by the SBA, of around $1.1 million. Both loans were made in 2008.
Global’s attorney said the hotel’s revenue fell due to a series of unfortunate events, including a slowdown in the economy, the lingering after effects of ending the Holiday Inn franchise agreement in July 2007, and bad publicity resulting from two suicides in December 2007.
Read MoreAccording to Chicago Business, the owner of the Chicago Reader has put the alternative weekly on the sales block. The paper is one of three weeklies — the other two are Washington City Paper and Creative Loafing in Atlanta — that are owned by Atalaya Capital Management. That firm acquired the papers and two others out of bankruptcy in 2009 after lending money to the prior owners. Atalaya buys loans and debt backed by business assets and provides small and middle-market loans, but its website doesn’t suggest that the firm is ultimately a business operator. Typically, such firms look to exit their investments through a sale that generates a return on their investment. The Chicago Sun-Times is one of the potential buyers that was approached.
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A new report shows gas prices had a direct effect on restaurants in February.
If your small business borrower is a restaurateur, he or she may be feeling an unexpected crunch. According to a recent report, rising gas prices contributed to a weakening in restaurant industry same-store sales and guest traffic in February, National Restaurant News reports.
The monthly report is garnered from the tracking of 73 distinct restaurant brands and more than 12,000 units. February’s report found that industry same-stores increased 2.5%, with both food and alcohol sales up for the month. Guest traffic, however, fell 0.10%. Both metrics were down from what started as a strong February.
“The story for the first half of February was strong comps driven by weather rollover for 2011, while the second half of the month produced some concerns regarding the recent spike in gas prices at the pump and how that is hurting the restaurant consumers wallet,” the chairman of the reporting service said.
Read MoreThe SBA’s Dallas-Fort Worth office approved $63.6 million in 126 loans in February, more than double the $30.6 million in 69 loans a year earlier. That office covers 79 counties. The office’s director attributed the lending spike to “improved economic times,” the Dallas Morning News reported. However, SBA loans for North Texas for the first five months of FY2012, which began October 1, lags the previous year: $455.3 million in 793 loans versus $225.6 million in 547 loans, respectively. That reflects loan incentives under the Small Business Jobs and Credit Act that were in effect at the start of FY2011, but not at the beginning of the current fiscal year. The top five SBA 7(a) lenders in North Texas for the first five months of FY2012: JPMorgan Chase Bank, Compass Bank, Wells Fargo, Southwest Bank, and Wilshire State Bank.
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Delays in a new Treasury program, the CDFI Bond Guarantee Program, have those involved feeling they won't be able to issue credit until 2013.
A federal program that had the potential to extend $4 billion in credit to small business and community development lenders has been reduced by half, Cat Clifford of Entrepreneur.com reports.
The CDFI Bond Guarantee Program, signed into law through the SBJA, is still waiting for a round of Congressional approvals. Because the program is only budgeted for $1 billion a year through 2014, the delays have shaved $2 billion in funds from the program.
According to the article, the government office managing the program confirmed that it doesn’t expect to issue credit until 2013 because of a “legislative requirement” typical of a new law of this sort. The CDFI Fund, a branch of the Treasury Department, said it is moving as “efficiently and responsibly” as it can. CDFIs are non-bank lenders that work in underserved communities and provide financing to small businesses that are turned down by traditional banks.
Read MoreA great article by Forbes talks about how important it is to keep the powerful engine of small business healthy to improve job growth and generate cash flow. In that same vein, they also list three things small businesses need right now to reverse their fortunes:
1. Better access to capital in order to grow, as well as refinance existing debt.
2. Reductions of uncertainty of future expenses due to Obamacare and the expiration of the Bush Income Tax Cuts.
3. Evidence that Federal and State Governments will begin to reduce deficit spending, primarily United States Budget and Trade deficits.
“The infrastructure for small business lending really does not exist for the existing banking community,” the article says, ”Most small businesses need finance to refinance existing debt or to grow. Access to more lending capacity for small businesses is needed now.”
Read more of this interesting article here.
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Our latest fraudster convinced his victims to make short-term loans to museums with art as collateral.
Eugenio Leo and his wife Jody Meyer plead guilty this week to their respective roles in a $3 million fraud scheme they ran from February 2004 to November 2004, loansafe.org reports. Leo plead guilty to one count of wire fraud and faces five years in prison, and a fine of up to $250,000 or twice the loss to the victims. Meyer plead guilty to once count of mail fraud and faces a five year term of probation and a fine of up to $250,000 or twice the loss to the victims.
According to court documents, during the time of the fraud Leo worked as a commodities broker at Compass Financial in Richardson, TX. He devised a mail and wire fraud scheme that involved the victims investing their money by making short-term loans to meuseums in Europe. These loans would be secured by pieces of artwork worth significantly more than the loan value. At Leo’s request, the victims provided a power of attorney to Leo so that he could make the necessary arrangements for the short-term loan. Leo falsely reported to the victim that their loan was repaid plus interest.
Instead of a short-term meuseum loan, however, Leo actually purchased art with the victim’s money, and then sold that art to the victim, never disclosing that he put himself in the purchase chain and made more than $800,000 from the sale. Leo was aided by Meyer, who falsely represented Leo owned the artwork so that leo could obtain a loan (using the art as collateral) from Art Capital Group for approximately $300,000. Leo made material misrepresentations to facilitate the scheme to defraud his victims. He used his authority under a power of attorney from the victim to act contrary to the victim’s instructions, contrary to the victim’s best interest, and for is own personal benefit.
Read MoreCheck out this article from The American Prospect: As chair of the Federal Deposit Insurance Corporation (FDIC) until last July, Sheila Bair played the role of loyal opposition to the strategy pursued by Treasury Secretary Timothy Geithner of propping up the biggest banks and deferring the issue of systemic reform. Bair argued for helping smaller banks and small businesses as well as breaking up huge banks that were deemed “too big to fail.” Now based at the Pew Charitable Trusts, Bair spoke with Prospect co-editor Robert Kuttner.
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The chairman of UK's largest business organization has proposed a UK-Small Business Administration for the Chancellor's Budget.
The UK’s largest business organization, Federation of Small Businesses (FSB), has called for a small business administration with a seat in the Cabinet to represent the needs of small to medium-sized businesses, SMEWeb reports.
In its Budget submission to the Chancellor, the FSB is proposing an agency modeled after the SBA is established to ensure that the voice of small enterprise isn’t lost among competing Government priorities. It is hoped this separate government body would challenge other departments to rethink policies that could hurt small business interests, as well as coordinate government agency communication with small firms – a major weakness in current arrangements.
“The Chancellor has made clear that there will be no big tax giveaways in this year’s Budget and that it is up to the private sector to drive economic recovery by creating jobs and growth,” FSB’s chairman John Walker said, “Through implementing a Small Business Administration, it would allow the Government to quickly implement policies aimed at helping small businesses – such as credit easing – which firms have been waiting for since the Autumn Statement. It would give the Government a channel through which it can advertise procurement opportunities, give expert help and advice on exporting as well improve communications with small firms. All of this would in turn help to achieve growth.”
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