Lying to the SBA Never Works…

Posted on July 15, 2011 by insidemainstreet in Fraud Friday

Peter Enzinger, 44, Has Been Convicted of Knowingly Making False Statements About His Criminal Record in a $1.3 million Application to the SBA.

A Maine man has been convicted of knowingly making false statements about his criminal record in a $1.3 million loan application to the SBA.

In March of 2009, Peter Enzinger applied for a loan on behalf of his two businesses to buy property and expand.

Though Enzinger had four previous convictions in Massachusetts, he wrote in the application he had never been charged with, arrested for or convicted of any criminal offenses other than minor car violations.

Enzinger was convicted of shoplifting and being a disorderly person in 1985, furnishing liquor to a minor in 1987, and disturbing the peace in 1990 when he got into a fight with his brother during a time he says they were both, “drinking heavily every day.”

Enzinger’s lawyer argued that his client didn’t include his criminal record in the application because he didn’t know he had one.  Enzinger claims to have paid for a criminal background check and never received an answer.  He also contends that the application was filled out during an extremely busy time where he and his wife were both working 80+ hours per week and raising young twins; and that he delegated parts of the application to be filled out by others.

The district attorney in the case argued that a loan application of this size would be too important to delegate and treat as just another routine form requiring a hasty signature.  He also said he couldn’t believe anyone who has been in court four times could fail to understand what a crime was.

No date has been set for sentencing, but the maximum penalty for this offense is five years in prison.

Maybe after some jail time, Enzinger will finally understand what a crime is.

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$2.5 Billion Needed for Restaurant Financing in 2011

Posted on July 14, 2011 by insidemainstreet in Inside Main Street

Coleman’s “Quick, Casual, and Full Service Restaurant Financing – Traps and Opportunities” webinar today provided listeners with a complete industry update for 2011.  Bob Bielinski of CIT Corporate Finance and Mary Jo Larson of Franchise Times Magazine joined Coleman Report Editor Bob Coleman for an in-depth discussion into this lucrative segment.

One of the biggest things, was the estimated lending need for restaurant financing in 2011 rising to $2.5 billion. The restaurant industry in the United States has around 960,000 locations and employs around 10% of the U.S. workforce.  2011′s estimated sales will account for nearly 4% of GDP.

Inside Mainstreet live tweeted the entire presentation.

Bielinski: Independents can succeed, but you want to make sure they are experienced before you lend to them. #restaurantfinancing
2010 was big year for restaurant M&A, w/ 25+ notable deals made. Activity should continue as private equity owned assets reach divestiture.
Capital Markets Environment: Economic recovery and availability of debt financing are driving M&A activity. #restaurantfinancing
Govt Regulatory Issues: With an Increasingly active regs. environment, federal, state and local govt agendas may impact the rest. industry.
#restaurantfinancing -High unemployment=mgmt. of hourly labor easier;lack of wage rate pressure,less turnover, acceptance of “short” shifts.
#restaurantfinancing — Commodity prices remain higher than 2010, high gas a big concern, Inflation expectations have risen for 2011.
Cost Pressures: Commodity costs have eased significantly over the past month, but prices remain high. #restaurantfinancing
Bielinski: At the beginning of the recession, the quick-serve segment was strong. After we’ve come back, customers went back to their usuals
Families w/ kids returned in 2010 after 3 years of declines; Discounting is down; Operators optimistic about 2011. #restaurantfinancing
Sales recovery gains strength in Q1 despite weather; Q2 sales performance may not be as strong. #restaurantfinancing
Top line recovery continues across all segments of the industry. #restaurantfinancing
Estimated 2011 Lending Need for Rest. Franchisees Is In Excess of $2.5B-New Unit Development, Acquisition, Remodel, Equipment, & Real Estate
Economic Outlook: High gas, consumer confidence down, non-farm payroll report weak, housing market down, Retail sales UP, 1stQ GDP up 1.9%.
2011 Restaurant Industry Stats: Estimated Sales=$604B, 4% of US GDP; Locations= 960k; Employees=12.8m,~10% US Workforce #restaurantfinancing
Bielinski: 1 in 4 adults in the United States had their first job in the restaurant business. #restaurantfinancing
“We’re not just doing #restaurantfinancing , we’re specifically financing these segments which perform differently at different times.”
Restaurant Segments:Quick Service(McD’s)-Casual Dining(Chili’s)-Fast Casual (Qdoba)-Upscale-Pizza-Family Dining(IHOP)-Snack (Jamba Juice)
Experts include Mary Jo Larson, Publisher, Franchise Times Magazine and Bob Bielinski, Managing Director, CIT Corporate Finance
(3/3) Understanding the loan application; How are Rest’s Currently Accessing Capital?; What Works in Each of the Vertical Rest Markets?cont.
(2/3) …here on twitter, #restaurantfinancing , or sign up atcolemanpublishing.com . Webinar will cover: Saturation of the Market; …..
(1/3) “Quick, Casual, and Full Service Restaurant Financing – Traps and Opportunities ” A Coleman Webinar Begins in 5 min! Follow along…
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Vegas’ “Original Celebrity Chef” Files for Chapter 11 Bankruptcy

Posted on July 13, 2011 by insidemainstreet in BK Wednesday

Andre Rochat, His Two Vegas Restaurants, and His Restaurant Management Company Have All Filed for Bankruptcy.

 

Andre Rochat, the self-proclaimed “Original Celebrity Chef” of Las Vegas, has filed for bankruptcy protection along with his two French restaurants.

Born in France, Rochat arrived in the U.S. in 1965, furthering his career by working in such places as Washington’s famed Mayflower Hotel and as United Airlines in-flight chef.  He opened his namesake restaurant in Vegas in 1980, “long before Wolfgang Puck, Emeril Lagasse and Charlie Palmer arrived.”

The two restaurants in the bankruptcy petition are Andre’s at Monte Carlo and Alize restaurant atop the Palms Casino Resort. Court papers show Alize lost $93,000 last year, while Andre’s lost over $290,000.

Rochat and his three companies all listed $2.3 million in claims with Plaza Bank, though Vegas, Inc. has reported that Plaza Bank has alleged that the borrowers are in default on the loans.

“They took on too much debt while the economy tanked,” Rochat’s restaurant-management group director said.

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Ten Ideas About How We Can Help Open Up Loan Markets for Small Businesses

Posted on July 12, 2011 by insidemainstreet in Inside Main Street


As we trudge through the slowing economy and access to credit issues, it can be hard to look past the problems and look for solutions.

Fortunately, a story was released by MultiFunding, Inc. today with ten ideas about how we fix our small business problem.  These are in no way the final say on what we need to do, but they can spur the discussion and brainstorming necessary to find the true solution.

The list goes as follows:

Ideas 1 & 2:  The first issue addressed by the article says that small businesses need to get their books in order.  According to the author, poor bookkeeping is the number one reason loans slow down.  The Solution? The government should increase penalties for any taxes that are filed late or when extensions are requested, and every business school in America makes it a requirement for their students to donate some time every week to a local business to help with their accounting systems.  These may seem like tough love, the article quips, but they will ultimately lead to healthier businesses.

Ideas 3 & 4:  The second problem addressed was the need for big businesses to start paying small businesses on time.  Some Fortune 1000 corporations are taking 100+ days to pay their small businesses suppliers, who risk termination if they complain.  This forces small business owners into expensive factoring arrangements and unhealthy accounts.  The challenge presented by the author asks for a CEO of a Fortune 100 company to take a leadership position and make a commitment to pay all of their suppliers within 30 days.  A internet platform was also called for when small business owners can publically display how longs it’s taking the big companies to pay them.

Ideas 5 & 6:  Everybody knows the pickle that banks are in when it comes to small business lending; they get pressured from government leaders to lend to small businesses in one ear, and in the other government regulators place pressure on banks not to lend to small business.  The article calls for the government to find a way to balance the legitimate need for strong and healthy banks and at the same time find appropriate and safe levels to allow banks to take appropriate risks when lending to small businesses.  The author also asks the government to realize the SBA is one answer, but not the only answer.

Ideas 7 & 8:  Another issue was that big banks need to organize themselves to lend to small business.  The author states that big banks should stop pretending that lending to small business is in their DNA and try a different approach entirely.  One idea was for big banks to try open communication and collaboration as opposed to shipping loan packages from one place to another.  Another idea was for big banks to consider taking a percentage of their assets and investing them in a subsidiary or different company entirely whose entire specialty is lending to smaller businesses.

Ideas 9 & 10:  The final two ideas center around a call to action by the author; consumers and small business owners need to rally around this cause.  The article champions supporting big businesses who support small businesses, and banking at small business friendly banks.

While these may not be the best (or the right) ways to go about fixing the small business lending problem, you can’t deny it gives you something to think about.

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Nebraska Single-Handedly Carrying SBA to Annual Cap

Posted on July 12, 2011 by insidemainstreet in Inside Main Street

As of June 30, Nebraska Alone Had $137 million in SBA Loans; a $45 million Per Quarter Pace.

For the first time this year, the SBA has admitted a general resurgence in SBA lending this year.

Through the end of the third quarter, the SBA 7(a) program has loaned more than $15.6 billion; 48% higher than during the same period last year and more than one and a half times the same period in 2009. The 504 program is also up from last year by around $120 million.

This revitalization has the SBA on track to hit its Congressionally mandated annual cap of $17.5 billion before the end of FY2011 (September 30).

Leading the charge is Nebraska, who as of June 30, had $137 million in SBA loans.

And there is still one quarter to go!

That is an average of more than $45 million per quarter and on pace to surpass the annual record for the state of $153 million. The SBA reported that last quarter, 102 loans worth $34 million created more than 300 jobs in Nebraska. Of those, more than half went to new businesses.

The only concern, is that if the SBA continues its pace toward the cap, lending could be limited unless Congress raises it.

But, that problem seems the lesser of two evils when presented with the sluggish, jobless alternative.

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Former Bank President Pleads Not Guilty to Bank Fraud Charges

Posted on July 11, 2011 by insidemainstreet in Mugshot Monday

 

Former Bank President Jed Hiers Has Been Charged with Conspiracy to Commit Bank Fraud and Making False Entries Into the Books and Records of a Federally-Insured Bank.

Former President of C&L Bank of Bristol Jed Hiers has pled not guilty.

Hiers was arraigned last Wednesday and entered a not guilty plea to federal charges of conspiracy to commit bank fraud and making false entries into the books and records of a federally-insured bank.

Allegedly, between 1999 and 2004, Hiers conspired with others to conceal the true finances of the bank from bank examiners and the bank’s own management.

Hiers is alleged to have made loans and extensions of credit to borrowers who were unable to repay and attempted to conceal the borrowers’ actual indebtedness from bank examiners.

A trial date has been set for September 6, 2011.

At this time, it hasn’t been released as to whether more arrests concerning this crime will be made.

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Former Executive Vice President Handed 18 Months for Loan Fraud

Posted on July 8, 2011 by insidemainstreet in Fraud Friday

Phil Coon, left, Has Been Sentenced to 18 Months in Federal Prison for Conspiracy to Commit Wire Fraud and Money Laundering.

It was all working perfectly…

Philip W. Coon, 58, was Executive Vice President of Coast Bank in Bradenton, Florida; his wife Melissa worked at Coast with him; and his friend John Robert Miller, a Tampa mortgage broker, had joined him in a scheme to pocket more than $1 million of Coast Bank’s money.

The crime was simple enough: Miller would send his customers to Coon for new home loans from Coast.  From there, Coon allegedly overcharged the customers and pocketed the profits.

But, as you might have guessed, things took a turn for the worst. The Great Recession hit Florida harder than most, and eventually builders could not complete homes and went under.  Borrowers stopped paying their loans, leading to Coast Bank’s failure and costing stockholders millions of dollars.

Coon was charged with conspiracy to commit wire fraud and money laundering, and prosecutors sought to get the maximum five year sentence.  But, Coon and his attorneys pointed to the fact Coon had made charitable donations with some of the stolen money, including a $200,000 gift to a church food kitchen that he wrote in Miller’s name.

As a result, Coon received 18 months in federal prison, after which he will be under three years of supervised release.

Coon has been ordered to forfeit his assets, including his home, jewelry,and piano he purchased for his wife.  Former shareholders of Coast wanted restitution for being the victims of Coon’s scheme, but the Judge deemed that it was Coast Bank, not it’s shareholders, that was the victim and threw out the request.

“Coon will be financially ruined as a result of this, professionally ruined,” Coon’s lawyer said, noting that he will not be paid the more  than $100,000 in legal fees he is owed.

“He just became addicted to money.”

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Two Must Attend Regional SBA Events Slated in August; Buffalo, NY & Fort Worth, TX

Posted on July 7, 2011 by insidemainstreet in Inside Main Street

With August less than a month away, the Mid-America and America East Lender’s Conferences are fast approaching.

Just yesterday the SBA urged through press release for participating lenders to attend the 2011 America East Conference scheduled for August 15th through 17th in Buffalo/Niagra Falls, New York.

“As the economy evolves, knowledge of SBA loan programs and other credit risk mitigation tools becomes more significant than ever.  America East is designed to provide intensive training to both new and seasoned SBA lenders, resulting in better delivery of our programs and expanded access to credit for the small business community,” SBA Region II Regional Administrator Jorge Silva-Puras said in the release.

The 17th annual Mid-America Lender’s Conference will be held August 8th through 10th in beautiful Fort Worth, TX. SBA has been a strong supporter of this event too, releasing in May a letter to all of their lenders announcing their participation.

Both of these events are a must for lenders in our current economic environment.  Not only are the hot topics of the industry discussed, but information garnered through side conversations among lenders is invaluable.

You can register now for America East here and Mid-America here.

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When a Shareholder Loan isn’t Capital — A Fruitcake Case Study

Posted on July 6, 2011 by insidemainstreet in Uncategorized

Bankers want their customers to have “skin in the game” reflected on their balance sheets. Equity contributions, retained earnings; and of course shareholder loans.

Small business bankers will view this as “capital” as the assumption is these “loans” are tax-free capital infusions.

But not always. Today’s BK Wednesday story is about the company that makes Grandma’s Fruitcakes from a recipe dating back to 1917.

The article, taken from the company’s press release, paints the company in glowing financial terms; strong cash flow, acceptable debt to equity ratios, current on all obligations including the bell weather indicator of impending financial doom – payroll taxes.

But why did the company file bankruptcy? “The company was forced into the bankruptcy filing by a shareholder, who along with other shareholders, had loaned the company money.”

Uh oh. Nothing good can come from a contested business partner divorce.
Despite the optimism of the article the pillars of the 5 Cs are crashing down. The “character” of the company is now shredded with the bankruptcy filing. The company doesn’t have the “capacity” to handle a dissident shareholder.

“Collateral” is now controlled by the court, not the borrower. Finally, in today’s fragile economic “conditions” this sentence is revealing to bankers who have seen way too many instances of failed expansion choices.

“While the original fruitcake has been a bakery staple, Beatrice Bakery has increased its products over the years to include liqueur cakes, artisan cakes, breakfast breads and kosher cakes, as well as all natural and no sugar added products.”

 

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http://www.beatricedailysun.com/news/local/article_4ca12820-a77c-11e0-9c4c-001cc4c03286.html

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Are your customers an Old School Employer? Or are they staying alive by Outsourcing?

Posted on July 5, 2011 by insidemainstreet in Uncategorized

Following up on our blog post of what small business bankers can learn about their customer’s finances from the Los Angeles Dodgers’ bankruptcy (1) Understand the power of the franchisor over the franchisee; 2) You must separate personal finances from business finances; 3) Don’t overstaff) is a great articles evangelizing outsourcing.

Are you customers embracing outsourcing? Do they really need that administrative assistant at $35k a year, when they can get the same productivity through virtual assistants on the cloud for a fraction of that?

4 Reasons Every Small Business Needs to Outsource
http://under30ceo.com/4-reasons-every-small-business-needs-to-outsource/

 

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