CREDIT ACCESS & APPLICATIONS DECLINING
The Federal Reserve Bank of New York’s Center for Microeconomic Data today released results from its latest Survey of Consumer Expectations (SCE) Credit Access Survey , which provides information on consumers’ experiences with, and expectations about, credit demand and credit access. The survey is conducted every four months.
Not only have deposits declined, but banks have gotten nervous about having enough liquidity to ensure they do not have a bank run like what occurred to Silicon Valley Bank. With less funds available it is no surprise that lending has declined dramatically.
Regardless of the headlines, lenders are getting concerned about the state of the economy and future defaults. With rising interest rates, student loan payments restarting, and inflation still running higher than desired lenders are being more cautious. The pullback in lending is just beginning and will accelerate later this year/early next year as defaults increase further.
What is the impact of decreased credit availability on real estate volume and in turn prices?Initially commercial property will feel the pain the most as the overwhelming majority of residential loans are government backed so the banks can easily pass them through to Fannie/Freddie. Commercial loans on the other hand are typically held by the banks (some larger ones are securitized or sold to life insurance companies) which ties up substantial capital.
With capital at small and midsize banks constrained there has been a sharp pullback in commercial real estate lending. This will first lead to much lower commercial real estate volumes due to lack of financing.
Ultimately there will be a major reset in commercial real estate prices as financing is more expensive and harder to obtain, many deals will no longer cash flow or make sense at their current pricing. We are already seeing this in the office sector, but multifamily is up next as the extremely low rates of the past three years reset to almost double their prior levels.
https://www.newyorkfed.org/microeconomics/sce/credit-access#/experiences-credit-applications1
Private bankruptcy filings are blowing past their COVID-era peaks as credit stress builds for small businesses
Bankruptcies were on the rise before the banking turmoil caused by the collapse of SVB and Signature Bank.
Rising bankruptcies among smaller businesses are "underappreciated signs of distress in US corporate credit."
Carla Mozée Apr 1, 2023, 8:15 AM
You need Debt XYZ to survive!
December 20, 2022
Delaney Sexton
Contributing Editor
SBA Hot Topic Tuesday – Small Business Loan Dollar Amount Decreased 21% in 2021
Source:
FDIC Nationwide Summary Statistics for 2021 Community Reinvestment Act Data
You need Debt XYZ to survive!
Watch Out Below
The US housing market’s sharp downturn has been bad for builders, flippers; and almost anyone who had plans to sell a home when rising mortgage rates shut down the pandemic buying frenzy. The worldwide commercial real estate market is seeing higher cap rates, lower appraised values; and increased vacancies. You need Debt XYZ to survive!
Commercial Real Estate Closed Deals DECLINED 16%
The WSJ reported on 6/25/22 that in the first quarter of 2022 commercial real estate closings nationwide declined 16%. This is due to buyers demanding discounts; while sellers are still asking for higher prices.
Banks cut lending to the lowest level in 7 years (5/12/2021)
There will be many foreclosures once the Covid foreclosure moratoriums expire. On average, there are three million borrowers in forbearance. Unfortunately, half of these homeowners will ultimately default and 1.5 million properties will hit the market. Mortgage credit availability, a measure of lenders’ willingness to issue mortgages, is near its lowest level since 2014, according to the Mortgage Bankers Association. You need Debt XYZ to survive!
Small Businesses Find Capital Hard To Secure
Small business loan approval percentages at big banks ($10 billion+ in assets) dropped slightly from 13.5% in September to 13.3% in October 2020, demonstrating the challenges of small business owners searching for capital, according to the latest Biz2Credit Small Business Lending Index. Debt XYZ approval % is 75%.
Covid Effect
Small businesses are scrambling to survive---renegotiating leases, loans, suppliers and clients. The Covid second wave is here. The "Extend and Pretend" loan policy from the banks is ending soon. You need Debt XYZ to survive!
Credit Card Debt
Small businesses oftentimes use credit card debt for working capital. This can hurt when cash flow declines. The average credit-card debt of households currently stands at around $8,400.
Tip: Debt XYZ can help you refinance or reduce your credit card debt; and help your company.
Banks: where are they?
The traditional bank branch is going away. McKinsey & Company claims three bank branches are closing every day. Many of the branches that remain open are closing their lobby and drive-through lanes. Still 80% of Americans prefer human interaction.
Tip: Debt XYZ can find you a bank, which understands YOU. Debt XYZ can steer you away from financial barriers like: charging you for making deposits, refusing to accept mail deposits, refusing to take cash, charging fees for check writing and other hidden fees.
Risk Raises Its Head!
The stock market just experienced a big decline. Overdue loans and rents have increased; and continue higher. Business loans are harder to find. Owners want answers not questions. Debt XYZ can deliver answers.
Is Now the Time to Sell?
"We're in what's called a "Goldilocks" economy, which like Baby Bear's porridge is not too hot and not too cold", thanks to James McIntosh, WSJ 7/7/17. Lately my shrewdest clients are contacting me to help sell assets; refinance debt; and arrange buyer acquisition debt. Debt XYZ can help you in many situations.
Small Business Optimism
On 2/14/2017 The National Federation of Independent Business said its index of small business optimism reached its highest level in 12 years! The enthusiasm might seem good news for the stock market. The record, however, suggests otherwise. Figures from FactSet going back to the mid-1970's show that when the small business optimism index is 105 or higher, the S&P 500 has risen an average of just 4.7% over the next year. When it is 85 or lower, the index has gained 38%. Maybe by the time the good economic feelings trickle down to Main Street, it is time to bail out of Wall Street. Thanks to the WSJ "Overheard". Debt XYZ will guide you carefully.
Ignore the Hype---Small Business Loans are Declining
You need Debt XYZ to find your small business loan. Why---read this:
Although the demand for small business credit remains high, banks the traditional providers of financing for this segment have continued a long and steady decline in small businesses lending. Small loans to businesses are down about 15% at banks since the financial crisis. Small business loans represented just 21% of business loan balances in 2016, continuing a consistent downward trend from 34% in 1995. Thanks to Nancy Michael Moody's Analytics.
Gold That Glitters---And Kills
"When the piles of gold begin to grow...that's when the trouble starts." This is from an insightful WSJ article by Amanda Foreman, who quoted this famous line from John Huston's film, "The Treasure of the Sierra Madre". WE HELP YOU BE SAFE.
Big Banks Cut Back on Small Business
The 10 biggest banks cut small business loans 38% from $72.5 billion in 2006 to $45.7 billion in 2016, according to PayNet Inc. At some big banks, the credit card is the only loan source for small business and costs an average interest rate of 12.85%, according to Creditcards.com. YOU NEED US! WE FIND YOUR CAPITAL.
33% Small Business Loans are SBA Loans
A study compiled by four Federal Reserve Banks showed that SBA financing is “a critical source of capital for Main Street,” reported Coleman Report. One big takeaway from the report is that almost 20 percent of applicants sought credit from an online lender in the first half of 2014. The most sought after product was a line of credit, followed by loans and credit cards. Nearly 40% of those seeking credit said the primary purpose was to expand their business—expansion was a top reason for borrowing across all revenue segments.
On the SBA side, startups were approved for SBA financing at a 25% rate. Growers (businesses that were profitable and increasing revenue) were approved at 17%. Microbusiness (defined as those valued at less than $250K) were approved 26% of the time with small businesses ($250K - $1M) approved at a 42% rate. Also of note was that one out of three small businesses that received credit in the first half of 2014 came from an SBA loan.
We know SBA!
8,000 Small Business Loan Applications totalling $52B Denied Daily
Bob Coleman: We are talking with Connie Evans, President & CEO, Association for Enterprise Opportunity (AEO) in Malibu, CA at the Dun & Bradstreet Credibility Corp. breakfast on microfinance. Connie I enjoyed your comments, they were great.
Connie Evans: Well the problem frankly is, there are 8,000 declines every single day in this country by banks for entrepreneurs that are looking to start or grow a business. That's a real market failure. We think if we were able to close that gap, we think this gap is between $44B-$52B, we would be able to create many more jobs, and good jobs that entrepreneurs would actually be able to create.
We can close the gap AND loans!
Community Banks Save Small Business
I love dissecting the numbers and here are some to contemplate as an FDIC official testified before Congress.
· Community banks account for 14% of banking assets
· Community banks account for 45% of small loans to Main Street and Rural America
· 600 of the 3,142 US counties would not have a brick and mortar bank if not for the community bank operating there
· Community bank loan balances grew 7.6% in the year ending June 2014. This outpaced a 4.9% growth rate for the industry as a whole.
We can find you a GOOD BANK!
Small Business Lending is Stuck in the S-L-O-W Lane
Across the U.S., small-business lending has been stuck in a slow, grinding recovery behind most other types of business and consumer loans. At the end of the first quarter, banks held $585 billion in loans to small businesses, up 1% from last September but still 18% less than the peak of $711 billion in 2008, according to the Federal Deposit Insurance Corp. The number of loans for $1 million or less held by banks is down about 14% to 23.5 million since 2008. In nearly one-third of all U.S. counties, small-business lending remains below 2005 levels, estimates PayNet Inc., a Skokie, Ill., tracker of loans by banks, corporations and alternative lenders such as finance companies.
Solution? Call us 404-216-3106.
Change is Here for Small Business Finance
Writing for Fortune.com, former SBA Administrator Karen Mills weighed in on the changes occurring in the small business lending market. "Innovators believe disruption is a good thing. And many will tell you there's no market more overdue for disruption than the banking industry," wrote Mills.
"... over the years what has persisted is a loan process built around inefficiencies that drive high costs due to two realities: 1) It is difficult for willing lenders and borrowers to find each other. 2) Small business credit risk is hard to assess," stated Mills.
Debt XYZ can find capital for small business.
Small Banks are more friendly than Big Banks
Small banks saw annualized loan growth of more than 6% in the second quarter of 2013, compared with less than 2% at the 25 largest banks, according to research by Keefe, Bruyette & Woods, Inc.
Debt XYZ can find the RIGHT lender for you.
SBA Loans are GOOD Loans
After peaking at 2.7% in 2010, the SBA 7(a) loan charge-off rate has dipped below the ten-year average of 1.3%, down to 1.1%. As lenders and Main Street recover from the Depression, SBA 7(a) loan performance stats continue to improve.
SBA Record Year
In 2013 SBA funded more than $29.5 billion of 7(a) and 504 loans. In 2014 there is -0- guaranty fee on SBA 7(a) loans under $150,000. Call us for details.
Small business transactions grow
Inc. Magazine reports that business sale transactions have risen sharply in the 3rd quarter of 2013 over the same period in 2012, climbing by 41.7% (1,685 deals vs. 1,189 a year earlier). This information is tracked by BuyBizSell.com. Restaurants and retail stores are leading the way in number of transactions, with a 109.4 percent increase in restaurant transactions and a 60.9 percent increase in retail, compared with the same time last year. A strengthening economy is to thank as the U.S. emerges from the Great Recession, the lingering effects of which have continued to punish businesses since 2008 - now both seller and buyer confidence is on the rise.
Small Business Lending Declines 1998-2013---you need us!
Recent declines in small business lending also reflect longer-term trends in financial markets. Banks have been exiting the small business loan market for over a decade. This realignment has led to a decline in the share of small business loans in banks’ portfolios. The percentage of nonfarm, nonresidential loans of less than $1 million—a common proxy for small business lending—has declined steadily since 1998, dropping from 51 percent to 29 percent. (source: FDIC)
Housing Market Crisis---Watchout!
Small business owners use the equity in their homes to support their businesses. If Congress abolishes Fannie Mae and Freddie Mac (see below); then housing values may decline and one more leg of support for small business will be removed.
Small business owners need Debt XYZ to find capital in this tough market.
(Updated - June 25, 2013 3:33 PM EDT)
Fannie Mae (OTCBB: FNMA) and Freddia Mac (OTCBB: FMCC) are lower on Tuesday's trading session as a bipartisan group of U.S. senators introduced a bill to abolish the two GSEs, replacing them with a government reinsurer of mortgage securities which would stem private losses in a crisis situation.
Business Acquistions +56% in 2013
The AP recently reported business acquisitions are up 56% over last year.
BizBuySell.com says retirement was the number one contributor for the uptick.
“It was almost like a light switch went on in January. We started getting a lot of activity with sellers who said, `I don’t want to go through another downturn or tough time. I want to see if I could sell my business,” says one broker.
“Trillions of dollars of business value are going to change hands in the next 10 to 20 years,” cited another.
Debt XYZ can find capital for your next business acquisition.
SBA Benefits Small Business
Thanks to Bob Coleman for the following:
"Today, we cover a Dayton Daily News hit piece that shockinginly (yes, note the heavy sarcasm) reveals a $1.3 billion loss in SBA 7(a) loans over a 13 year period.
It continues to amaze me these irresponsible reports fail to note the most important factor about SBA lending - that is unlike Fannie, Freddie, Sallie, GM, Bank of America and AEI, just to name a few, SBA did not need a bailout.
Where is the outrage about GM alone costing the taxpayers $50 billion, or a $250,000 subsidy per job?
SBA borrower and lender fees covered the 13 year loss of $130,000 million per year.
Can you imagine the economic impact to Main Street if it received a $250,000 subsidy, not a loan, but a taxpayer subsidy per employee?
If the politicians had given Main Street 1/10 of that number, If that happened, we wouldn't be talking about a Detroit renaissance, we would be talking about a Main Street renaissance and a country at full employment with a whopping GDP. "
Big Banks are NOT friendly to Small Business
A recent SNL Financial report contradicts all the big bank chest pumping press releases about how they are growing their small business loan portfolios.
Banks with assets over $10 billion continue to decrease their small business loan presence.
Analyzing three loan buckets, loans between $250,000 and $1 million increased over 4% in 2012 for banks with assets between $1 billion and $10 billion.
Overall, small business lending is down $10.9 billion, or 2% compared to 2011.
Note: Debt XYZ places most loans with community banks and finance companies.
Small Business Lending---Where is it today?
It's official: Banks are lending to businesses again in a big way--unless you're a small business. According to FDIC data released today, U.S. commercial & industrial loans totaled $1.5 trillion as of December 31, 2012, a 12 percent increase from the year before, surpassing the high-water mark set in the second quarter of 2008. Meanwhile, small business lending continues to plod along: Loans with initial balances under $1 million increased just 0.4 percent, to $284 billion, 17 percent below the pre-recession peak.
"There really hasn't been much of any recovery" for small businesses, says Scott Shane, a professor of economics at Case Western Reserve University. "You could make a case it's no longer declining…[but] it's all far below where it was before the recession."
Lender or Partner?
Lenders these days focus so much on financial statements, credit scores, and risk ratings, that vision, strategy and industry expertise have been pushed to the side and replaced by "Analysis Paralysis".
On most occasions when we are introduced to a borrower, their expectation appears to be a five minute phone call for "niceties" followed by a two minute request for a full and complete financial package. About thirty minutes into the call, when we haven't even brought up financial statements yet, is when the comment comes. And it's in a friendly, surprised, and even relieved fashion. "I've never had a lender ask me these questions before."
What are we asking? Well, we want to understand our borrower's business, first and foremost. What do you do? How do you do it? How long have you been doing it? Why do you do it? How did you start doing it? Why do you keep doing it? What is your vision for the company? What is your strategy for success? What is on your "Wish List"? Why do your customers buy from you?
That's just for starters, but you get the idea. And then we surprise them again by scheduling a time to come visit face-to-face. Of course, we also ask for the financial package. But that package doesn't mean much if we don't understand the business.
A lender understands the risks.
A partner understands your business.
Lending to small businesses DECLINES
(Reuters) - Lending to small businesses fell in June 2012 to the lowest level since October, a report showed on Wednesday, suggesting the economy's recent loss of momentum is likely to persist absent any new action by policymakers.
The Thomson Reuters/PayNet Small Business Lending Index, which measures the overall volume of financing to small U.S. companies, sagged to 98.5 from 103.8 in May, PayNet said. The index, which points to changes in overall economic growth several months in the future, has fallen in five of the past six months.
"Small businesses really took a dive," said PayNet founder Bill Phelan. "What this means is, the slowdown is going to continue."
Selling a small business---BE PREPARED
Today, we cover the supply side of the Main Street Capital Crisis.
Lack of access to capital reduces the number of potential buyers for a small business.
This lowers the value of retail and service small businesses.
Angus Loten in his Wall Street Journal blog looks at the numbers:
Median Asking Price $236,759
Median Asking Price Last Year $239,000
Median Sale Price $150,000
Median Sale Price Last Year $150,000
Median Revenues of Sold Businesses $360,000
Median Revenues of Sold Businesses Last Year $340,000
The silver lining, "More than 3,332 small businesses changed hands so far this year, a 1.2% increase over the same period last year. Increased sales of smaller firms are typically seen as a positive economic trend, as healthy businesses change hands and boost entrepreneurial activity. 'You can't sell a failing business, so the fact that more businesses are selling this year is a good sign,' says Mike Handelsman, a group general manager at BizBuySell.
Hot and Cold Business Climates
A recent poll conducted by Thumbtack.com and the Kauffman Foundation has produced a list of the top states and the worst states to start a small business. More than 6,000 small businesses, representing all 50 states, responded to the survey which asked them how they rated their state's support of small businesses, how easy they thought it was to start a new business there, and whether they'd encourage others to do the same, CNN Money reports. Ready for the results?
Idaho tops the list as the friendliest state, followed in order by Texas, Oklahoma, Utah, and Louisiana. In other categories, these states were also tops for things like friendliness of their tax codes and regulations and employee hiring costs. Rhode Island was the least friendliest state, with Vermont, Hawaii, California and New York rounding out the bottom five. Among cities, small businesses picked Oklahoma City, Dallas-Fort Worth, San Antonio, Austin and Atlanta as the five best, and Sacramento, San Diego, Los Angeles, Tucson and Detroit as the five worst.
Big Banks Get Bigger---Thanks to the Feds!
An FDIC program created during the 2008 financial crisis is nearing expiration, making many community bankers uneasy about the future. Initially created during the depths of the recession, the program encouraged small business owners to keep their deposits at community banks by providing unlimited insurance. But, with the program set to end in December, CNN Money reports many small bankers fear small businesses will shift billions of dollars in deposits to the nation's largest banks, stifling their ability to lend to small firms.
Bill Isaac, who led the FDIC during the 1980's banking crisis, told CNN that doing away with the insurance now would reroute funds to large banks, hurt small business, and impede job growth. The kicker is that many small business owners are unaware of the impending deadline. Some bankers believe the expiration will only be a hiccup in the scheme of things, while others believe it will drive up the cost of lending and force them to raise credit standards. At least we still have a few months to work on it, but be aware and be prepared for the effects of this potential problem.
Small Business Credit Tight
The debate of whether there is sufficient available small business credit for Main Street has gotten a lot more interesting after Case Western Scott Shane's argument that small business lending is down 39% since 2007.
Citing FDIC statistics, Professor Shane says commercial loans under $1 million (e.g. small business loans) have continued their free fall, losing 17% in loan values, and 8% in loan numbers between 2009 and 2011.
And he doesn't see any loosening of the credit spigot soon. He concludes his article citing a Fed survey of senior bank lending officers that 94% say their credit box for small business remains unchanged.
Small Business Loans Decrease
For FY 2012, approval for 7(a) and ARC Loans is $4,257,467 compared to $9,541,387 for FY2011 during the same time period. (Period ending 01/27/12) SBA 504 volume is flat.
Why? SBA fees increased over 100% is Reason #1. Bankers see a Double Dip Depression is Reason #2.
Capitalization Rates
Capitalization rates drive value. Wall Street knows this; so Main Street should know it. Check out this website for insight on capitalizataion rates and calculate the value of your Main Street owner occupied property: http://www.realtyrates.com/commentaryg.html
Note: Cap rates for small business properties (convenience stores, hotels, office/warehouses) are 11%+.
Credit Card Debt? Sometimes Necessary, but Expensive
If you use credit cards to finance your small business, be aware that it is expensive. The average annual percentage rate on a credit card clocked in at 15.14% on Jan. 4, nearly half a percentage point higher than at the beginning of 2011, according to www.CreditCards.com.
Short Sale Approval---Standard of Review SBA Loans
A request from a borrower to approve a short sale should be analyzed in the same manner as any other request for release of lien for consideration. The test is whether the dollar amount offered as consideration in exchange for release of the lien is approximately equal to or greater than the Recoverable Value of the property. At a minimum, the documents that should be reviewed include:
(1) Real Estate Listing Agreement;
(2) Real Estate Purchase and Sale Agreement;
(3) Short Sale Addendum to Purchase and Sale Agreement;
(4) Current title report;
(5) Draft settlement statement;
(6) Consent letter from any other lender whose agreement is required to complete the short sale;
(7) Post-default Appraisal of the property; and
(8) Pre-approval letter from the purchaser's lender.
Credit Bids
1. Requirement
A Credit Bid should be entered at all real property lien foreclosure sales initiated by SBA, a 7(a) Lender or CDC to foreclose a lien securing an SBA Loan, whether the sale is judicial or non-judicial.
2. Credit Bid Amount
To determine the amount of a Credit Bid the following factors must be considered: (a) Recoverable Value; (b) the loan balance; and (c) need for and ability to collect a deficiency judgment. The Credit Bid amount should be based on the Recoverable Value of the collateral and should not exceed the amount of the loan balance. Further, the entire loan balance should not be bid if doing so would eliminate an otherwise collectible deficiency.
FACT:
Over $300 billion in real estate loans were originated in 2006, and many of these loans are coming due this year and into 2012 with LTV’s over 80%.
The percentage of foreclosed commercial mortgages held by banks by the end of the fourth quarter is estimated to be over 7% or nearly $15 billion.
---Debt XYZ can help you!
Goldman's Ruse
Goldman announced 18 months ago that it would spend $500 million to help 10,000 small businesses obtain credit. To date only 300 businesses have actually been approved!
How to Get a Loan
First, call Debt XYZ 404-216-3106; and read this:
http://www.bizjournals.com/sanjose/print-edition/2011/04/29/businesses-find-success-sba-loan-program.html
Megabanks Shrink Small Business Lending
If the megabanks are so big on lending, why do their loan books keep shrinking? The biggest U.S. banks tell us they have spent the past quarter writing loans, renewing credit lines and generally being upstanding economic citizens. Bank of America (BAC) says it provided consumers and businesses with $144 billion in credit in the first quarter, Wells Fargo (WFC) ponied up $151 billion and JPMorgan Chase (JPM), swinging for the PR fences, claims to have lent out an improbable-looking $450 billion. These guys are our economic heart? Yet loan balances actually shrank from a year ago at all three banks in the first quarter, just as they did at their old pal Citi (C). This at a time when the too-big-to-fail four are being drenched with new deposits.
Missed Mortgage Payment
Don't underestimate the harm that even one missed mortgage payment can do to your credit score—especially if you had good credit to begin with.
Another year, another catalog of bank failures. Over the past year, many banks have been forced to shut down and customers have been left to wonder about the future of their accounts. To help you stay updated, we have again compiled a list of failed banks with useful information for the customers of these banks, such as the acquiring bank, bridge bank or receiver of account transfers, which may include deposits and loans. Please be aware that the FDIC is often appointed as receiver for failed banks.
http://www.mybanktracker.com/bank-news/failed-bank-list-2011/
The Big Problem
The media is full of anecdotal reports about small businesses that had bank loans and lines of credit before the Great Recession--and now have neither. While these stories put a face on the entrepreneurs struggling to make do with less credit, they don't give a sense of the overall breadth or depth of the problem: The decline in bank credit to small businesses during the Great Recession is so large that it's unlikely to return to prerecession levels for many years.
SBA Changes AGAIN!
Republicans now control the House, and they've promised to cut spending. So the odds are against the renewal of these lending incentives, which were created by the economic stimulus bill in early 2009. The loan breaks boosted SBA lending, which had dropped dramatically during the financial crisis. The 90 percent guarantee on the SBA's flagship 7(a) loans -- up from the usual 75 percent or 85 percent -- made the loans less risky for lenders. The fee waivers on 7(a) and on 504 loans, which are primarily used for real estate, made these programs more affordable for borrowers. Thanks to these incentives -- and anticipation of their demise -- nearly 20,000 small businesses received more than $9 billion in 7(a) loans from October through December. That compares with $3.9 billion in 7(a) loans during the same quarter a year ago, and only $1.9 billion during this period in 2008. . . . keep reading
https://mail.google.com/mail/?hl=en&shva=1#inbox/12d7003d25960695
Note: The SBA lending incentives were NOT renewed.
90% of Loan Applications Rejected
The 2010 Small Business Bank Study is out and a trio of high-profile banks atop its "consumer best" list made some huge gains in consumer satisfaction in just one year. Here are the findings:
Lenders and investors reject 90% of loan applications or investment proposals that would be secured by a business's real estate holdings.
They also reject 73% of loan applications or investment proposals that are based on a business's cash flow.
Slightly more than 50% of business owners surveyed had obtained capital from friends and family for money. One-third obtained capital from bank loans.
Lenders and Investors Reject 90% of Loan Applications---you need us!
Small Business is Fighting for its LIFE
03/15/2020 | 01:10pm EDT
By Ruth Simon
Small-business confidence plunged in March to near its lowest levels in the past seven years, as business owners grappled with the effects of the novel coronavirus on their companies and the broader economy.
Owners of businesses from restaurants and yoga studios to marketing and manufacturing firms are already making tough choices, as the fallout spreads from industries dependent on Chinese manufacturers to the broader U.S. economy.
"We're going into a period no one has been through before," said Jay Foreman, chief executive of Basic Fun Inc., a small Boca Raton, Fla., toy maker. "It feels like 9/11, Katrina and the financial crisis all in one."
SBA Paycheck Protection Program
The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll.
SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.
You can apply through any existing SBA 7(a) lender. Debt XYZ knows the right lender.
The Federal Reserve Bank of New York’s Center for Microeconomic Data today released results from its latest Survey of Consumer Expectations (SCE) Credit Access Survey , which provides information on consumers’ experiences with, and expectations about, credit demand and credit access. The survey is conducted every four months.
- The application rate for any kind of credit over the past twelve months declined to 40.3 percent from 40.9 percent in February, its lowest reading since October 2020. Application rates declined to 11.9 percent for auto loans and 12.5 percent for credit card limit requests, but increased to 24.8 percent for credit cards, 6.5 percent for mortgages, and 5.3 percent for mortgage refinances.
- The overall rejection rate for credit applicants increased to 21.8 percent, the highest level since June 2018. The increase was broad-based across age groups and highest among those with credit scores below 680.
- The rejection rate for auto loans increased to 14.2 percent from 9.1 percent in February, a new series high. It increased for credit cards, credit card limit increase requests, mortgages, and mortgage refinance applications to 21.5 percent, 30.7 percent, 13.2 percent, and 20.8 percent, respectively.
- The average reported probability that a loan application will be rejected increased sharply for all loan types. It rose to 30.7 percent for auto loans, 32.8 percent for credit cards, 42.4 percent for credit limit increase requests, 1 percent for mortgages, and 29.6 percent for mortgage refinance applications. The readings for auto loans, mortgages, and credit card limit increase requests are all new series highs.
Not only have deposits declined, but banks have gotten nervous about having enough liquidity to ensure they do not have a bank run like what occurred to Silicon Valley Bank. With less funds available it is no surprise that lending has declined dramatically.
Regardless of the headlines, lenders are getting concerned about the state of the economy and future defaults. With rising interest rates, student loan payments restarting, and inflation still running higher than desired lenders are being more cautious. The pullback in lending is just beginning and will accelerate later this year/early next year as defaults increase further.
What is the impact of decreased credit availability on real estate volume and in turn prices?Initially commercial property will feel the pain the most as the overwhelming majority of residential loans are government backed so the banks can easily pass them through to Fannie/Freddie. Commercial loans on the other hand are typically held by the banks (some larger ones are securitized or sold to life insurance companies) which ties up substantial capital.
With capital at small and midsize banks constrained there has been a sharp pullback in commercial real estate lending. This will first lead to much lower commercial real estate volumes due to lack of financing.
Ultimately there will be a major reset in commercial real estate prices as financing is more expensive and harder to obtain, many deals will no longer cash flow or make sense at their current pricing. We are already seeing this in the office sector, but multifamily is up next as the extremely low rates of the past three years reset to almost double their prior levels.
https://www.newyorkfed.org/microeconomics/sce/credit-access#/experiences-credit-applications1
Private bankruptcy filings are blowing past their COVID-era peaks as credit stress builds for small businesses
Bankruptcies were on the rise before the banking turmoil caused by the collapse of SVB and Signature Bank.
Rising bankruptcies among smaller businesses are "underappreciated signs of distress in US corporate credit."
Carla Mozée Apr 1, 2023, 8:15 AM
You need Debt XYZ to survive!
December 20, 2022
Delaney Sexton
Contributing Editor
SBA Hot Topic Tuesday – Small Business Loan Dollar Amount Decreased 21% in 2021
Source:
FDIC Nationwide Summary Statistics for 2021 Community Reinvestment Act Data
You need Debt XYZ to survive!
Watch Out Below
The US housing market’s sharp downturn has been bad for builders, flippers; and almost anyone who had plans to sell a home when rising mortgage rates shut down the pandemic buying frenzy. The worldwide commercial real estate market is seeing higher cap rates, lower appraised values; and increased vacancies. You need Debt XYZ to survive!
Commercial Real Estate Closed Deals DECLINED 16%
The WSJ reported on 6/25/22 that in the first quarter of 2022 commercial real estate closings nationwide declined 16%. This is due to buyers demanding discounts; while sellers are still asking for higher prices.
Banks cut lending to the lowest level in 7 years (5/12/2021)
There will be many foreclosures once the Covid foreclosure moratoriums expire. On average, there are three million borrowers in forbearance. Unfortunately, half of these homeowners will ultimately default and 1.5 million properties will hit the market. Mortgage credit availability, a measure of lenders’ willingness to issue mortgages, is near its lowest level since 2014, according to the Mortgage Bankers Association. You need Debt XYZ to survive!
Small Businesses Find Capital Hard To Secure
Small business loan approval percentages at big banks ($10 billion+ in assets) dropped slightly from 13.5% in September to 13.3% in October 2020, demonstrating the challenges of small business owners searching for capital, according to the latest Biz2Credit Small Business Lending Index. Debt XYZ approval % is 75%.
Covid Effect
Small businesses are scrambling to survive---renegotiating leases, loans, suppliers and clients. The Covid second wave is here. The "Extend and Pretend" loan policy from the banks is ending soon. You need Debt XYZ to survive!
Credit Card Debt
Small businesses oftentimes use credit card debt for working capital. This can hurt when cash flow declines. The average credit-card debt of households currently stands at around $8,400.
Tip: Debt XYZ can help you refinance or reduce your credit card debt; and help your company.
Banks: where are they?
The traditional bank branch is going away. McKinsey & Company claims three bank branches are closing every day. Many of the branches that remain open are closing their lobby and drive-through lanes. Still 80% of Americans prefer human interaction.
Tip: Debt XYZ can find you a bank, which understands YOU. Debt XYZ can steer you away from financial barriers like: charging you for making deposits, refusing to accept mail deposits, refusing to take cash, charging fees for check writing and other hidden fees.
Risk Raises Its Head!
The stock market just experienced a big decline. Overdue loans and rents have increased; and continue higher. Business loans are harder to find. Owners want answers not questions. Debt XYZ can deliver answers.
Is Now the Time to Sell?
"We're in what's called a "Goldilocks" economy, which like Baby Bear's porridge is not too hot and not too cold", thanks to James McIntosh, WSJ 7/7/17. Lately my shrewdest clients are contacting me to help sell assets; refinance debt; and arrange buyer acquisition debt. Debt XYZ can help you in many situations.
Small Business Optimism
On 2/14/2017 The National Federation of Independent Business said its index of small business optimism reached its highest level in 12 years! The enthusiasm might seem good news for the stock market. The record, however, suggests otherwise. Figures from FactSet going back to the mid-1970's show that when the small business optimism index is 105 or higher, the S&P 500 has risen an average of just 4.7% over the next year. When it is 85 or lower, the index has gained 38%. Maybe by the time the good economic feelings trickle down to Main Street, it is time to bail out of Wall Street. Thanks to the WSJ "Overheard". Debt XYZ will guide you carefully.
Ignore the Hype---Small Business Loans are Declining
You need Debt XYZ to find your small business loan. Why---read this:
Although the demand for small business credit remains high, banks the traditional providers of financing for this segment have continued a long and steady decline in small businesses lending. Small loans to businesses are down about 15% at banks since the financial crisis. Small business loans represented just 21% of business loan balances in 2016, continuing a consistent downward trend from 34% in 1995. Thanks to Nancy Michael Moody's Analytics.
Gold That Glitters---And Kills
"When the piles of gold begin to grow...that's when the trouble starts." This is from an insightful WSJ article by Amanda Foreman, who quoted this famous line from John Huston's film, "The Treasure of the Sierra Madre". WE HELP YOU BE SAFE.
Big Banks Cut Back on Small Business
The 10 biggest banks cut small business loans 38% from $72.5 billion in 2006 to $45.7 billion in 2016, according to PayNet Inc. At some big banks, the credit card is the only loan source for small business and costs an average interest rate of 12.85%, according to Creditcards.com. YOU NEED US! WE FIND YOUR CAPITAL.
33% Small Business Loans are SBA Loans
A study compiled by four Federal Reserve Banks showed that SBA financing is “a critical source of capital for Main Street,” reported Coleman Report. One big takeaway from the report is that almost 20 percent of applicants sought credit from an online lender in the first half of 2014. The most sought after product was a line of credit, followed by loans and credit cards. Nearly 40% of those seeking credit said the primary purpose was to expand their business—expansion was a top reason for borrowing across all revenue segments.
On the SBA side, startups were approved for SBA financing at a 25% rate. Growers (businesses that were profitable and increasing revenue) were approved at 17%. Microbusiness (defined as those valued at less than $250K) were approved 26% of the time with small businesses ($250K - $1M) approved at a 42% rate. Also of note was that one out of three small businesses that received credit in the first half of 2014 came from an SBA loan.
We know SBA!
8,000 Small Business Loan Applications totalling $52B Denied Daily
Bob Coleman: We are talking with Connie Evans, President & CEO, Association for Enterprise Opportunity (AEO) in Malibu, CA at the Dun & Bradstreet Credibility Corp. breakfast on microfinance. Connie I enjoyed your comments, they were great.
Connie Evans: Well the problem frankly is, there are 8,000 declines every single day in this country by banks for entrepreneurs that are looking to start or grow a business. That's a real market failure. We think if we were able to close that gap, we think this gap is between $44B-$52B, we would be able to create many more jobs, and good jobs that entrepreneurs would actually be able to create.
We can close the gap AND loans!
Community Banks Save Small Business
I love dissecting the numbers and here are some to contemplate as an FDIC official testified before Congress.
· Community banks account for 14% of banking assets
· Community banks account for 45% of small loans to Main Street and Rural America
· 600 of the 3,142 US counties would not have a brick and mortar bank if not for the community bank operating there
· Community bank loan balances grew 7.6% in the year ending June 2014. This outpaced a 4.9% growth rate for the industry as a whole.
We can find you a GOOD BANK!
Small Business Lending is Stuck in the S-L-O-W Lane
Across the U.S., small-business lending has been stuck in a slow, grinding recovery behind most other types of business and consumer loans. At the end of the first quarter, banks held $585 billion in loans to small businesses, up 1% from last September but still 18% less than the peak of $711 billion in 2008, according to the Federal Deposit Insurance Corp. The number of loans for $1 million or less held by banks is down about 14% to 23.5 million since 2008. In nearly one-third of all U.S. counties, small-business lending remains below 2005 levels, estimates PayNet Inc., a Skokie, Ill., tracker of loans by banks, corporations and alternative lenders such as finance companies.
Solution? Call us 404-216-3106.
Change is Here for Small Business Finance
Writing for Fortune.com, former SBA Administrator Karen Mills weighed in on the changes occurring in the small business lending market. "Innovators believe disruption is a good thing. And many will tell you there's no market more overdue for disruption than the banking industry," wrote Mills.
"... over the years what has persisted is a loan process built around inefficiencies that drive high costs due to two realities: 1) It is difficult for willing lenders and borrowers to find each other. 2) Small business credit risk is hard to assess," stated Mills.
Debt XYZ can find capital for small business.
Small Banks are more friendly than Big Banks
Small banks saw annualized loan growth of more than 6% in the second quarter of 2013, compared with less than 2% at the 25 largest banks, according to research by Keefe, Bruyette & Woods, Inc.
Debt XYZ can find the RIGHT lender for you.
SBA Loans are GOOD Loans
After peaking at 2.7% in 2010, the SBA 7(a) loan charge-off rate has dipped below the ten-year average of 1.3%, down to 1.1%. As lenders and Main Street recover from the Depression, SBA 7(a) loan performance stats continue to improve.
SBA Record Year
In 2013 SBA funded more than $29.5 billion of 7(a) and 504 loans. In 2014 there is -0- guaranty fee on SBA 7(a) loans under $150,000. Call us for details.
Small business transactions grow
Inc. Magazine reports that business sale transactions have risen sharply in the 3rd quarter of 2013 over the same period in 2012, climbing by 41.7% (1,685 deals vs. 1,189 a year earlier). This information is tracked by BuyBizSell.com. Restaurants and retail stores are leading the way in number of transactions, with a 109.4 percent increase in restaurant transactions and a 60.9 percent increase in retail, compared with the same time last year. A strengthening economy is to thank as the U.S. emerges from the Great Recession, the lingering effects of which have continued to punish businesses since 2008 - now both seller and buyer confidence is on the rise.
Small Business Lending Declines 1998-2013---you need us!
Recent declines in small business lending also reflect longer-term trends in financial markets. Banks have been exiting the small business loan market for over a decade. This realignment has led to a decline in the share of small business loans in banks’ portfolios. The percentage of nonfarm, nonresidential loans of less than $1 million—a common proxy for small business lending—has declined steadily since 1998, dropping from 51 percent to 29 percent. (source: FDIC)
Housing Market Crisis---Watchout!
Small business owners use the equity in their homes to support their businesses. If Congress abolishes Fannie Mae and Freddie Mac (see below); then housing values may decline and one more leg of support for small business will be removed.
Small business owners need Debt XYZ to find capital in this tough market.
(Updated - June 25, 2013 3:33 PM EDT)
Fannie Mae (OTCBB: FNMA) and Freddia Mac (OTCBB: FMCC) are lower on Tuesday's trading session as a bipartisan group of U.S. senators introduced a bill to abolish the two GSEs, replacing them with a government reinsurer of mortgage securities which would stem private losses in a crisis situation.
Business Acquistions +56% in 2013
The AP recently reported business acquisitions are up 56% over last year.
BizBuySell.com says retirement was the number one contributor for the uptick.
“It was almost like a light switch went on in January. We started getting a lot of activity with sellers who said, `I don’t want to go through another downturn or tough time. I want to see if I could sell my business,” says one broker.
“Trillions of dollars of business value are going to change hands in the next 10 to 20 years,” cited another.
Debt XYZ can find capital for your next business acquisition.
SBA Benefits Small Business
Thanks to Bob Coleman for the following:
"Today, we cover a Dayton Daily News hit piece that shockinginly (yes, note the heavy sarcasm) reveals a $1.3 billion loss in SBA 7(a) loans over a 13 year period.
It continues to amaze me these irresponsible reports fail to note the most important factor about SBA lending - that is unlike Fannie, Freddie, Sallie, GM, Bank of America and AEI, just to name a few, SBA did not need a bailout.
Where is the outrage about GM alone costing the taxpayers $50 billion, or a $250,000 subsidy per job?
SBA borrower and lender fees covered the 13 year loss of $130,000 million per year.
Can you imagine the economic impact to Main Street if it received a $250,000 subsidy, not a loan, but a taxpayer subsidy per employee?
If the politicians had given Main Street 1/10 of that number, If that happened, we wouldn't be talking about a Detroit renaissance, we would be talking about a Main Street renaissance and a country at full employment with a whopping GDP. "
Big Banks are NOT friendly to Small Business
A recent SNL Financial report contradicts all the big bank chest pumping press releases about how they are growing their small business loan portfolios.
Banks with assets over $10 billion continue to decrease their small business loan presence.
Analyzing three loan buckets, loans between $250,000 and $1 million increased over 4% in 2012 for banks with assets between $1 billion and $10 billion.
Overall, small business lending is down $10.9 billion, or 2% compared to 2011.
Note: Debt XYZ places most loans with community banks and finance companies.
Small Business Lending---Where is it today?
It's official: Banks are lending to businesses again in a big way--unless you're a small business. According to FDIC data released today, U.S. commercial & industrial loans totaled $1.5 trillion as of December 31, 2012, a 12 percent increase from the year before, surpassing the high-water mark set in the second quarter of 2008. Meanwhile, small business lending continues to plod along: Loans with initial balances under $1 million increased just 0.4 percent, to $284 billion, 17 percent below the pre-recession peak.
"There really hasn't been much of any recovery" for small businesses, says Scott Shane, a professor of economics at Case Western Reserve University. "You could make a case it's no longer declining…[but] it's all far below where it was before the recession."
Lender or Partner?
Lenders these days focus so much on financial statements, credit scores, and risk ratings, that vision, strategy and industry expertise have been pushed to the side and replaced by "Analysis Paralysis".
On most occasions when we are introduced to a borrower, their expectation appears to be a five minute phone call for "niceties" followed by a two minute request for a full and complete financial package. About thirty minutes into the call, when we haven't even brought up financial statements yet, is when the comment comes. And it's in a friendly, surprised, and even relieved fashion. "I've never had a lender ask me these questions before."
What are we asking? Well, we want to understand our borrower's business, first and foremost. What do you do? How do you do it? How long have you been doing it? Why do you do it? How did you start doing it? Why do you keep doing it? What is your vision for the company? What is your strategy for success? What is on your "Wish List"? Why do your customers buy from you?
That's just for starters, but you get the idea. And then we surprise them again by scheduling a time to come visit face-to-face. Of course, we also ask for the financial package. But that package doesn't mean much if we don't understand the business.
A lender understands the risks.
A partner understands your business.
Lending to small businesses DECLINES
(Reuters) - Lending to small businesses fell in June 2012 to the lowest level since October, a report showed on Wednesday, suggesting the economy's recent loss of momentum is likely to persist absent any new action by policymakers.
The Thomson Reuters/PayNet Small Business Lending Index, which measures the overall volume of financing to small U.S. companies, sagged to 98.5 from 103.8 in May, PayNet said. The index, which points to changes in overall economic growth several months in the future, has fallen in five of the past six months.
"Small businesses really took a dive," said PayNet founder Bill Phelan. "What this means is, the slowdown is going to continue."
Selling a small business---BE PREPARED
Today, we cover the supply side of the Main Street Capital Crisis.
Lack of access to capital reduces the number of potential buyers for a small business.
This lowers the value of retail and service small businesses.
Angus Loten in his Wall Street Journal blog looks at the numbers:
Median Asking Price $236,759
Median Asking Price Last Year $239,000
Median Sale Price $150,000
Median Sale Price Last Year $150,000
Median Revenues of Sold Businesses $360,000
Median Revenues of Sold Businesses Last Year $340,000
The silver lining, "More than 3,332 small businesses changed hands so far this year, a 1.2% increase over the same period last year. Increased sales of smaller firms are typically seen as a positive economic trend, as healthy businesses change hands and boost entrepreneurial activity. 'You can't sell a failing business, so the fact that more businesses are selling this year is a good sign,' says Mike Handelsman, a group general manager at BizBuySell.
Hot and Cold Business Climates
A recent poll conducted by Thumbtack.com and the Kauffman Foundation has produced a list of the top states and the worst states to start a small business. More than 6,000 small businesses, representing all 50 states, responded to the survey which asked them how they rated their state's support of small businesses, how easy they thought it was to start a new business there, and whether they'd encourage others to do the same, CNN Money reports. Ready for the results?
Idaho tops the list as the friendliest state, followed in order by Texas, Oklahoma, Utah, and Louisiana. In other categories, these states were also tops for things like friendliness of their tax codes and regulations and employee hiring costs. Rhode Island was the least friendliest state, with Vermont, Hawaii, California and New York rounding out the bottom five. Among cities, small businesses picked Oklahoma City, Dallas-Fort Worth, San Antonio, Austin and Atlanta as the five best, and Sacramento, San Diego, Los Angeles, Tucson and Detroit as the five worst.
Big Banks Get Bigger---Thanks to the Feds!
An FDIC program created during the 2008 financial crisis is nearing expiration, making many community bankers uneasy about the future. Initially created during the depths of the recession, the program encouraged small business owners to keep their deposits at community banks by providing unlimited insurance. But, with the program set to end in December, CNN Money reports many small bankers fear small businesses will shift billions of dollars in deposits to the nation's largest banks, stifling their ability to lend to small firms.
Bill Isaac, who led the FDIC during the 1980's banking crisis, told CNN that doing away with the insurance now would reroute funds to large banks, hurt small business, and impede job growth. The kicker is that many small business owners are unaware of the impending deadline. Some bankers believe the expiration will only be a hiccup in the scheme of things, while others believe it will drive up the cost of lending and force them to raise credit standards. At least we still have a few months to work on it, but be aware and be prepared for the effects of this potential problem.
Small Business Credit Tight
The debate of whether there is sufficient available small business credit for Main Street has gotten a lot more interesting after Case Western Scott Shane's argument that small business lending is down 39% since 2007.
Citing FDIC statistics, Professor Shane says commercial loans under $1 million (e.g. small business loans) have continued their free fall, losing 17% in loan values, and 8% in loan numbers between 2009 and 2011.
And he doesn't see any loosening of the credit spigot soon. He concludes his article citing a Fed survey of senior bank lending officers that 94% say their credit box for small business remains unchanged.
Small Business Loans Decrease
For FY 2012, approval for 7(a) and ARC Loans is $4,257,467 compared to $9,541,387 for FY2011 during the same time period. (Period ending 01/27/12) SBA 504 volume is flat.
Why? SBA fees increased over 100% is Reason #1. Bankers see a Double Dip Depression is Reason #2.
Capitalization Rates
Capitalization rates drive value. Wall Street knows this; so Main Street should know it. Check out this website for insight on capitalizataion rates and calculate the value of your Main Street owner occupied property: http://www.realtyrates.com/commentaryg.html
Note: Cap rates for small business properties (convenience stores, hotels, office/warehouses) are 11%+.
Credit Card Debt? Sometimes Necessary, but Expensive
If you use credit cards to finance your small business, be aware that it is expensive. The average annual percentage rate on a credit card clocked in at 15.14% on Jan. 4, nearly half a percentage point higher than at the beginning of 2011, according to www.CreditCards.com.
Short Sale Approval---Standard of Review SBA Loans
A request from a borrower to approve a short sale should be analyzed in the same manner as any other request for release of lien for consideration. The test is whether the dollar amount offered as consideration in exchange for release of the lien is approximately equal to or greater than the Recoverable Value of the property. At a minimum, the documents that should be reviewed include:
(1) Real Estate Listing Agreement;
(2) Real Estate Purchase and Sale Agreement;
(3) Short Sale Addendum to Purchase and Sale Agreement;
(4) Current title report;
(5) Draft settlement statement;
(6) Consent letter from any other lender whose agreement is required to complete the short sale;
(7) Post-default Appraisal of the property; and
(8) Pre-approval letter from the purchaser's lender.
Credit Bids
1. Requirement
A Credit Bid should be entered at all real property lien foreclosure sales initiated by SBA, a 7(a) Lender or CDC to foreclose a lien securing an SBA Loan, whether the sale is judicial or non-judicial.
2. Credit Bid Amount
To determine the amount of a Credit Bid the following factors must be considered: (a) Recoverable Value; (b) the loan balance; and (c) need for and ability to collect a deficiency judgment. The Credit Bid amount should be based on the Recoverable Value of the collateral and should not exceed the amount of the loan balance. Further, the entire loan balance should not be bid if doing so would eliminate an otherwise collectible deficiency.
FACT:
Over $300 billion in real estate loans were originated in 2006, and many of these loans are coming due this year and into 2012 with LTV’s over 80%.
The percentage of foreclosed commercial mortgages held by banks by the end of the fourth quarter is estimated to be over 7% or nearly $15 billion.
---Debt XYZ can help you!
Goldman's Ruse
Goldman announced 18 months ago that it would spend $500 million to help 10,000 small businesses obtain credit. To date only 300 businesses have actually been approved!
How to Get a Loan
First, call Debt XYZ 404-216-3106; and read this:
http://www.bizjournals.com/sanjose/print-edition/2011/04/29/businesses-find-success-sba-loan-program.html
Megabanks Shrink Small Business Lending
If the megabanks are so big on lending, why do their loan books keep shrinking? The biggest U.S. banks tell us they have spent the past quarter writing loans, renewing credit lines and generally being upstanding economic citizens. Bank of America (BAC) says it provided consumers and businesses with $144 billion in credit in the first quarter, Wells Fargo (WFC) ponied up $151 billion and JPMorgan Chase (JPM), swinging for the PR fences, claims to have lent out an improbable-looking $450 billion. These guys are our economic heart? Yet loan balances actually shrank from a year ago at all three banks in the first quarter, just as they did at their old pal Citi (C). This at a time when the too-big-to-fail four are being drenched with new deposits.
Missed Mortgage Payment
Don't underestimate the harm that even one missed mortgage payment can do to your credit score—especially if you had good credit to begin with.
Another year, another catalog of bank failures. Over the past year, many banks have been forced to shut down and customers have been left to wonder about the future of their accounts. To help you stay updated, we have again compiled a list of failed banks with useful information for the customers of these banks, such as the acquiring bank, bridge bank or receiver of account transfers, which may include deposits and loans. Please be aware that the FDIC is often appointed as receiver for failed banks.
http://www.mybanktracker.com/bank-news/failed-bank-list-2011/
The Big Problem
The media is full of anecdotal reports about small businesses that had bank loans and lines of credit before the Great Recession--and now have neither. While these stories put a face on the entrepreneurs struggling to make do with less credit, they don't give a sense of the overall breadth or depth of the problem: The decline in bank credit to small businesses during the Great Recession is so large that it's unlikely to return to prerecession levels for many years.
SBA Changes AGAIN!
Republicans now control the House, and they've promised to cut spending. So the odds are against the renewal of these lending incentives, which were created by the economic stimulus bill in early 2009. The loan breaks boosted SBA lending, which had dropped dramatically during the financial crisis. The 90 percent guarantee on the SBA's flagship 7(a) loans -- up from the usual 75 percent or 85 percent -- made the loans less risky for lenders. The fee waivers on 7(a) and on 504 loans, which are primarily used for real estate, made these programs more affordable for borrowers. Thanks to these incentives -- and anticipation of their demise -- nearly 20,000 small businesses received more than $9 billion in 7(a) loans from October through December. That compares with $3.9 billion in 7(a) loans during the same quarter a year ago, and only $1.9 billion during this period in 2008. . . . keep reading
https://mail.google.com/mail/?hl=en&shva=1#inbox/12d7003d25960695
Note: The SBA lending incentives were NOT renewed.
90% of Loan Applications Rejected
The 2010 Small Business Bank Study is out and a trio of high-profile banks atop its "consumer best" list made some huge gains in consumer satisfaction in just one year. Here are the findings:
Lenders and investors reject 90% of loan applications or investment proposals that would be secured by a business's real estate holdings.
They also reject 73% of loan applications or investment proposals that are based on a business's cash flow.
Slightly more than 50% of business owners surveyed had obtained capital from friends and family for money. One-third obtained capital from bank loans.
Lenders and Investors Reject 90% of Loan Applications---you need us!
Small Business is Fighting for its LIFE
03/15/2020 | 01:10pm EDT
By Ruth Simon
Small-business confidence plunged in March to near its lowest levels in the past seven years, as business owners grappled with the effects of the novel coronavirus on their companies and the broader economy.
Owners of businesses from restaurants and yoga studios to marketing and manufacturing firms are already making tough choices, as the fallout spreads from industries dependent on Chinese manufacturers to the broader U.S. economy.
"We're going into a period no one has been through before," said Jay Foreman, chief executive of Basic Fun Inc., a small Boca Raton, Fla., toy maker. "It feels like 9/11, Katrina and the financial crisis all in one."
SBA Paycheck Protection Program
The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll.
SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.
You can apply through any existing SBA 7(a) lender. Debt XYZ knows the right lender.