SBA Lending News President Encourages Congress to Act on 'To-Do' List During Small Biz Roundtable The week before National Small Business Week kicks off, President Obama called a roundtable discussion on his proposed legislation with entrepreneurs and SBA administrator Karen Mills. During the session, the President called upon Congress to take action on the "To Do List" of small business legislation, Fox News reports. A report released Wednesday by the National Economic Council entitled "Moving America's Small Businesses & Entrepreneurs Forward," highlights the initiatives put in place so far during President Obama's administration. "To help them expand and hire, the President has signed a total of 18 tax cuts for small businesses, from greater expensing to the President's signature call to eliminate capital gains taxes on investments in small businesses," the report says, "The President has also established two new small business lending funds and expanded Small Business Administration lending programs, which have hit an all-time record." . . . keep reading Report: Running a Small Business 3x More Stressful Than Raising Children According to Bank of America's inaugural Small Business Owner Report, managing the ongoing success of their business creates more stress for small business owners than any other aspect in their lives. The survey answers indicate running a small business is twice as stressful as maintaining a healthy relationship with a spouse or partner, nearly three times as much stress as raising children, and more than four times as stressful as managing their own personal finances, MarketWatch reports. In addition, small business owners regularly forego free time (57%), exercise (37%) and other priorities in order to manage their small business. Also part of the survey, were questions about optimism in the next 12 months. 42% of small business owners surveyed expect their own local economic conditions to improve, compared to 35% who expect the national economy to improve. Nearly one-third of those surveyed expect to expand their workforce in the next 12 months, while more than half plan to keep their staffing levels consistent year over year. . . . keep reading Are Big Banks and Small Businesses a Good Fit? Bank of America has touted the fact it has added nearly 1,000 bankers to its small business ranks over the past year, and says in the first three months of 2012, they have extended more than $3.6 billion in credit to small businesses. But, not every small business owner has had a pleasant experience with larger firms. That's why this article from CNBC poses the question: Are bigger banks willing to deal with the risk of a small business in tough times? A couple of bankers interviewed said every bank has their sweet spot, and when times are good, anybody can do business with a big bank. But when times are bad, some smaller bankers see it as an opportunity for business. "It cuts both ways," one banker said, "We can't be the lender to the business that needs $100 million. But if one of my lenders has been chasing the ski-boot guy forever, and suddenly get the phone call [that their credit line has been denied], we swoop in." . . . keep reading Celebrity Bankruptcy Rooted in Lack of Knowledge We've told you about the dangers of Celebrity Worship before, celebrity bankruptcy filings are common and often disastrous. This article from Go Banking Rates argues that anyone can succumb to debt problems, and a disregard for money management and a deficiency in financial literacy are often rooted factors that lead bankrupt celebrities astray. The website also has a "Billionaire or Bankrupt Quiz," which you can take yourself, that shows that financial illiteracy isn't as uncommon as you would think. When asked to identify possible debt reduction approaches, 42% of respondents successfully pinpointed "start paying the balance with the highest APR" as a method of paying down debt, but failed to recognize other viable ways like starting with the lowest balance, working up to the highest debt balance and vice versa. Read more at Go Banking Rates and see their list of the top 8 celebrity bankruptcies, including the likes of Mike Tyson, Nicholas Cage, and the Octomom. . . . keep reading Senator Proposes "Common App" for Small Business Senator Kay Hagan (D-NC), member of the Small Business and Entrepreneurship Committee, has introduced a new act in Congress to help small businesses deal with mountains of paperwork they face each time they apply for a government contract or for an SBA loan. The Small Business Common Application Act aims to reduce these paperwork burdens and cut through government red tape. "The Small Business 'Common App' would function much like the one that students complete to apply to multiple colleges and universities simultaneously," Senator Hagan said in an article for Politico, "It would ensure that small businesses across the country can concentrate on growing and creating jobs -- not wasting time, filling out mountains of repetitive paperwork." The application would be accepted by multiple federal agencies (i.e. SBA), and eliminate the need to file, and re-file, the same information in different forms. "Small businesses shouldn't have to be responsive to the whims of the federal bureaucracy. The federal government needs to be responsive to the needs of our small businesses," Senator Hagan concluded. What do you think? . . . keep reading SBA 504 Lending up 54% For the first four months of 2012, SBA 504 lending is up a whooping 54%, and SBA 7(a) lending is up 11%. Annualizing the numbers, 504 is on a $7 billion pace, and 504 is on a $15 billion pace. . . . keep reading Alaskan Small Businesses Having No Problem Finding Credit Unlike the rest of America, loan approval rates haven' dropped a bit in Alaska. In fact, according to KTVA, one of the largest small business lenders in the state said it's seen an unprecedented number of approvals over the last six months. Bond Stewart of Wells Fargo said he has approved as many SBA loans between October 2011 and April this year as his bank did in the entirety of FY2011. So why is Alaska seemingly immune and prospering while the Lower 48 continue to revel in recovery? The secret appears to be nothing more than entrepreneurial spirit and pent-up demand. Stewart credits the low interest rate structure as boosting the feelings of financial surety among Alaska's small business owners. "It's a very strong, active year," he said, "I'm feeling very bullish about Alaska right now." . . . keep reading China's Sprinting Economy Reigned In to a Crawl Just six months ago, Chinese leaders were trying to pump the brakes on the rapid economic growth in China after the 2008 global crisis. Now, it looks like they may have hindered themselves too much. According to Businessweek, as export demand and consumer spending at home have weakened, the threat of job losses and possible unrest it rising. To get the economy cooking again, China's economic leaders are easing lending curbs and are expected to take other steps to shore up growth that fell to a nearly three year low of 8.1% in the first quarter of this year. On Saturday, regulators reduced minimum reserves banks are required to hold in a move that frees up money for lending. Analysts said though, that was in line with earlier plans and was unlikely to dramatically expand borrowing due to weak demand for credit. After China avoided the 2008 crisis better than most countries, they seem to have found a way to weaken their economy anyway. . . . keep reading Canadian Territory Taking Active Steps to Support Small Business According to this article from Bernadeen McLeod for Business Insider, the success of small business stories in the Southwestern Ontario Region has sparked the interest of hundreds of entrepreneurs. Luckily for them, Ontario government funding provides low-interest financing programs and small business funding grants in support of start-ups and young entrepreneurs. The FedDev Investing in Business Innovation (IBI) program provides a fully repayable low-interest loan up to $1 million with 33% contribution from the Canadian Government based on a term sheet from an accredited investor. The Community Futures Development Corporations (CFDC) offers up to $150,000 in low-interest financing for start-up and expansion projects in rural Ontario. And the MaRS Regional Innovation Centres (RIC) support the region's start-ups in expansion and development, as well as helps small businesses locate and acquire small business government grants. Canada clearly understands the importance of entrepreneurship, and their version of the SSBCI in Ontario is a model the rest of the territories should imitate. . . . keep reading $2.5M the Dividing Line for CRE Loans For Commercial Real Estate transactions, $2.5 million is the magic number; over that amount bank financing seems abundant, under it, there is so little financing available that many deals fall apart. That is according to the National Association of Realtors' findings in its Commercial Real Estate 2012 Lending Survey last month. The Association notes that more than 13,000 major properties valued at $2.5 million or higher traded hands nationwide in 2011. Sales volume increased 51% over 2010, with the lion's share of financing coming from big banks. Other funding sources included insurance companies and institutional investors. By contrast, the Herald-Tribune reports, the survey showed that small business transactions rely heavily on smaller regional and local banks and small private investors. Survey responses also indicated nearly 30% of smaller commercial properties are purchased with cash and some are seller financed. . . . keep reading Current SBA Borrowers More 'Aggressive' The volume of small business lending is seeing a significant decrease in the first half of FY2012 compared to the same period last year. The lower volumes are attributable to the comparative rush in lending that occurred during the same period last year, the North Bay Business Journal reports, with borrowers hurrying to take advantage of several SBA provisions in the JOBS Act that ended in 2010. Mark Quinn, district director for the SBA's San Francisco office, says that while the expiration of those provisions has lead to an expected 20% lower volume of SBA lending nationally this year, small businesses receiving loans through the program are using it to finance more aggressive goals than in FY2011. "It's not so much that we have a surge in demand for SBA lending," Quinn said, "What we're hearing from lenders is that the businesses are much stronger and not simply looking for a loan to keep the doors open." Quinn also said some the recent activity can be attributable to the temporary refinance program currently through the 504 loan, which makes it easier to obtain fixed-rate financing for property at a time when pure bank refinancing can be difficult. . . . keep reading Mug Shot Monday: Credit Union CEO Lent to Dead People A key conspirator gets 18 years in jail from one of the largest credit union loan frauds in history Koljo Nikolovski has pleaded guilty to 18 counts of bribery, bank fraud and money laundering after blowing $5.8 million on fast cars and gambling. He probably figured he would take the best deal he could as the list of fellow conspirators willing to testify against him included his former wife. And former Credit Union CEO Anthony Rugez. St. Paul Croatian Federal Credit Union's Rugez (pictured) has admitted to accepting at least $1 million in bribes and has pled guilty to six counts of bank fraud, money laundering and bank bribery that cost the credit union insurance fund $170 million. He will be sentenced in November. . . . keep reading Small Business Lending Opportunities for EB5 Visa Holders The number of Chinese seeking foreign citizenship is growing. Political turmoil and economic concerns have many of the wealthiest Chinese seeking to get their money out of China. One of the ways they are doing that, is a great, little known program for Main Street called EB5. What is never reported about these wealthy Chinese coming to America, is not only do they want their money out of China and permanent resident status, but they want their children educated in the U.S. The EB5 program gives applicants and their immediate families permanent U.S. residency if an investment of at least $1 million in the U.S. leads to 10 full-time jobs within two years. The requirement is only $500,000 if the U.S. jobs created are in a rural or high-unemployment area. The EB5 program is great for Main Street, for low income areas, and an excellent program to partner with SBA lending. . . . keep reading The Benefits of Committing to the Community This recent blog post from Hotel News Now talks says the key to financing is in your own backyard. When the author's brother moved to a new town, his recipe for success was the show his commitment to the community, becoming someone his neighbors could trust and could do business with. As our own Bob Coleman said during the Asian American Hotel Investment Conference, it's also crucial for hoteliers seeking financing to become involved. "Who is lending today are the community banks," Coleman said, "Community bankers are not tied to the financial matrix that the large banks are. Their mission is to support the community and revive the community." Hoteliers provide jobs, venues to conduct business, restaurants and bars, and more, but Coleman said these attributes don't sell themselves. Hoteliers need to get out and make their presence know; have lunch with other community leaders, sponsor a Main Street parade float. It doesn't cost much, but committing to the community can have a big impact when it comes time to seek financing. . . . keep reading Bank Exec and Developer Charged in Fraud Scheme Meet former vice president of Bank of the Commonwealth Jeremy Churchill and longtime Chesapeake-based developer Recardo Lewis. These two have recently been arrested (Churchill charged) in an ongoing investigation into a real estate development fraud that led to the bank's collapse. According to Hampton Roads, Churchill was the bank's chief commercial loan officer, and under his direction lent more than $5 million to Lewis and his construction company. The bank ended up writing off $1.6 million as a loss from these loans, and Lewis is accused of siphoning proceeds from these loans for other unlawful purposes. . . . keep reading Small Biz Lending Down 15% Though still increasing, small loans from banks were still 15% below their 2008 at the end of last year. But don't worry, the Federal Reserve Chairman is optimistic. Speaking at a banking conference in Chicago, Ben Bernanke said many businesses and consumers are finding it easier to borrow as banks shore up their balance sheets. He said that banks have made "considerable progress" in shedding risk from balance sheets and building against future loan losses, and that the way banks fund themselves has gotten safer, Boston.com reports. In response to criticism that regulators have made it difficult for banks to lend, Bernanke said the Fed has stressed to supervisors on its staff to take a "balanced approach" in overseeing banks; whatever that means. . . . keep reading And the Story is the Same Across the Pond... A story from UK's Tax Assist brings a familiar tale across the pond: small businesses operating in various industries are finding it increasingly difficult to acquire loans from the county's banks. This comes after new figures from the Bank of England show that business lending contracted by some £4 billion in February this year. The data also shows that lending to UK companies fell at the fastest pace in almost two years, showing that the situation is getting progressively worse. But, while the figures suggest that loans are becoming more difficult to acquire, lenders insist that demand for credit from smaller businesses remains "muted." Sounds like a Chicken or the Egg problem to me… . . . keep reading "TARP Orphans" Cast a Shadow Over Main Street Of the 343 banks that received capital injections under the TARP program and are still partly owned by the government, a majority won't be able to repay their debt to taxpayers in the "foreseeable future," if ever. That's according to a Treasury Department official this week, who said they are selling off some of the preferred shares it owns in these individual banks and may pool some of the weaker holdings. CFO.com is calling these banks "TARP Orphans," and saying they are the shadow over community banking. As community banks continue to fail (23 banks this year), systematically important financial institutions are rejuvenated. The effect? Small business owners could be in for a lot of pain the next time business lending terms and conditions tighten. . . . keep reading New Loan Guarantee Program - Interested? The Private Employment Partners Program ("PEPP") has been formed to provide a loan guarantee to lenders who provide business loans to small to medium sized high tech companies. As a condition of the guarantee the companies financed will have to commit to hire new employees. The loans will be collateralized by certain assets of the companies as well as a pooled investment account of liquid securities. The Guarantee will be 60%. BoeFly will be the online portal connecting those companies who are pre-qualified for the guarantee program with you as the lender. We are very excited to be a preferred vendor of the program and we would like to gauge Lender interest in it by inviting you to take this brief survey. . . . keep reading As Draft Picks Sign Contracts, Be Wary of Celebrity Worship A couple of weeks ago, the NFL held its highly publicized rookie draft; making a group of early twenty-something's instant millionaires. For the rookies, the money will represent free spending, new temptations, and risky investments. Those that have come before, and have seen their brethren fall off along the way, realize that this is a very important time. The list of bankrupt former NFL players adds new names every year, and often times the fall from grace doesn't take long. "A lot of guys don't look to the end of their careers, because it's just starting," former Chiefs wide receiver Eddie Kennison told the Standard-Examiner, "Once they see the checks, they say, 'Man, these checks are going to last forever.'" Kennison said he was saved by attending an NFL-sponsored financial responsibility seminar; that day, he stuffed a card into his pocket that read: 78% of NFL players go bankrupt or suffer financial distress two years after retirement, 100% of players will experience career termination, will you be ready when the fat lady sings? Something to remember these days where everything is at a premium. . . . keep reading More

Questions, Comments or Suggestions? Please E-mail them to bob@colemanreport.com Contact Information Bob Coleman P.O. Box 546 La Canada, CA 91012 (818)790-4591 (c) 2012 All Rights Reserved