Entries from BizBox Blog on Slate tagged with 'Credit'
A Meeting of Minds
Even as we speak (or type), various prominent officials in the Obama administration are meeting with various prominent folk in the small business and banking communities. Treasury Secretary Tim Geithner,Small Business Administration head Karen G. Mills, and Small Business &...
The Big Banks Give Their Thanks
While much of the small-business credit drop of the past year can be, er, credited to falling demand for credit (this economy, after all, is not a splendid time to go into debt if you can avoid it), we have...
The Banks Don't Like Obama's New Plan
Though the main target of President Obama's plan to increase small business lending is, naturally, small businesses--particularly those in need of credit--it appears to be something that would help the community banks, too. After all, they would be permitted to...
Our Anonymous Banker Takes On Obama
President Obama’s small business lending plan calls for increasing the maximum size of SBA 7(a) and 504 loans to $5 million. It also would increase the limits on micro-loans. The plan would lower rates (the bank’s cost of funds) for...
The Politics Behind Obama's Small Business Plan
Robb Mandelbaum takes a look at the politics surrounding President Obama's new small business lending proposals. As we noted at the time, some of these proposals--most prominently, raising the ceiling on Small Business Administration-backed loans from $2 million to $5...
How The Newly Important Community Banks Are Doing
Since President Obama's new plan to increase small-business credit envisions a major role for the community banks--those small, locally-focused institutions wither under $1 billion in assets--it's probably important that we take stock of how those banks are doing. According to...
Details of Obama's Small Business Plan Emerge
Today, President Barack Obama headed out just past the Beltway to Landover, Md.--home of, among other things, FedEx Field, the stadium of perhaps the National Football League's most hapless franchise (Impeach Dan Synder!)--to tout his new plans to help small...
7(a) Loans: The Basics
Since it appears that, month-to-month, Small Business Administration 7(a) loans are actually picking up again, now is a good time to refamiliarize ourselves with just exctly how that program--the SBA's flagship--works. OPEN Forum (published by our sponsor, American Express OPEN)...
Behind Small Biz Problems Lie the Banks
The cover story in today's New York Times Business section concerns the continued tightened state of small business credit. (Reuters ran a similar state-of-small-business-credit story recently, and found similarly cramped circumstances.) There are two crucial points the Times makes about...
Yearly Loan Numbers Awful; Monthly Ones Better
The Fiscal Year 2009 Small Business Administration loan numbers are in, and they are ... predictable. Notably, 7(a) loans--that's the SBA's flagship program--fell 36% in volume from FY 2008, dropping to a little over 44,000, and 27% in dollars, falling...
The Crappy Loans Being Salvaged At Your Expense
Last week, the Federal Deposit Insurance Corp. addressed the sharp decline in all loan commitments worth $20 million or more. For the layperson, such a share commitment divvies up risk among several institutions, including, in the case of these, U.S....
One Bank Dominates Small Business Administration Loans
The simple fact that, almost alone among big banks, Wells Fargo is still making lots of Small Business Administration-backed loans is interesting, but little more. The statistics are pretty noticeable: while almost every major small-business lender--J.P.Morgan Chase, Comerica, TD BankNorth,...
Peer-to-Peer Lending Gets Ready to Explode
According to the Washington Post, bank industry watchers are predicting the rapid growth of peer-to-peer lending, in which Websites facilitate the borrowing and lending of money between individuals (we wrote about it here), to the point that next year almost...
Anonymous Banker Takes On Congress and the Banks
It's been almost one year since I wrote to the New York Times's Joe Nocera and predicted that the Worst Is Yet To Come, and specifically pointed to the economic risks posed by the credit card industry. I'm saddened to...
Good News on the Lending Front
At least as far as small business policy is concerned, the results appear to be in: February's stimulus, by and large, improved the credit situation. In addition to the America's Recovery Capital program, which has done less well but was...
Why We Need Real Credit Card Reform
A new study finds what you probably suspected anyway: using credit cards as a way to borrow cash--giving the "credit" in credit card its full meaning--can threaten businesses. The Ewing Marion Kauffman Foundation finds that extensive credit card debt plays...
Here's How To Get A Loan
We've talked a ton about the policy and the larger, macroeconomic implications of changes to the Small Business Administration's flagship 7(a) lending program. (Under the program, banks make the loans, which are then backed anywhere from 50% to 95% by...
A Microlending Solution?
As the practical failure--or, at least, lack of real success--of the America's Recovery Capital lending program becomes ever more apparent, John Tozzi of The New Entrepreneur offers a potential solution: encourage microlenders to make the loans. (ARC loans, which arose...
Get In On A Credit Line
Credit lines--in which you can incur and pay back debt from a bank with astonishing flexibility up to a certain level, being charged interest only for the amount actually outstanding--is one of the most advantageous forms of credit for small...
Give Us Some Credit
John Tozzi takes a gander at the Federal Reserve's latest lending statistics (download here). His conclusion is that, as far as bank lending to small businesses goes, things are slightly better...maybe: "The survey shows that we may be approaching a...
The Downward-Bending ARC
When we last checked in on the America's Recovery Capital program--under which "viable" small businesses can apply for 100% government-backed, no-interest loans of up to $35,000 to pay back pre-existing bank debt--it looked to be in trouble: specifically, it looked...
Update on Small-Business Lender CIT
Wednesday afternoon, trading in shares of CIT on the New York Stock Exchange was suspended. (We reported on the situation of the prominent small-business lender yesterday.) That generally means either an impending bankruptcy or an impending bailout. For what its...
Should CIT Be Bailed Out?
Big news on the small-business credit front. It looks like CIT Group, one of the biggest of lenders to focus specifically on small businesses (it has been the number one lender-participant in the Small Business Administration's 7(a) program for the...
The Pluses of P2P Lending
Our sister site Slate runs a characteristically witty and insightful take on peer-to-peer lending Websites--in which wannabe borrowers tell their stories and ask to borrow money from, well, pretty much anyone who happens upon their request and wants to fulfill...
ARC Lending Program: Some Success, Mostly Failure
Well, the Small Business Administration's America's Recovery Capital microlending program--the one in which "viable" small businesses can apply for interest-free bank loans of up to $35,000, to be fully backed by the government, in order to pay back pre-existing debt--has...
Report: SBA Loan Programs Remain Controversial
John Tozzi of The New Entrepreneur flags a very interesting report on the current state of small-business credit (which you can download and read here). Much of its findings contain things we clearly already know: for example, it should be...
Kiva Expands Microlending To Small Businesses
The big news this morning is that Kiva, a non-profit that lets ordinary people make microloans to wannabe entrepreneurs and small business owners in developing countries around the world, has broadened its business. Now, those making microloans to Kiva can...
An ARC To Nowhere? Yet Another Lending Plan Failure
A couple of weeks ago, we talked about how private lenders might not be willing to play ball with the Small Business Administration's America's Recovery Capital microlending program. The program, you'll recall, would see the SBA backing interest-free loans of...
Bad Harbinger for Obama's Lending Plan
We've been deeply concerned about the Obama administration's plans to use $15 billion from the TARP fund in an effort to increase the flow of small-business credit for quite some time. To recap: the plan is to use the money...
Have We Reached a Turning Point on Lending?
Small Business Administration head Karen G. Mills is currently on something of a barnstorm, touring the country to popularize her agency's new lending policies--the temporary waiver of fees, the increase in the amount of loans the SBA will guarantee, the...
Lending Happens
We could blog these articles ad infinitum. The Times reports that while national banks have cut small-business lending, small-business lending is actually up. The people you can thank? The community banks, which are apparently, according to one study, three times...
Trouble For Another Lending Program
It was treated as rather triumphant earlier this week when the Small Business Administration announced that its program of 100%-backed, interest-free $35,000 loans would become operational next month. We're a little more skeptical of the so-called America's Recovery Capital (ARC)...
Profile of a Community Banker
The New York Times Magazine last week joined its print counterpart in celebrating community banks. They profile the impeccably named Rusy Cloutier, who turned Louisiana community bank MidSouth into one with 35 branches that publicly trades for over $900 million....
Top Loan Program Expanded Further
Starting next week, reports The New Entrepreneur, a business can have annual revenue as high as $8.5 million and federal income taxes as high (for the previous two fiscal years) as $3 million in order to be eligible for the...
How Banks Are Screwing Small Business
In response to a recent article over at Business Week, "Snipping Credit lines for Small Businesses", which discusses how JPMorgan Chase and others are slashing small-business lending in an effort to shore up their balance sheets, I must, unfortunately, question...
More on Geithner's Extended Lending Program
Yesterday, we reported that the Treasury Department is now reopening its Capital Purchase Program--under which the government purchases preferred shares in willing banks to given them extra lending capital--to banks with assets under $500 million each. In other words: think...
Borrowing Against Owed Money
The Wall Street Journal runs a solid piece on the increasing prevalence--and, hopefully, taming--of the practice of borrowing against accounts receivable, in which the borrower puts up money it is owed from others as collateral. It's the sort of practice...
Negotiating With Creditors
One of a recession's (admittedly few) upsides is that all the rules can potentially be thrown out the door. One good example of this is that the recession has actually, believe it or not, brought back the ancient art of...
The False Obsession With Lending
This Tuesday, the Wall Street Journal published the article that launched a thousand blogposts. The paper reported that some lenders are perceiving a "thaw" in the secondary market for small-business loans, and are in turn feeling more comfortable making new...
Trouble Ahead For Obama's Lending Plan
Well, the problems with the Obama administration's plans to up small businesses' credit access--which involves taking $15 billion from the TARP fund and using it to buy already-made small business loans on the secondary market, thereby, hopefully, freeing up lenders'...
Anonymous Banker Sez: Don't Accept Returned TARP Money
Let's see if I understand this. The banks and investment houses violate Federal Regulation H, which governs safety and soundness in real-estate lending. Over a period of ten years, they issue trillions of dollars in sub-prime loans. They then sell...
The Administration's Credit Plans Are Stymied Further
When last we visited the Obama administration's plan to use $15 billion from the TARP fund to buy up small-business loans in an effort to loosen the small-business credit market, well, the plan looked somewhat screwed. The problem? Congress appropriated...
Credit Frees Up, Without Government Help
Has the small-business credit market began to thaw? A key metric to watch is the rate at which lenders are able to sell off small-business loans on the secondary market, because banks' ability to do this would in turn free...
Bank Lending Continues To Fall
So says the Treasury Department. The 21 surveyed banks together received $211 billion under TARP. Business lending was down 24%. It's partly a question of demand, of course. And the banks naturally claim that they would have made even fewer...
Why Obama's Small-Business Plan Is Unlikely To Work
As the Obama administration takes steps aimed at reversing the dramatic slide in Small Business Administration-backed loans, it is becoming even more clear that so long as such loans are ultimately dependent on private lenders, especially big banks, intiating them,...
Microlending: Not So Micro Anymore?
We've written before about the Small Business Administration's brand-new emergency microlending program. Designed specifically for those small businesses and entrepreneurs struggling to pay off pre-existing bank loans, it allows them to apply for loans up to $35,000 that are then...
From The Trenches of the Credit Crunch
I recently read the fable of the “Seven Blind Mice” to my three year-old daughter, which reminded me of the difficulty of describing the business environment right now. In the story, a family of mice crawl over an elephant,...
Defaults On The Rise
Not only are Small Business Administration-backed loans falling at a precipitous rate; more and more of those outstanding are being defaulted on, Fortune reports. Specifically: 11.9% of SBA loans (under its flagship 7(a) and 504 programs) in fiscal year 2008...
The Government Starts Microlending
Microlending is hot right now--Muhammad Yunus won the Nobel Peace Prize a few years back for pioneering programs that lend tiny amounts of capital to poor entrepreneurs in poor countries, which ended up being paid back at far higher rates...
Guess Who's Still Offering Credit?
As the stimulus bill prepares for enactment, it's time to take a last, pre-stimulus look at the small-business credit climate. We say pre-stimulus because, well, the bank bailout--of which one can also expect a round two--did not increase lending as...
Why We Like Barney Frank's TARP Bill
Longtime Rep. Barney Frank (D-Mass.), who chairs the U.S. House of Representatives Financial Services Committee, has emerged as one of the key players in crafting the federal government's bailout efforts, most notably the Troubled Asset Relief Program. (The New...
Government Small Business Loan Program Becoming A Shambles
A couple months ago, when last we checked in on Small Business Administration-backed loans, things were looking bad: a combination of the slumping economy (lowering demand for credit), the credit crunch (lowering the supply of credit), and an utter lack...
Chicago Workers Fight For Bank Loans!
If you thought our posts about the failure of big banks fattened up by new government capital to provide credit to small businesses were bitterly angry, well, then you haven't met the laid-off employees of Chicago-based Republic Windows &...
Your 401(k): Another Way To Borrow
Credit continues to be tight for small business owners, as BizBox has been reporting. So now just may be a good time to take from another, more readily available source of money: your 401(k) plan account. Assuming your plan...
Weekend Reading
BizBox's favorite unnamed source, New York Times columnist Joe Nocera's Anonymous Banker, is back to answer your questions about small businesses' (not) getting loans these days. AB, you'll recall, is a high-placed "small business banker and credit underwriter" at...
I've Found A Bank That Actually Lends!
Well, there’s a been a whole lot of discussion here about whether banks are lending to small businesses in this environment. For BizBox posts alone, see here and here. Oh, and here, too. So I thought I’d share my...
The Credit Solution
New York Times columnist Joe Nocera's Anonymous Banker is back. When last we quoted this "small business banker and credit underwriter" at "one of the country’s biggest banks," he was angling for the government to direct its bailout dollars...
The Bailout Passes Small Businesses Over
So last week came news of the Federal Reserve's ambitious new lending program. $500 billion to buy mortgage-backed securities. $100 billion to buy the debt of Fannie Mae, Freddie Mac, and others in the mortgage underwriting business. Plus, and...
Yes, But Will Banks Finally Lend?
The news of the Federal Reserve's latest contribution to the bailout--which includes a pledge to lend up to $200 billion, on favorable terms, against collateral that consists of securities backed by several types of troubled loans, including ones backed...
Treasury Institutes Small Business Lending Incentive
We reported two weeks ago that it looked as though some more direct encouragement for banks to increase lending in the wake of the government's massive capital injection might be in the offing. The effort the Treasury Department and...
The Fed and the Treasury Get It. Sorta.
So here's some good news: the community banks--those small (under $1 billion in assets), locally-focused financial institutions that are prime sources for small businesses seeking ever-more-scarce credit--are getting a little extra encouragement to take a part of the $700...
SBA Approves New Lending Rules
The Small Business Administration has approved two changes to the way in which so-called 7(a) loans, which form its main loan program, are administered, reports Sharon McLoone of BizBox sister site Washingtonpost.com. The changes should in theory make it...
The Government Wakes Up, And Lending May Be On The Way
Well this seems--emphasis on seems--a step in the right direction. We've complained over and over that a key problem with the $700 billion bailout package is that while the money is ostensibly geared towards unfreezing the credit markets, the...
Credit Limits Cut Across The Board
Credit cards, as we've reported, aren't just for consumers anymore: increasingly, small business owners willing to use any means necessary to obtain credit have resorted to borrowing money on them. (Disclosure: BizBox's sponsor is American Express OPEN.) The downside...
SBA Loans Fell Massively (But Not Shockingly)
Well this should surprise exactly no one. The number of loans backed by the Small Business Administration dropped a whopping 30% in fiscal year 2008 from FY 2007, and the value of all such loans dropped a sobering 13%....
Big Banker Sez: Time To Help The Small Banks
A few days ago, the New York Times's Joe Nocera reported on big banks' plans to take the billions in government money they are getting from the $700 billion bailout package and use it not to increase loans and...
A Scam of a Bailout Plan
For the record, we were in favor of the bailout, even though some in the small business community were skeptical. Even though it appeared to contain little specifically geared towards small businesses, it did contain some provisions that appeared...
More Credit Alternatives
Since big banks tend to be short on cash right now, we've been trying to show you new and exciting ways to get cash these days. Today we'll look at a very typical way of securing money--credit cards--and a...
Be Careful What 7(a) Help You Wish For
Earlier this week, as we discussed yesterday, the Small Business Administration publicly urged banks to, in effect, go easy on small business borrowers who had taken out 7(a) loans, which are partly backed by the SBA, given the current...
Lenders of Hopefully-Not-Last Resort
In this credit-starved environment--in which, generally, the bigger a bank you are, the less money you now have to loan--we are constantly on the lookout for new ways you can secure credit. Today we look at two: credit unions,...
Improving Your Credit Score
More and more small business owners are going to have start using credit cards to take out loans on their business' behalves. No one's saying this is an ideal situation: credit cards tend to have high interest rates, with...
The Bailout's Been Passed...What's Next?
Well, for one thing, a healthy dose of skepticism is what's next. Will it work--will we see a sufficient loosening of the credit markets? Many aren't so sure. The Washington Post points out that where some have seen cause...
Managing Your Bank Payments
Just because it's harder to obtain credit now--and, by the way, the bailout bill passed the House and was signed into law today--doesn't mean you won't still owe your pre-existing lenders for your pre-existing loans. (This dynamic is sort...
Should Small Businesses Support The Bailout?
"I had heard that there was not much in the bail out bill for small businesses, so I hope you are right," a commenter writes on our earlier post, "How The Bailout Would Help Small Business". A good post...
Cover of the Times: Small Businesses Screwed
"Small Businesses Frozen by Crisis" is the headline. “Small businesses are sitting on their hands. Either they can’t get the capital or they don’t want the capital. They read what is happening, and frankly they are scared,” is what...
How The Bailout Would Help Small Business
Just yesterday we asked, of the proposed bailout, "What's In It For The Small Businesses?" The answer, among other things (firming up the credit markets, as the $700 billion asset-purchase program is intended to do, would most definitely be...
What's in It For The Small Businesses?
If the performance of the Dow Jones Industrial Average yesterday is any indication, the broader business community was not well served by the failure of the U.S. House of Representatives to pass the $700 billion bailout plan (although this...
How To Secure Credit, Even Now
As we said in our previous post, we're going to withhold too much comment on any financial industry bailout until such a bailout appears to have a chance of actually being, you know, enacted. (It's worth quickly mentioning that...
More Bad News on the Credit Front...
Though there has been much debate over just how badly the credit crunch will harm small businesses--in fact, our own Michael Taylor argued that the lending dearth will provide a comparative advantage to small businesses over overleveraged big ones--there...
UPS's New Credit Program
Who says there's no credit available for small businesses right now? (Well, the Wall Street Journal did, and they had a point, but bear with us--there's good news up ahead, brought to you, as so many pleasant packages every...
WSJ: No Credit For Small Businesses
The latest entry in the great debate over how the quickening credit crunch will affect small businesses comes from the Wall Street Journal, which sounds a bearish note, arguing that particularly small businesses with anything other than wonderful credit...
The Rise of the Small Business Credit Card
Alan L. Carsrud, who runs Florida International University's Global Entrepreneurship Center, says it all to the New York Times: “Small-business cards have fundamentally replaced lines of credit." The big story of the U.S. economy for the past several months...
Paying Back The Bank
We talked last week about how times are hard, and how there is no type of business on which they are harder than small ones. But enough with the pessimism--how can you ride out this situation? Yesterday we gave...
Do You Need D&B?
Shortly after starting Cedarcrest Capital LLC in 2004, I was cold-called by a Dun and Bradstreet representative who started asking probing questions about my business. Not wanting to broadcast my small business to strangers, and seeing no reason to take...
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