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Business Digest: Groups ask FTC to look at Facebook

2010-09-11T12:57:00.000-07:00

A Washington-based privacy advocacy group and nine other organizations have filed a complaint against Facebook over the social network's latest privacy changes.

The Electronic Privacy Information Center said Thursday that it has asked the Federal Trade Commission to look into the changes Facebook made to its users' privacy settings and to force Facebook to restore its old safeguards. The changes, unveiled last week, include treating users' names, profile photo, friends list, gender and other data as publicly available information.

Among the groups joining in the complaint are the American Library Association, the Consumer Federation of America and the Center for Digital Democracy.

Banks Don't Belong in the Student Loan Business

2009-12-18T12:45:00.000-08:00

Since I arrived in Washington, I've been looking at every line item in the budget of the U.S. Department of Education with two questions in mind: Is this program helping students learn? And is it a good use of taxpayer money? In the case of the Federal Family Education Loan (FFEL) program, the answer to both questions is no.

Under the current FFEL program, banks make loans to students. While those students remain in school, the federal government pays the interest on their loans; otherwise the interest accrues. Once the borrowers leave school or graduate, the lending agency collects on the loans. But if the student defaults, my department pays back the loan—plus the interest owed. The FFEL program, in short, is a great deal for bankers but a terrible one for taxpayers.

Over the next decade, according to the Congressional Budget Office, the Education Department is slated to subsidize banks to the tune of $87 billion to enable them to make federal student loans. All of this money would be put to better use providing financial aid directly to millions of needy students who want a college education. The Education Department will be able to accommodate the new loans through an existing federal public-private partnership, Through that partnership, the federal government makes loans directly to students and uses companies that will provide better service to borrowers at a lower cost to taxpayers

Critics contend that the government is trying to nationalize a private industry and do away with competition. Our real aim is to simply stop using banks as the middle man for student loans.

The banking industry would continue to compete in the marketplace to finance mortgages, business start-ups, and other forms of credit. But we are intent on stopping subsidies to bankers who make student loans at no risk because they know the federal government will bail them out in case of default.

By working with private sector companies with expertise in the field, we are prepared to initiate all new student loans in the existing federal Direct Loan program. Right now, the Education Department already owns and services 80% of the student loans made last year. It owns such a high volume of loans chiefly because it had to take emergency action in 2008 to ensure students had access to loans when lending in the nation's credit markets was frozen.

Our experience handling the bulk of student loans makes me confident in our capability. This year alone, an additional 500 colleges and universities joined the Direct Loan program. Just last month, the department's independent inspector general's office issued a report documenting that the Education Department had taken the right management steps so that all loans can be serviced by the Direct Loan program.

In a recent survey by the National Association of Student Financial Aid Administrators, schools that have made the switch to direct lending overwhelmingly reported the conversion was easy and quick. That is just one reason why that association of financial aid experts, along with organizations representing the nation's largest public and private universities, community colleges and college students, support the department's Direct Loan proposal.

The private sector would continue to play an important role in servicing loans. Last summer, the department's Federal Student Aid Office awarded contracts to four companies to service federal student loans, following an intense competition among the best companies in the loan servicing business. These companies are paid more when borrowers are in good standing, and those that keep defaults down and provide the best customer service will be given the most work.

We are preparing to make the switch to direct loans as easy as possible for colleges and universities. We appreciate their feedback, and their ideas will help us transition smoothly from FFEL to direct loans once Congress has passed a bill authorizing the switch to 100% direct loans

As for the $87 billion we'll save from ending the troubled FFEL program, the administration seeks to use that money for important programs that will improve our economic future. We propose to substantially increase scholarships in the Pell Grant program and other financial aid for low-income students. We would start new programs to raise college graduation rates and strengthen our community colleges. We will expand our investment in early childhood education. Plus, $10 billion would be set aside to reduce the deficit.

Now is the time to allocate resources to students—not to banks—so they have access to college and other educational opportunities. We cannot in good conscience let $87 billion in subsidies go to banks when our students desperately need financial help to realize the dream of getting a college education.

Business owners air loan complaints

2009-10-19T23:27:00.000-07:00

HAGERSTOWN — They’re designed to help struggling small businesses stay open, refocus and get their cash flow back on track in the struggling economy.

But local business owners complained Monday night at City Hall that special loans for businesses through the U.S. Small Business Administration are slow to get approved.

Provided under the American Recovery and Reinvestment Act, the interest-free loans are for up to $35,000. They are intended for established, viable businesses that need short-term help with their debts.

But Al McGarity said he and six other people were turned down for the loans even though they met all the program’s qualifications.

McGarity, owner of Robbies Billiards and Game Room Outfitters in Williamsport, said the bank told him and the others that the Small Business Administration turned down their loan requests.

McGarity told Edward Knox, lender relations specialist for the SBA, that the bank claimed that the SBA did not give a reason for the loan rejections.

Knox said the SBA will give reasons for rejecting loans, including that the borrower was not a U.S. citizen or that the person had too much money on hand to qualify.

Knox said the fact that McGarity was told that the SBA did not give a reason for the loan rejections did not give him a “warm and fuzzy” feeling.

Banks are saying the loans are not lucrative enough for them because no upfront fees can be charged, according to Knox.

One woman in the audience of about 20 people wondered if President Obama knew about the drawbacks of the loan program.

Knox said he is sure Obama would flip a switch to correct the situation if he could.

“But there is only so much he can do. There is only so much Congress can do,” Knox said.

Brent Bailey of Interstate Communication Services, an information technology company, stood up during the meeting and walked to the front of the room.

Bailey told Knox to let him know if some kind of incentive is offered to banks to stimulate the flow of loans.

“Then I’m in,” Bailey said.

“Without it, it’s just talk,” said Bailey, who left the meeting.

“It sounds like our banks are stopping us at the door,” said another woman in the audience.

The City of Hagerstown hosted the meeting so people could share their experiences with the program and offer ways to improve it.

Knox offered possible solutions, like going back to a bank again after an initial loan rejection. The bank might have changed its mind about the loans, Knox said.

Business owners can let banks know they are not happy about their decision not to offer the loans, Knox said.

Business owners also can take their business to another bank, although there might be a waiting period with the new bank before a loan can be considered, Knox said

North Dakota improves in business tax rankings

2009-10-08T11:43:00.000-07:00

North Dakota ranks squarely in the middle of states in a study that compares how each state taxes business. The Tax Foundation review gives much better rankings to neighboring South Dakota and Montana.
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The Washington, D.C.-based organization, which produces an annual report on the business tax climates of states, ranked North Dakota 25th among the 50 states in its most recent survey, after four years of ratings in the low 30s. The foundation's rankings are considered important by legislators and economic development officials.

South Dakota, which has no individual or corporate income tax, was ranked first, while Montana was rated sixth among the 50 states, the survey said. Minnesota's business tax climate was ranked 43rd.

Cory Fong, North Dakota's tax commissioner, said the Legislature helped improve the state's standing by cutting individual income and corporate tax rates and reducing the number of corporate tax brackets from five to three. The Tax Foundation's ratings favor states that impose no income tax at all or that have only a single tax rate, instead of progressively higher rates on larger incomes.

North Dakota's tax system may never attain a top rating because tax collections are spread across income, sales and property, Fong said.

"Having a balanced tax structure is helping us immensely during these difficult times, and I think that is an overall strength that businesses are looking at," Fong said. "We've done a good job of demonstrating ... that having the right level of taxation across those tax types makes some sense."

The foundation's ratings included the 2009 Legislature's across-the-board reduction of state income tax rates, which lowered the top individual income tax rate from 5.54 percent to 4.86 percent, and the lowest rate from 2.1 percent to 1.84 percent of state taxable income.

It did not take into account the Legislature's corporate tax changes, which reduced North Dakota's number of corporate tax brackets from five to three, cut the top tax rate from 6.5 percent to 6.4 percent, and applied the top rate to income greater than $50,000. Previously, the maximum tax rate was assessed against corporate income greater than $30,000.

Nationally, North Dakota has been one of the few states where the state government budget is in surplus. Dustin Gawrylow, director of the North Dakota Taxpayers' Association, an advocacy group based in Bismarck, said the state's rankings improvement should be credited to North Dakota's tax cuts and moves to raise taxes in other states with less robust revenue collections.

"Unlike a lot of states, we're not getting any worse," Gawrylow said.

Gawrylow said North Dakota's rankings when compared to South Dakota, Montana and No. 2-rated Wyoming are more worrisome. North Dakota economic development officials appear to put more emphasis on offering tax incentives to selected businesses than on having lower tax rates on all companies, he said.

"We've got to really look at how we can compete regionally," he said. "We need to look at how we can match Wyoming, South Dakota and Montana on those factors that companies are looking at when they come to North Dakota to look for where to place their factories, or their jobs."

The report analyzes a number of taxes that affect businesses, including income and sales taxes, unemployment insurance rates and property taxes.

On property taxes, which are the subject of frequent complaints by business and home owners alike, the report ranks North Dakota fifth among states, while giving less favorable scores to the state's corporate and individual income tax laws.

Fong said that is where he sees "some fundamental flaws" in how the report depicts North Dakota. "Perhaps the measurements they are focusing on don't necessarily coincide with what people in North Dakota are concerned about," he said.

Business Twitter hub in progress

2009-10-05T11:44:00.000-07:00

I confess I'm a Twitter user and not just to keep up with friends. I use Twitter for on-the-spot news, links to coupons and keeping track of business, food and fashion trends.

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I received a tweet from the Mississippi Hospitality and Restaurant Association drawing my attention to an article in The Wall Street Journal about how entrepreneurs use Twitter to get through a crisis.

The National Restaurant and the Mississippi Hospitality and Restaurant associations stress that Twitter is a powerful tool for small businesses, especially during any sort of customer-service or public-relations crisis. However, I see an opportunity for Hattiesburg businesses to use Twitter not only for crises but to use it as a public relations machine, as well as to keep up with business articles in the Hattiesburg American.

I'm thinking of starting our own Hattiesburg business Twitter to keep all businesses and customers up-to-date with sales, holiday closings, hiring fairs and special events. Send an e-mail my way if you want to take part or even if you have ideas on how to run it and work out the kinks.
Openings

# The Grill and Grocery, 121 E. Pine St., opened next to Go Young Fashions. The G&G is a combination convenience store and a grill/takeout eatery with a very interesting menu. The G&G is open Monday through Saturday. Details: 336-7986.

# Elements Salon is moving to Canebrake Country Club, 1 Cane Drive, and will reopen as Elements Salon and Spa at Canebrake. The salon, with full spa and massage, has a tentative opening date of Sept. 30.

# Topher's Rock 'n' Roll Grill will open in the old Ray Ray's Fried Chicken building, 5252 Old U.S. 11 in Hattiesburg. The family-oriented, fast food restaurant plans to open Oct. 1. Owned by the parent company that also owns The Bottling Company and Mugshots, the restaurant promises tasty burgers and vintage music memorabilia. Details: 336-7418 or visit www.tophersgrill.com.

# Gatti Town is slated to open this fall. It is located between Best Buy and Toys 'R Us.

# Qdoba Mexican Grill is expected to open Nov. 1 on Hardy Street between Applebee's and Wachovia Bank.

# Auto Barn is being built at the corner of Emerald Lane and Broadway Drive. No completion date was given.

# An independently-owned burger shop is being built in the former Popeye's on U.S. 49 location. No completion date was given.
Events

# The Kitchen Table will host Young Chefs with Julia at 4 p.m. Sept. 28. Participants will learn to cook pasta jambalaya, white chocolate bread pudding with white chocolate sauce. Cost: $35. Details: 261-2224.

# Curves is offering a free 30-day diet program for Hattiesburg-area women Sept. 30 at Curves of Hattiesburg on the corner of Hardy Street and North 25th Avenue. Details: 450-2878 or visit www.curves.com.

Social networking for business: What works and what doesn't

2009-09-30T11:44:00.000-07:00

Social Media sites like Twitter, Facebook, Linkedin and YouTube are changing the way the world does business. I think this is in response to our desire to connect with others. Relationship Marketing is all about connecting with people first as human beings and then as customers later. For a real business relationship to work, both parties must receive value. If only one or neither does, that relationship won't continue for long.

It is the same with Social Networking. You have to provide value consistently for people to want to follow you (as in Twitter) or be your "friend" (as in Facebook). This value means something that helps them in their business or their personal lives.
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* Social networking for business: What works and what doesn't
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* Advice for today -- from Benjamin Franklin
* Social media: You have to be there
* Social networking is about people, not technology
* Relationship marketing and the 'little things'
* Relationship farming and the 'WOW' factor
* Eliminate the asterisks in your marketing

Go to full archivesGo to full archives

So, what works in Social Media and Social Networking?

What to do in Social Networking -- Provide solid value first

Provide tips that are valuable to your followers. If you talk about a special that is with a third party --- where you have no benefit from your followers purchasing --- you gain points.

Retweet

This means you copy something that was said by one person and send it to your followers. You are helping in three ways here: 1) You help the person who sent the initial tweet and they will remember that, 2) You help your followers by providing value and 3) You help yourself two ways. First you strengthen the relationship with the person you are retweeting (don't you love these new words we come up with today?) and secondly you help yourself as others see you as a resource. Make sure it is value when you retweet otherwise it comes off as TweetSpam and that can only hurt you.

Link with URL shorteners

This sounds a bit technical but it's quite easy. If you have a really long name for a website (URL) it can eat up your 140 character limit fast. A better way is to use one of the free URL shorteners available. Bit.ly is good for generating statistics on how many are coming to the site. Tinyurl and snipurl have been around for years and are quite reliable.

Always points to more value on your blog or Web site

Let your Facebook postings, your tweets and Linkedin messages always point to your Blog or website (they can be the same) where your followers or friends will find more value on the subject. This is the methodology you want to deploy in your marketing today. Generate value on your Blog and point to it with your notices on all the various social networking sites.

What to avoid in Social Networking -- It's all about me

Ugh! How many times do we need to hear that the world doesn't keep spinning around YOU? We all want to hear about ourselves and how what you have to say will make our lives better. Make all your communications about how others will benefit from being involved with you. Frankly, we don't care that you're "standing in line to get a hamburger." What will help is if you found that hamburgers are available at half price today from 12:00 to 3:00 at 4th and Main and they are the best you've ever had. That information would be valuable. Make it about others and you will succeed.

Spam city

We hated spam on email (still do). We don't like it any more in the era of social networking. So stop it already! Yes, we know you have a "great way to make money on Twitter" on your site but frankly, we're tired of hearing it! Instead, promote serious ways people can solve problems in their business. You add to your credibility and avoid being seen as a spammer.

Too much "unfollowing" or "de-friending"

When you stop following someone (and there are times it is appropriate) make sure it is because of serious problems (like spamming --- see above). When we see someone has "unfollowed" us (more of those clever new words we get today), it can hurt. I remember one person who I admired and had purchased a lot of her materials. However, when she unsubscribed to my email I was hurt. Was I logical? Of course not. However, that person has already lost thousands of dollars as I spent the money with someone else --- and she doesn't even know it! Careful on what you do and who it can offend. Hear more about this story in my podcast at www.TerryBrock.com.

Social Networking is really very much like good ole networking has been since human beings started gathering in groups. Treat people with honesty and dignity. Relationship Marketing principles work today on these new media. Avoid the "hot new ways to increase traffic" that smack of hucksterism and chicanery.

If it doesn't come from a genuine, real desire to help other humans beings, it should probably be avoided. This is true in Relationship Marketing, Social Networking and life.

Can Twitter Rake in the Ads to Justify $1 Billion Valuation?

2009-09-29T11:39:00.000-07:00

The question about Twitter used to be, "Is it a business?" Now, the question becomes "How big can it be?"

And the answer is: It better be big. CEO Evan Williams confirmed last week that the microblogging service had finalized its new funding, reported to be $100 million, giving Twitter -- which now has no monetization program in place -- a whopping $1 billion valuation. Prior investors Spark Capital, Benchmark Capital and Institutional Venture Partners doubled down, and late-stage investors T. Rowe Price and Insight Venture Partners joined up.

With the funding, Silicon Valley and the venture community are once again setting their sites on the marketing budgets of American business to support another free "cloud" web service, in this case 140-word bursts of text. Indeed, they're counting on the exponential growth of advertising revenue in a flat market for a company that -- while certainly useful to marketers -- has yet to earn its first dollar.

"I think they can build some kind of ad business, but the more relevant question is can they build an ad business worth a billion plus dollars," said Warren Lee, VC at Canaan Partners. "That would require tremendous volumes of impressions and reasonable conversions. Lots of execution will be needed. Not impossible but unlikely."

The cash infusion (on top of $55 million already raised and the estimated $25 million Twitter has left in the tank), puts the pressure on Twitter to earn its first $100 million within the next year or two, and sparked cries of "bubble!" from the cheap seats, but that was true of AOL, Netscape, Google and Facebook.

'No precedent'
Yet Twitter is quite different. "It's the first one that's not a destination -- it's a distributed service," said Seth Goldstein, CEO of SocialMedia and investor in early Twitter backer Union Square Ventures. "There is no precedent for how to monetize it. "

Like Facebook, businesses already use Twitter to communicate with their fans and don't need to pay Twitter a thing to build followers or communicate with them. "What we see is a move away from brands using broadcast media to more engagement media," said Zephrin Lasker, CEO of sales-lead exchange Pontiflex. "If you have engagement on a one-to-one basis, extremely scalable, that's valuable."

Valuable to marketers, but is it valuable to Twitter? With the money comes an expectation of corresponding revenue, and while verified accounts, corporate services and analytics are interesting, advertising is the business that scales. While co-founder Biz Stone said there are no plans to start an ad business this year, it seems inevitable Twitter will be going toe-to-toe with Facebook in the ad market.

"What is interesting from an advertising perspective is the same thing that is interesting about Facebook: It is one of the only platforms of scale that has two-way messaging potential," said Michael Lazerow, CEO of Buddy Media, which sells ads on Facebook widgets. "But are they a $50 mil or a $1 bil business?"

Twitter could turn on revenue immediately, but appears to be in no rush to do so. Observers have, for example, long wondered why Twitter didn't start running contextual or keyword ads next to tweets, like Google. Twitter could run the ads based on the content of tweets combined with what Twitter knows about the user from their profile and registration details.

Outside factors
The problem with that is that more and more users access Twitter from third-party apps like TweetDeck or Tweetie not owned by Twitter, and those services, too, need a business model and may also incorporate advertising.

Mr. Stone said that ads won't come before 2010 and Twitter's early-stage venture backers have told Ad Age the ad business, narrowly defined, isn't that interesting to them. On its site, Twitter touts marketing success stories from Pepsi, Jetblue and Dell, which consist of the brands using the service to connect with fans.

The cash could allow Twitter to make some acquisitions; perhaps one of the URL shorteners like Bit.ly, one or more of the Twitter applications, or one of the many, many firms now making dashboards to manage Twitter for corporate clients.

With a valuation of $1 billion, Twitter's investors believe one or more of the following outcomes are likely: an IPO or an acquisition at a healthy price. Already Twitter has reportedly turned down bids from Facebook, Google and Microsoft.

Small Business and Health

2009-09-28T11:53:00.000-07:00

“Bristling at Health Plan to Cover Early Retirees” (“The Work-Up” series, news article, Sept. 9) pegs health care coverage for early retirees as exclusively a labor issue. In fact, this is an issue for all Americans.

Small Business Majority, a national nonprofit, is working for America’s 27 million small businesses and small-business owners.

Today, small businesses provide 75 percent of all net new jobs and employ 52 percent of the private-sector work force. What hurts small businesses hurts America’s economy. Not only are the majority of small-business owners between 55 and 64 years old — a precarious window for personal health care coverage — but they also face skyrocketing health care costs, which is hindering their ability to provide high-quality coverage to their employees.

Our research has shown that an average of 86 percent of small-business owners cite affordability as the reason they do not offer health care to their employees, while an average of 68 percent of small-business owners believe that health care reform is needed to help fix the economy.

The biggest problem facing America’s small businesses and America’s economy is unavailable, unaffordable health care. Emphasis on health care coverage for people between 55 and 64 is not just good for labor, it’s good for the economy.

How should my business market itself with Facebook?

2009-09-26T11:48:00.000-07:00

How should my business market itself with Facebook?

Facebook is growing by 700,000 new members every day and is the third-most-trafficked site on the Web. Your business should be making the most of this marketing opportunity.

The most important thing to remember is that you’re there to build relationships with customers and prospects. Connecting in an authentic manner means approaching the world of social networking as a person and not necessarily as a brand.

You should actually start with your personal profile — if you’re not already on Facebook, sign up (it’s free), add a photo and a little information about yourself, find some friends on the site and begin to interact. Then, and only then, should you set up a business page with your logo.

After all, you wouldn’t start a sales call with a trial close — you’d get to know your prospects first and give them a chance to know you.

There are some distinct differences between personal profiles and pages. With personal profiles, people must request to become your friend in order to see your information, and you confirm these friendships manually. With pages, however, anyone can become a fan of your business page. Even better, all of their friends will see that they’re a fan and can join them; now you’re leveraging the viral power of the Internet to make new connections.

Content of your page and posts should be of service to the reader. Consider including reviews, tips, helpful hints, related articles you’ve found, relevant discussions, events and photos.

Next steps: Facebook ads may be purchased. These work similarly to Google AdWords.

Response provided by John Addessi, a consultant with the Kansas Small Business Development Center at Johnson County Community College.

SBA offer small-business help

2009-09-25T11:45:00.000-07:00

Wowwww... They can be sobering statistics for those who are thinking of leaving an employer to start a small business of their own: Nearly one-third of small businesses fail before their second anniversary. And half of them close their doors before their fifth year.

After years of collecting such data, the United States Small Business Administration has learned a lot about what makes some new business thrive while others collapse under the pressures that are so prevalent during the first months and years of operation.

On Tuesdays in October, SBA officials will team up once again with the Suffolk Economic Development Department to share some of those lessons.

The “Start and Grow Your Suffolk Business” seminar series begins Oct 6 and will be held from 6 p.m. to 8 p.m. each Tuesday of the month, with a focus on different topics each week.

This is the fourth or fifth such series in Suffolk, according to Kevin Hughes, the city’s economic development manager, who said some topics change from one series to another.

But some of those topics — like Business Plan Development (Oct. 13) — stay pretty constant because of their value to business owners.

“Obviously, there are some that are very important for every business,” he explained.

Hughes’ department and the SBA consider a solid business plan to be foundational to the success of a new or growing business. In fact, it’s almost impossible to get a loan for a new business without one.

Even so, Hughes said, “You see a lot of startups … who haven’t even done a business plan.”

The two-hour seminar Oct. 13 will cover some of the techniques for writing a winning business plan. It will be led by Jim Carroll of the Small Business Development Center, which specializes in helping small businesses get off the ground.

“It’s a great resource for small businesses, really, at any stage,” Hughes said of the SBDC.

The information that Carroll and other presenters will provide participants is a benefit of the series, Hughes said, but the access to resources like the SBDC is even better.

“Knowing that an organization of people is out there — a lot of them free — that can assist” small business owners can make a huge difference, he said. “The best thing is that we’re able to get those resources in front of people.”

Past seminars have attracted 15 to 25 participants at a time, Hughes said, and they range from the merely curious to the already-established small business owner looking to broaden his awareness of the help that’s available.

“They range from the dreamer to folks who are already up and running,” he said.

Those who would like to participate in the programs are encouraged to call in advance so that organizers can ensure they have enough materials. But Hughes said even walk-ins will be welcome.

The following seminar topics are planned:

4Oct. 6: Do you know how to read and respond to an opportunity with the federal government? This presentation will provide a section-by-section understanding as to what the government asks for in a solicitation. Insights on how to prepare a response to the proposal will be shared.

4Oct. 13: Business Plan Development. Learn about some of the techniques to writing a winning business plan.

4Oct. 20: Pricing to win federal contracts. A follow-up to the first session, focusing on the financial requirements that come along with the pursuit of federal contracts, from the preparation of a cost submission to having the necessary financial resources to invoicing requirements.

4Oct. 27: Finance. Hear what the bank is looking for and the things that impact your loan package. There will be an overview of the Small Business Administration Loan Guaranty Program.

Lilly says David Ricks will lead US business

2009-09-24T11:42:00.000-07:00

INDIANAPOLIS -- Drugmaker Eli Lilly and Co. said Tuesday that David Ricks, who is now in charge of its Chinese business, will become president of the U.S. division on Nov. 1.

Ricks has worked at Lilly for 13 years, including managing operations in Canada and China, Lilly said. He will take over for Enrique Conterno as president of Lilly USA. Conterno will become head of the company's diabetes business as part of a reorganization announced earlier in September.

Lilly USA will be part of the established-markets business, which will be lead by Bryce Carmine. The established-markets business will focus on developed markets like the U.S., European Union, and Japan, and will handle marketing of heart and neurological drugs, among other products.

Eric Baclet, vice president of marketing over global neuroscience brands, will succeed Ricks to lead Lilly China.

The company is reorganizing into five business units: cancer, diabetes, established markets, emerging markets, and the Elanco animal-health business. The reorganization includes about 5,500 job cuts, or about 14 percent of Eli Lilly ( LLY - news - people )'s work force, by the end of 2011.

$350M-$500M Price Tag For Yahoo Small Business

2009-09-23T11:37:00.000-07:00

Yahoo Small Business isn't going to sell for a particularly tiny sum if Yahoo has its way. A fresh report indicates that Yahoo, which has been trying to unload the unit for some time now, would like to receive around $500 million by way of payment.

Yahoo Small Business is, as you probably guessed, a property that caters to small businesses. It deals in things like Web hosting, ecommerce solutions, domain names, and business email. And even if you haven't heard of Yahoo Small Business before, it's not bad, having won an editors' choice award from PC Magazine last year.

The question is whether Yahoo can get a full $500 million - or even 70 percent of that amount - for the unit.

An unnamed source told Reuters that, although Yahoo might accept $350 million, "Yahoo's price expectations are higher than what buyers were willing to pay. People would like to own this asset, but not at the asking price."

We'll see what happens. Considering that Yahoo's trying to sell so much stuff - HotJobs, Yahoo Games, Yahoo Small Business, and Zimbra at last count, with the sale of its Alibaba.com stake under its belt - it's not hard to imagine that the company will compromise just for the sake of closing more deals.

Yahoo seeking up to $500 million for small business unit

2009-09-22T11:34:00.000-07:00

SAN FRANCISCO/NEW YORK (Reuters) - Yahoo (YHOO.O) hopes to get up to $500 million for a unit that hosts websites for small companies, after putting it on the market for several months, two people familiar with the matter said.

Yahoo has received interest from corporate buyers and private equity firms, one of the sources familiar with the situation said. It is unclear if any party has made an offer.

But some potential corporate buyers who have looked at the asset in recent months have decided not to bid because they think the price is too high, a second source said.

"Yahoo's price expectations are higher than what buyers were willing to pay," this person said, adding that Yahoo was seeking $350 million to $500 million. "People would like to own this asset, but not at the asking price."

As part of its strategy to shed assets that are no longer core to its brand, Yahoo put the unit called Yahoo Small Business up for sale about six months ago, along with HotJobs, its online job classified site, the sources said.

Last week, Yahoo sold its stake in China's top e-commerce company Alibaba.com for $150 million.

The sources spoke on condition of anonymity because the sale process has not been made public. A Yahoo spokeswoman said the company does not comment on rumors or speculation.

The small business division provides domains, email, Web hosting and other merchant services to customers. Sunnyvale, California-based Yahoo, which posted $7.2 billion in revenue last year, does not break out the unit's performance.

From Finance Chief, a Bill That May Weather the Blows

2009-09-17T23:43:00.000-07:00

On the surface, it appears that no one is happy with Sen. Max Baucus (D-Mont.) -- and that may be the best news President Obama has haWithin minutes of the release of the Senate Finance Committee chairman's long-awaited health-care reform bill Wednesday, the attacks started flying. Liberal Democrats and allies, particularly labor unions, fumed. Republicans, after being courted for months, denounced the work as pure partisanship.

But behind the rhetorical fireworks was a sense that the fragile coalition of major industry leaders and interest groups central to refashioning the nation's $2.5 trillion health-care system remains intact. As they scoured the 223-page document, many of the most influential players found elements to dislike, but not necessarily reasons to kill the effort. Most enticing was the prospect of 30 million new customers.

At the White House, after the delays and drama of summer, strategists spoke finally of movement and a possible path toward success on the president's centerpiece domestic policy goal. To keep up the pressure, Obama met with three lawmakers who had warned they would not support the Baucus bill.

Sen. John D. Rockefeller IV (D-W.Va.), who is upset that Baucus did not include a public health insurance option, tempered his criticism after a private meeting with Obama, signaling that he hopes to work out a compromise.

"Nothing is clearer than the president's commitment to providing affordable and effective health care for all Americans, and he and I are united in our efforts to deliver on this promise," he said.

Lawmakers and lobbyists alike cautioned that Obama remains far from a White House signing ceremony and that perhaps the greatest danger at this point is death by a thousand legislative changes.
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The goal now is to keep the legislation moving toward a House and Senate conference committee, in which the administration would have its greatest influence on the outcome.

"He is open to a variety of different approaches if it gets it out of the Finance Committee," Sen. Ron Wyden (D-Ore.) said after talking to Obama. "He also knows he's got a lot of heavy lifting to do to get it out of the Finance Committee."

At the heart of the administration's strategy -- and Wednesday's guarded optimism -- is a collection of deals intended to neutralize the interest groups that helped defeat President Bill Clinton's health-care overhaul 15 years ago. In each instance, the industry has agreed to make financial concessions in return for new customers or other protections that could have lasting effects.

Hospitals, for example, have said they would accept about $155 billion in cuts over the next decade in return for promises that they would be exempt from actions taken by a proposed commission that would pursue additional savings in the Medicare program.

The best evidence that the approach was holding was the calm emanating from organizations that have criticized House health-care bills and a version approved by the Senate health committee.
d in months.

Finance Chief to Tackle Japan's Economic Woes

2009-09-16T23:39:00.000-07:00

TOKYO -- Japan's newly appointed finance minister, Hirohisa Fujii, will focus on fixing the country's economy, even if that means it will take longer to reduce Japan's massive public debt and possibly prompt more new-debt issuance.

In an interview this week, the 77-year-old Mr. Fujii said he would prioritize economic growth over fiscal overhaul. "If you allow me to make the story short, while fiscal rehabilitation is important, it comes after economic growth," he said. "There's no question that unless the economy recovers to some extent ... our country's fiscal state will get even worse."

He also hinted that the Democratic Party of Japan government may come up with new stimulus steps if the economy weakens, even if that would require a further issuance of bonds.

"We certainly must keep in mind the possibility of [the Japanese economy entering] a second round of sharp contraction," said Mr. Fujii, who was named finance minister Wednesday by new Prime Minister Yukio Hatoyama.

While exports to China and India are rebounding, Japanese business investment remains weak, and "wage and employment conditions are considered to be in the worst shape in the postwar era ... which will surely ricochet against consumer spending," he said.

Mr. Hatoyama has insisted that the DPJ's promised economic-support measures will be financed without floating more debt, but Mr. Fujii's remarks suggest the government's focus will be ensuring that the economy doesn't deteriorate further.

Should the economy demand more money, "it is possible" the government will sell more bonds to raise cash, Mr. Fujii said, despite worries about how that could worsen Japan's poor fiscal state. The country's public debt stands at 170% of gross domestic product -- the worst ratio in the industrialized world -- and the Organization for Economic Cooperation and Development expects the figure to hit around 200% next year.

The DPJ government could also support the economy by redirecting trillions of yen it plans to save through scrapping steps it considers ineffective in the previous government's last stimulus package, valued at 15.4 trillion yen, or $169 billion.

Mr. Fujii's immediate task is to work with Naoto Kan, a top DPJ officials who Wednesday was formally named minister in charge of the new National Strategy Bureau. The bureau is expected to set guidelines on key policies such as the national budget. Mr. Kan is expected to determine the priorities and outline of the budget, while Mr. Fujii will finalize details and make ends meet as tax revenue shrinks due to the economic slump.

The Court and Campaign Finance

2009-09-12T10:49:00.000-07:00

In the Supreme Court this week, Elena Kagan, the new solicitor general, eloquently defended the longstanding ban on corporate spending in political campaigns. But the conservative justices who spoke showed a disdain for both Congress’s laws and for the court’s own prior rulings. If the ban is struck down, as we fear, elections could be swamped by special-interest money.

Conservative jurists talk about judicial modesty and deferring to the elected branches. But in the questioning, Justice Antonin Scalia made clear that he considers Congress to be a self-interested actor when it writes campaign finance laws. Chief Justice John Roberts and Justice Samuel Alito seemed to put little weight on the fact that the court has repeatedly upheld a ban on corporate campaign expenditures.

What the conservatives seemed most concerned about was protecting the interests of corporations. The chief justice and Justice Scalia seemed especially perturbed that what they see as the inviolable right of these legal constructs to speak might be infringed upon.

The conservatives also seemed incredulous that vast amounts of corporate money flooding into campaigns could be seen as corrupting the system. We agree with Senator John McCain, who told reporters after the argument that he was troubled by the “extreme naïveté” some of the justices showed about the role of special-interest money in Congressional lawmaking.

The more liberal justices — including Justice Sonia Sotomayor, who was participating in her first argument — were far more sympathetic to the ban on corporate expenditures, but they have only four votes.

There is still some hope that Chief Justice Roberts may decide his affection for corporations is less important than the reputation of the Roberts court. If he does, there is a chance for a limited, and relatively undamaging, ruling that hews closely to the facts of this case.

The underlying dispute is a narrow First Amendment challenge brought by Citizens United, a nonprofit group that wanted to show an anti-Hillary Clinton movie on a video-on-demand service during the primary season. The court could uphold its right to show the movie without opening the door to a new era of political corruption.

Vectra Bank's small-business index for Colorado rises

2009-09-11T10:43:00.000-07:00

The Vectra Bank Colorado Small Business Index for Colorado climbed to 79.8 in August 2009, up from a revised 78.1 in July, mostly because high unemployment rates have expanded the labor pool for employers.

"The last time Colorado's unemployment reached current levels was the spring of 1987, over 22 years ago. There's no question it's a painful time for the state's labor force," said Jeff Thredgold, Vectra Bank Colorado's corporate economist, in a statement.

"The return to employment strength is going to be a slow process. But positive U.S. economic growth expected this quarter should bode well for Colorado moving forward," Thredgold said.

Colorado's unemployment rate was estimated at 7.8 percent in July, up from 7.6 percent in June. August employment data will be reported on Sept. 18.

The index measures business conditions from the viewpoint of the Colorado small business owner or manager. A higher index number is associated with more favorable business conditions for Colorado's small businesses.

The index uses 100.0 for calendar year 1997 as its base year.

Vectra Bank is a unit of Salt Lake City-based Zions Bancorp.

Source: Bizjournals

Obama to give speech on financial crisis Monday

2009-09-10T22:47:00.000-07:00

WASHINGTON (Reuters) - U.S. President Barack Obama will give a speech about the financial crisis on Monday in New York, marking the anniversary of the collapse of Lehman Brothers, the White House said on Thursday.

The fall of Lehman last year triggered a worldwide financial crisis and accelerated Obama's race to the presidency as the Democrat's cool reaction to the country's economic problems contrasted with a more scattered response from his Republican opponent, Senator John McCain.

Obama made financial regulatory reform a key platform of his candidacy and is trying to push through Congress legislative measures on the issue as president.

"He will discuss the aggressive steps the administration has taken to bring the economy back from the brink (and) the commitment to winding down the government's role in the financial sector," the White House said in a statement about the speech.

Actions the United States and other nations around the world must take to prevent "a crisis like this from ever happening again" would also feature in the speech, the statement said.

Lehman, once the fourth-largest U.S. investment bank, filed for bankruptcy protection on September 15, 2008, in the largest U.S. bankruptcy filing in history.

Obama's speech will take place at midday in New York City's Federal Hall.

Love a local business? Buy a share

2009-09-10T11:54:00.000-07:00

HASTINGS-ON-HUDSON, N.Y. (Fortune Small Business) -- John Halko was halfway through renovating an expanded space for Comfort, his mostly organic eatery in Hastings-on-Hudson, N.Y., when the credit crisis hit. His source of funding -- a home-equity line -- ran out, so he applied for a loan at a local bank. He was turned down.

Halko wasn't ready to throw in the dish towel. His solution? The modern equivalent of an old-fashioned barn raising. Instead of soliciting neighbors to lift timbers, he asked them to open their wallets. For every $500 they purchased in "Comfort Dollars," his patrons received a $600 credit toward meals at the restaurant. As the community rallied around Comfort, Halko says, "it gave us hope." He raised $25,000 in six months, and the new, larger space - now called Comfort Lounge -- opened for business in May.

Plenty of entrepreneurs are turning to their communities for support in these tricky times. As the recession wreaks havoc on America's economy, finding the money to launch, expand or even just sustain a small business is often a struggle. In the second quarter of 2009, venture capital funds raised the smallest amount since the third quarter of 2003, according to the National Venture Capital Association in Arlington, Va. Banks continue to pull credit lines and credit cards from many small businesses. Even proprietors who are willing to extract capital from their homes -- often their biggest personal asset - can't always do so, because the declining housing market has left so many homeowners underwater.

But entrepreneurs are resourceful, and as the economic crisis forces them to seek new sources of capital, a growing number appear to be finding money in their own backyards. After all, local customers have a personal incentive to invest in their favorite businesses. And while no one is officially tracking the trend, anecdotal evidence suggests that the practice is growing.

"There are no secure returns out there right now," says David Lavinsky, co-founder of Growthink, a venture investment firm headquartered in Los Angeles. "People are very willing to invest in their local community, especially if there is the possibility of return."

High hopes: Small business is becoming optimistic

2009-09-09T11:46:00.000-07:00

Small business owners are joining consumers and investors in showing some cautious optimism about the economy.

An index that measures owners' optimism rose last month, boosted by expectations that business conditions will improve in the future. And there's anecdotal evidence from owners in a variety of industries who say they have reasons to feel a little more upbeat.

The National Federation of Independent Business, which surveys its members each month, said its index of business owner optimism rose 2.1 points to 88.6 in August, an increase that NFIB chief economist William Dunkelberg called "a big gain." The optimism, though, is about the future, as owners still have a dim view of current economic conditions. Dunkelberg noted that small businesses generally aren't planning big capital expenditures or to start hiring again.

"First you have to feel better before you'll spend your money," Dunkelberg said.

Dunkelberg makes the same caveats that other economists do: If consumer spending doesn't pick up, the budding optimism is likely to wither. But, he said, having watched decades of economic cycles, "every recovery begins with an improvement in the feel good stuff, and that's followed by an improvement in the hard spending numbers."

Several small business owners interviewed by The Associated Press reported that their own optimism, as well as that of their clients and customers, has started to improve recently.

"It's still tough, but people are at least starting to speak in normal terms again," said Michael Frenkel, president of New York-based M Frenkel Communications Inc.

Like many other public relations firms, Frenkel's business was hurt when clients slashed their marketing budgets, often the first casualties when companies cut costs. Now, he said, with his hotel and real estate clients putting their budgets together, "things are looking a bit looser for the fourth quarter and they're looking even looser for the beginning of 2010."

But Frenkel said business owners have been forced to adapt to a new reality: The booming economy of two and three years ago, when a company like his could find business almost anywhere, isn't likely to return soon. So, he said, "you just try to go out there and make it happen."

Ian Ford, whose company sells discount tickets to Orlando, Fla., tourist attractions, has become more optimistic as his sales, which dropped off last September and fell as much as 20 percent, started to rebound this summer. Part of the improvement followed Walt Disney World's discontinuing some of its deep discounts, which in turn lifted demand for the tickets sold by Ford's company, Undercover Tourist. Also, more people are willing to travel now.

BUSINESS: Online training course aimed at small businesses

2009-09-08T09:56:00.000-07:00

WASHINGTON -- The U.S. Small Business Administration launched a new online training course to help strengthen access to contracting opportunities for small businesses, including those owned by women, minorities, disadvantaged individuals and veterans.

The training course, "Recovery Act Opportunities: How to Win Federal Contracts," is part of a federal government-wide initiative announced last month.

As part of the initiative, federal agency procurement officers are participating in more than 200 events over the next several weeks to help connect small businesses with contracting opportunities.

Additionally, SBA and Commerce are expanding their outreach to contracting officials across the federal government to ensure they have the tools to meet their annual contracting goals and increase opportunities to small businesses, including those owned by veterans, women and minorities, as well as those in designated HUBZones.

As part of the outreach to small businesses, the comprehensive online course uses both audio and script to provide information about the federal marketplace, contract rules and, most importantly, how to sell to the government and where to find contract and Recovery Act opportunities.

The new training portal is a free online training course designed to assist entrepreneurs during this period of economic recovery. This self-paced, instructional guide provides an overview of the federal procurement process.

The Recovery Act Opportunities

Big target on small business - Now !

2009-09-07T09:50:00.000-07:00

Small-business owners are sweating this summer — and it's not necessarily because of the weather.

Many worry that a form of nationalized health care could soon become law, and that this would cost jobs.

"I give my employees health insurance but I can't afford to meet the government mandates," one owner told the National Federation of Independent Business. "I will have to eliminate several employees to reduce my payroll expense."

(NFIB is a trade organization that helps businesses).

"I don't believe we'll be able to comply. We will have to eliminate pay increases and Christmas bonuses. Full-timers will be eliminated and all staff will be part-timers, and that will likely be insufficient," another added.

"In general, H.R.3200 will hurt my business due to increasing my costs. Ultimately that may mean letting people go. How is that helping the economy or small business?" wondered a third owner.

No wonder NFIB has come out in opposition to the "reforms" proposed in the House of Representatives.

Many politicians insist they can add a government-run "public option" health insurance plan on top of the trillions of dollars in obligations our federal government is already facing. But small business owners know better.

The government plans have a big problem: The extra taxation and spending would destroy many small businesses, the very foundation of the American economy.

Half of all private workers in the U.S. are employed in firms with fewer than 500 workers. These small firms have also created somewhere between 60 and 80 percent of all new jobs in the last decade.

But some politicians are willing to endanger that growth.

Rep. Charlie Rangel, D-N.Y., chairs the crucial Ways and Means Committee. To pay for health-care "reform," he wants to slap a surtax on roughly 2 million tax filers.

Some 60 percent of these returns reflect money made by a small business or partnership.

While 400,000 of people affected by the surtax derive most of their adjusted gross income from a small business, these taxpayers already shell out one quarter of all income taxes. They represent our economic foundation.

The proposed extra tax would be on a sliding scale: 1 percent for joint filers with more than $350,000, 1.5 percent for joint filers with more than $500,000, and 5.4 percent for joint filers with more than $1 million in adjusted gross income.

In addition to higher taxes, the House health care bill would force small businesses with at least $250,000 in payroll to provide health insurance or pay a tax penalty up to 8 percent of payroll.

And as if the initial proposed tax rate wasn't high enough, there's every chance it could go up.

The House bill would empower the Office of Management and Budget to jack the tax rates up to 2 percent for those making $350,000 and 3 percent for those making less than $1 million, if bureaucrats decide that's necessary.

Businesses would have an even harder time preparing for the future, because they'll never be able to know when their taxes may increase or how high they'll eventually go. Few business owners would hire new workers under those conditions.

The national unemployment rate in July reached 9.4 percent, and of course we all want to bring that number down by creating as many jobs as possible, as quickly as possible.

To do so we need to shore up small businesses, not chip away at them with higher taxes and expensive mandates.

As summer winds down, Obamacare seems to be on life support.

Small-business owners have spoken. We ought to pull the plug, and start over again with an effective reform plan that won't hammer our nation's economy.

Twitter Strategies for Marketing Your Business

2009-09-06T08:02:00.000-07:00

-“Brevity is the soul of wit,” wrote William Shakespeare. And it also appears to be the heart of the microblogging phenomenon, Twitter. Microblogging as a marketing strategy is bound to thrive, and sooner or later you’ll find it’s just smart business to communicate with your customers 140 characters at a time.
“Twitter is a great way to position yourself as an expert and go-to source in a particular field,” says Julio Ojeda-Zapata, author of Twitter Means Business: How Microblogging Can Help or Hurt Your Company. Ojeda-Zapata says people have found jobs, hired staff, promoted books, and been written about by major media outlets by blogging on the popular site. And while most business owners have heard of Twitter, relatively few are taking advantage of its power to promote their businesses.

The irony is that while blatant self-promotion and marketing on Twitter can be a recipe for failure, there are other uses that make it a back-end marketing and public relations bonanza. Here are three Twitter strategies every company should consider.

1. Search and respond: To see what your customers are saying about you, follow the advice of Tim O’Reilly, author of The Twitter Book, and search for your name, your company name, your Twitter name, and your brand or product. A few useful search engines include Twitter Search, TweetGrid, and Monitter.

2. Educate customers and be an expert: Natural Food Exchange in Reading, Massachusetts, is an independent, natural food store featuring the largest gluten-free stock of supplies in the state. Lisa Kalner Williams says the company uses Twitter as a way to distinguish it in the whole/natural food marketplace by tweeting useful information about celiac disease, a condition where a gluten-free diet has produced positive changes in those afflicted. Occasionally the company will do promotional tweets that mention gluten-free products available in the store.

3. Engage in conversations with customers: Of all the misconceptions that business owners have about Twitter, the biggest one is thinking of Twitter in terms of a monologue rather than a dialogue. “Old-school, one-way marketing is at best quaint and at worst annoying in this two-way world of social media,” according to Steve Mulder, director of emerging interactions at Molecular, part of Isobar, a global network of digital marketing companies.

Palo Alto: business tax foes step up campaign

2009-09-05T07:53:00.000-07:00

Foes of a business tax ballot measure in Palo Alto are stepping up their campaign with a new "fact sheet" calling the proposal unfair.

"Measure A will create a business license tax in Palo Alto written by the city to benefit large corporations and will unfairly burden our city's small businesses," says the document, paid for by the committee Small Business Against Taxes.

The measure would charge multi-billion-dollar corporations a lower rate per employee than small businesses, it goes on. For instance, manufacturing firms would pay $34 per employee while professional service businesses would pay $95 per employee. And the city's largest corporations will pay lower rates than medium-sized businesses, it says, because of a cap on the size of the tax.

The line of attack is in keeping with the official ballot argument against the tax, which also focuses on the disparity in tax rates between large and small businesses. Both documents have the endorsement of the Palo Alto Chamber of Commerce.

The Palo Alto City Council put the tax on the Nov. 3 ballot in hopes of raising $3 million annually for the city's general fund. If approved, businesses would pay between $75 and $30,000 per year based on their line of work and number of employees, with the majority paying $200 or less. The first payments would be due in 2011.

The official ballot argument in favor of the tax says it would benefit the city's libraries, parks and schools and help
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pay for new infrastructure. It notes that Palo Alto is one of only two cities that do not have a business license tax.

A rebuttal to the argument against the tax combats the claim that the tax rates are skewed. "The tax is more than fair. It will reach lawyers, accountants, venture capitalists and other service providers who don't pay sales tax. They will pay $95 per employee, as compared to restaurants and retail outlets that will pay only $40 per employee."

Many California cities have flat fees for business licenses, while some have employee-based taxes like the one proposed in Palo Alto. Of the two models, Palo Alto's actually charges big corporations far more while charging the smallest companies less.

The tax will go into effect if more than half of the city's voters support it.

Future Financing For Small Business Clouded, Hurting Recovery

2009-09-02T23:03:00.000-07:00

Even as the economy improves, financing may continue to be elusive for small businesses that drive job creation in the U.S.

Battered banks have cut back on loans and lines of credit. While smaller banks and credit unions have jumped in, they don't have the capacity to fully make up the financing needs.

It's unclear how small businesses, which account for half the U.S. economy, will find the funds to invest and propel the fragile recovery.

"We have to figure out how to get to the institutions and avenues small businesses actually use," said William Dennis, senior research fellow at the National Federation of Independent Business Research Foundation.

Despite government efforts to shore up the banking system, credit remains tight. The Federal Deposit Insurance Corp. last week said loans to small firms declined 1.9% in the past year. A Federal Reserve survey showed a third of banks tightened lending to businesses in the three months ended in July.

While the recession depresses demand for funds and hurts credit quality for small businesses, lines of credit are being cut for even solid firms, say advocates.

Meanwhile, community development financial institutions, such as credit unions and microloan funds, are making more loans, and larger ones, this year compared with last, according to a Philadelphia Federal Reserve Bank report on its region.

When it comes to number of loans made under the U.S. Small Business Administration's primary loan program, National Penn Bank and Susquehanna Bank have moved up in the Philadelphia area. They rank seventh and sixth respectively in the nine months ended July, from eighth and 12th during October 2006 through September 2007. In contrast, Bank of America Corp. (BAC) in the same period has gone from ranking fifth in number of loans - 118 - to 29th, with just four loans.

"Now, we're seeing more and more credit-worthy firms that are unable to get conventional financing," said Lynn Ozer, who manages Susquehanna's government guaranteed lending. She's seeing at least double the number of applicants for the SBA program than a year ago. Susquehanna Bancshares (SUSQ), based in Lititz, Pa., has $13.8 billion in assets.

Bank of America spokeswoman Tara Burke said the bank remains committed to small business. It lent more than $8 billion to companies with less than $20 million in annual revenue and modified payment structures for 32,000 small business credit-card customers so far this year, she said.

National Penn Bancshares Inc. (NPBC), based in Boyertown, Pa., with $9.7 billion in assets, didn't return a call for comment.

Groups that help small businesses are encouraging them to try regional banks. Philadelphia's Wharton Small Business Development Center is inviting more regional banks to attend its "meet the lenders" program in November and arranging its first-ever panel discussion with regional bank presidents in December.

But while regional banks didn't delve into the securitized products that bedeviled larger banks, they have exposure to commercial real estate - the next phase of the crisis. The National Association of Realtors recently said the market may only see meaningful recovery in the second half of 2010. Regional banks facing impending losses may cut back on credit even more.

Larger companies have the ability to bypass tight bank credit - they can sell bonds to investors, who lately have shown an insatiable appetite for the attractive assets. But small businesses have no such access. A long, protracted recovery may be the result.
Source: CNN

Qwest to upgrade business Internet network

2009-09-02T22:58:00.000-07:00

Wow, there are many news about it on internet, well Qwest Communications International Inc. will upgrade its Internet network for businesses over the next 16 months to make it fast enough to transmit 90 mammograms per second or a two-hour movie in nine seconds.

The Denver-based telecom plans to be able to offer 100 gigabits-per-second broadband speeds to businesses and governments using Ethernet services.

The upgrades will benefit the overall Qwest network by reducing the pressure on it created by steadily increasing bandwidth consumption of businesses and individual customers.

The project should also reduce the amount of power necessary for the network, making Qwest’s network not only faster but greener, the company said.

Qwest has already started the work. The upgrades are part of an overall deeper relationship with Paris-based Alcatel-Lucent, a major supplier of network technology.

Qwest is not disclosing how much the network upgrades will cost.

Source: Bizjournals.com

2nd UPDATE: Medtronic Consolidate Businesses Into Two Groups

2009-09-01T10:28:00.000-07:00

Medical-devices giant Medtronic Inc. (MDT), which has been restructuring amid efforts to control costs and manage pressure on top businesses, said Monday it is moving its various business units into two main groups.

The moves include some changes among Medtronic's top managers, and Medtronic said it's searching outside the company for someone to run a new group covering its cardiology franchises. The other group includes businesses making orthopedic, diabetes, neurology and surgical devices, Medtronic said in a release.

"This new structure enables us to capitalize on existing synergies across our businesses," Chairman and Chief Executive William A. Hawkins said in a statement.

Shares of Medtronic recently traded down 55 cents, or 1.4%, at $38.12, although they've generally been on an upswing since March. The company, which is battling to stabilize its position in markets for key devices amid a slumping economy, has enacted job cuts and other moves in its restructuring efforts this year.

The "CRDM, CardioVascular and Physio-Control" group will contain Medtronic's big cardiac-rhythm business, which includes implantable defibrillators. It will also cover the business that makes stents to open heart arteries and Physio- Control, an external defibrillator business Medtronic would like to spin off once issues raised by the Food and Drug Administration are resolved.

Medtronic said it's currently conducting an external search for someone to run this new group. Segment leaders from the three businesses within the group - Pat Mackin, Scott R. Ward and Brian Webster - will report to that person.

Morgan Stanley analyst David Lewis called Medtronic's decision to search outside the company for this spot the "biggest surprise." Outside perspective has worked before, but the decision to not promote either Mackin or Ward "will come as a surprise to some investors," Lewis said.

"We are not convinced this sends any message regarding the outlook for these businesses," he added.

Christopher J. O'Connell, who had led Medtronic's diabetes franchise, was promoted to head the "Spinal and Biologics, Neuromodulation, Diabetes and Surgical Technologies" group. Catherine Szyman, formerly senior vice president of strategy and innovation, will now run the diabetes business.

Richard E. Kuntz, who had run Medtronic's Neuromodulation business, which includes "deep-brain stimulation" devices used to treat neurological disorders, was named chief scientific clinical and regulatory officer. Tom Tefft, formerly vice president and corporate controller, will take over the neuromodulation unit.

In addition, Jean-Luc Butel was promoted to a new position overseeing international operations.

Last week, the company reported its fiscal first-quarter profit dropped 38%, weighed down by charges from a recent legal deal, but core earnings and sales beat expectations with help from extra time on the fiscal calendar.
Source : cnn

Business Highlights - Disney Buy Marvel

2009-08-31T22:32:00.000-07:00

Disney to buy comic book powerhouse Marvel for $4B

LOS ANGELES (AP) - The Walt Disney Co. is buying Marvel Entertainment Inc. for $4 billion in cash and stock, bringing such characters as Iron Man and Spider-Man into the family of Mickey Mouse and WALL-E.

Under the deal, which was announced Monday and is expected to close by the end of the year, Disney will acquire the rights to 5,000 Marvel characters. Many of them, including the Fantastic Four and the X-Men, were co-created by the comic book legend Stan Lee.

Stocks end strong month with a bout of selling

NEW YORK (AP) - After giving the stock market solid gains during August, investors still worried about the economy backtracked a bit during the final day of the month.

Stocks fell in light trading Monday after a plunge in China's main stock market sent a wave of selling around the world and added to concerns that stocks have rocketed too high, too fast. The Dow fell 47.92, or 0.5 percent, to 9,496.28.

The Standard & Poor's 500 index, which is the basis for many mutual funds, ended August higher to post its sixth straight monthly gain. It is up 50.9 percent since early March, the best run since 1938.

Baker Hughes to buy BJ Services in $5.5B deal

HOUSTON (AP) - Oilfield services company Baker Hughes Inc. said Monday that it will buy BJ Services Co. in a cash-and-stock deal valued at $5.5 billion to diversify the services it offers and compete better with industry leaders.

Baker Hughes customers will get a one-stop shop for a variety of services. Notably BJ Services' pressure pumping business will go to Baker Hughes, which will help clients with unconventional gas and deepwater fields, said Chad Deaton, Baker Hughes Chairman, President and CEO.

Southwest faces Tuesday deadline to replace parts

DALLAS (AP) - Southwest Airlines Co., facing a deadline of Tuesday for settling a dispute with regulators over the use of unapproved parts, said Monday the parts were installed on almost twice as many planes as it first believed.

The airline also has suspended the maintenance firm that got the parts from a subcontractor.

Southwest said Monday it has replaced the unapproved parts in more than 25 planes but needs more time to find parts for the remaining jets and an extension to avoid a disruption in its service to its customers.

Without an extension, the Federal Aviation Administration could force the airline to ground some planes.

Oil settles below $70 on China worries

UNDATED (AP) - Oil prices fell nearly 4 percent to below $70 a barrel Monday as a steep drop in China's stock market raised doubts about the strength of the U.S. and global economic recovery.

Benchmark crude for October delivery lost $2.78 to settle at $69.96 on the New York Mercantile Exchange, the first time oil has ended a trading day below $70 in about two weeks.

Major refiner China Petroleum & Chemical Corp. fell by the daily maximum 10 percent after the company said it does not expect to significantly boost production, while PetroChina, the Shanghai index's heaviest weighted share, fell 6.7 percent.

Head of Boeing's commercial jets to step down

CHICAGO (AP) - Boeing Co. said Monday that Scott Carson will step down as head of the company's commercial airplane division and retire at the end of the year.

The Chicago-based company said Carson will be succeeded on Tuesday by the head of its defense business, Jim Albaugh.

Boeing's commercial aircraft operation has struggled with sharply lower orders amid the global economic downturn, which has hurt demand for air travel and cargo services. It also has grappled with problems arising from its new 787, a next-generation aircraft that's been delayed five times. Boeing said last week the lightweight plane will fly for the first time by year's end.

Survey finds support for Fed, jitters on spending

NEW YORK (AP) - Economists are pleased with the Federal Reserve's policy on interest rates but skeptical of the government's ability to rein in spending, curb greenhouse gases or overhaul health care, a new survey finds.

The latest semiannual survey by the National Association for Business Economics, set to be released Monday, indicates almost 70 percent of the 266 economists surveyed earlier this month think the Fed's monetary policy is "about right," up from 63 percent in March and 56 percent a year ago.

The results come as indicators point to an improving economy, presenting policy makers with wrenching decisions over how quickly to roll back measures taken in the past year to avert a financial collapse.

Wal-Mart to sell goods from other vendors on Web

LITTLE ROCK, Ark. (AP) - Wal-Mart Stores Inc. has launched an addition to its online business that has outside retailers selling nearly 1 million new items through Walmart.com, a move that could help the world's largest retailer catch up in the online world.

The Walmart Marketplace has products from categories that include home, baby, toys, apparel, sporting goods and sports memorabilia. The company said it picked the retailers - including eBags, CSN Stores and Pro Team - because they have large product assortments and solid customer service track records.

Huntsman makes $415M bid for Tronox assets

NEW YORK (AP) - Chemical company Huntsman Inc. has offered to pay about $415 million for Tronox Inc.'s titanium dioxide and electrolytics businesses in a deal that would make Huntsman the world's second-biggest maker of a whitener used in products as diverse as food, plastics and paint.

Texas-based Huntsman Inc. said Monday that it signed a "stalking horse" agreement last Friday with Oklahoma City-based Tronox Inc., which filed for bankruptcy protection in January.

That means other companies may submit competing bids for Tronox's assets before a bankruptcy court auction, which will likely take place in the fourth quarter of this year.

Drugstores to start giving flu shots Tuesday

NEW YORK (AP) - Drugstore operators are beginning their seasonal flu shot campaigns several weeks early this year, saying they expect greater demand for the vaccine in a year when the swine flu strain has dominated the news.

CVS Caremark Corp. and Walgreen Co. are making flu shots available starting Tuesday, while Rite Aid Corp. said some of its pharmacists are already giving the shots. The vaccine is intended to prevent the seasonal flu and is separate from vaccines for swine flu. A swine flu vaccine could be ready by mid-October.

CVS said it was offering the shots three or four weeks earlier than usual. Walgreen said it started giving flu shots Oct. 1 last year.

By The Associated Press

The Dow fell 47.92, or 0.5 percent, to 9,496.28.

The S&P 500 index fell 8.31, or 0.8 percent, to 1,020.62, while the Nasdaq fell 19.71, or 1 percent, to 2,009.06.

Benchmark crude for October delivery lost $2.78 to settle at $69.96 on the New York Mercantile Exchange.

In other Nymex trading, gasoline for September delivery fell 7.59 cents to settle at $1.9859 a gallon and heating oil dropped 8.11 cents to settle at $1.7792 a gallon. Natural gas shed 5.6 cents to settle at $2.977 per 1,000 cubic feet.

In London, Brent crude settled down $3.14 at $69.65.

Business Activity Increases More Than Expected

2009-08-31T22:24:00.000-07:00

Business activity in the United States rose more than forecast in August, adding to signs the economy is improving.

The Institute for Supply Management-Chicago said Monday that its business barometer increased to 50, the highest level since September 2008, from 43.4 in July. Fifty is the dividing line between contraction and expansion.

Automakers are likely to be at the epicenter of a rebound in manufacturing in coming months as assembly lines speed up after the government’s cash-for-clunkers plan left showrooms bare. Increasing demand from overseas and a record reduction in inventories mean that an increase in factory orders and production may last for much of the rest of the year.

It’s “a manufacturing-led recovery,” said Robert Stein, a senior economist at First Trust Advisors of Wheaton, Ill. “Much of this is probably related to the revival in auto production over the past month or so.”

Economists surveyed by Bloomberg News had forecast the index would rise to 48, according to the median of 53 projections. Estimates ranged from 46 to 52.5.

Economists watch the Chicago index for an early reading on the outlook for overall manufacturing, which makes up about 12 percent of the economy. The Institute for Supply Management is scheduled to release its August factory report on Tuesday. According to a Bloomberg survey, that measure will show expansion for the first time since January 2008.

The Chicago report’s orders gauge climbed to 52.5, the highest level in a year, from 48 in July, and the production index rose to 52.9, from 43.3.

The employment index increased to 38.7, from 35.3. A measure of prices paid for raw materials jumped to 50, from 35, while a gauge of delivery times increased to 54.6, from 49.6.

Source: NYTimes

European business, consumer confidence up again

2009-08-29T05:58:00.000-07:00

LONDON — Official data shows business and consumer confidence in the 16-nation euro zone has increased again in August.

Eurostat, the European Union's statistics agency, said Friday its measure of business sentiment rose to -2.21 points in August from -2.70 points the previous month. Improvements were particularly strong for production expectations and orders booked.

The figure is still weak, however — "even when compared to the previous historical lows of 1993" — suggesting that industrial production remains subdued, Eurostat said.

The wider Economic Sentiment Indicator showed that its measure of consumer confidence also improved in August, to -22 points from -23 points in July.

For the 27-nation European Union, consumer confidence likewise improved marginally, to -20 from -21.

Australia to Open Auto Finance Fund - Sydney

2009-08-28T17:50:00.000-07:00

SYDNEY -- Australian Treasurer Wayne Swan said Friday the government will activate from Sept 1. a special fund to provide liquidity for auto dealer financiers encountering difficulties due to the global credit crisis

The government announced last December it would create the special purpose vehicle worth up to 2 billion Australian dollars ($1.66 billion) with the support of country's big four banks -- Commonwealth Bank of Australia, National Australia Bank Ltd., Australia and New Zealand Banking Group Ltd. and Westpac Banking Corp.

The government in June lowered the estimated size of the vehicle to around A$550 million, following a better-than-expected functioning of the market and the ability of dealers to secure funds through remaining lenders.

Like in the U.S., scarce credit has hammered Australia's A$7.7 billion auto sector in recent times.

The Australian government decided to establish the auto fund following plans by GE Money, a unit of General Electric Co., and GMAC, to exit the local market, leaving an estimated A$2 billion hole in funding lines to auto dealers. Swan said Friday the so-called OzCar program has helped ensure their orderly withdrawal.

"However, it will still be necessary to activate OzCar so that the remaining GE and GMAC dealerships will have more time to secure ongoing financing," Mr. Swan said in a statement.

"The activation of OzCar will also provide Ford Credit Australia with access to the liquidity required to continue to support its dealerships -- most of which are in regional areas."

Legislation enabling the fund was passed by lawmakers in June.

The fund is backed by the government's AAA sovereign guarantee but the government won't contribute direct funding.

Holden, the Australian unit of General Motors Corp., Ford Motor Co. and Toyota Motor Corp. currently manufacture cars in Australia.

Source: WSJ.com

Domestic trade finance business doing well

2009-08-25T10:23:00.000-07:00

PETALING JAYA: Some 80% to 90% of the world’s trade relies on trade finance, and there is little doubt the trade finance market will experience difficult times which will contribute to the global economic malaise.

However, the trade finance business in Malaysia is still doing well.
Chuang Boon Kheng ... ‘We believe our country’s exporters are unlikely to suffer any trade finance shortage.’

According to Harm Bots, Royal Bank of Scotland Bhd’s senior vice-president, country head, global transaction services, the bank has been expanding its trade finance business.

“There is a greater need for companies to open trade lines. We have been expanding our corporate business. On the other hand, the risk profile of most companies has increased,” he told StarBizWeek.

He said access to trade and supply chain financing had become more challenging with the onset of the credit crisis, especially in the emerging markets of Asia, due to a tighter credit environment.

“While it is tougher for banks to give out financing these days, big companies are also taking the cue and spreading their wings to work with a panel of banks,” he said.

Bots said the World Trade Organisation had estimated that there was a trade financing gap of US$49bil globally, “which means there is a shortfall of funds that are required but not available from banks.”

“Right now financing from banks is not as readily available. The pool of liquidity is smaller,” he said, adding that the pricing of trade finance instruments had also risen, reflecting higher funding costs, increased capital constraints and greater counter-party risks.

He said the types of trade finance products in demand had also changed as a result of the changing financial and business landscape.

“We are seeing a shift from open account trading, which was popular when the risk of trading account defaulting was considered small, to documentary trading using conventional trade finance products – such as letters of credit, bills of exchange and guarantees – to mitigate risk.

“Open account trading represents about 70% of the market and will always play a key part but, in the short term, letters of credit are becoming an increasingly popular way to mitigate risk,” he said.

In an atmosphere of constant uncertainty and volatility there was a growing need for financial service providers to take account of the end-to-end trade cycle to keep trade flowing, he added.

The International Chamber of Commerce had observed, based on global surveys, that about 70% of documents presented under letters of credit were discrepant on first presentation, he said.

“This is consistent with our own experience in Asia and Europe where we found about 70% to 80% of the documents being discrepant,” Bots said.

In this challenging, risky environment, it was crucial to manage risk and documentation, he said. “It is crucial for exporters to understand how to conduct trade and ensure that when you ship to stressed markets you get your money back.”

ABN Amro Bank N.V. executive director, regional head, business development Abraham Chacko said it was prevalent in volatile markets for suppliers to weasel out of their contract by looking for loopholes in documentation.

He said the UCP 600 was a set of rules used globally in documentary trade and detailed knowledge of this subject was key for exporters to manage risk and working capital efficiency.

“The UCP remains the most successful set of private rules for trade ever developed,” he said.

OCBC Bank (M) Bhd head of global trade finance Chuang Boon Kheng said the general exports demand continued to be weak but the bank was seeing early signs of improvement as seen in the trends of export letters of credit flows at the end of the second quarter.

“Given the resilience of the domestic banking system and existing trading relationships, we believe our country’s exporters are unlikely to suffer any trade finance shortage induced by the ongoing crisis,” she said.

The current financial crisis had had a visible impact on several fronts, such as the overall decrease in transaction value and volume, she said, but the capacity of banks to provide trade finance continued to be strong, as often reiterated by Bank Negara.

She said based on the bank’s experience, about 50% of letter of credit document submissions tended to be discrepant and this could have an impact on discrepant bills, including delays in payment, which may result in loss of interest, withholding of payment and exploitation of the discrepancies in an attempt to avoid payment or obtain discounts in the event of falling prices on the world market or currency fluctuations.

HSBC Bank Malaysia Bhd director trade and supply chain Lawrence Yong said the bank’s trade finance business was faring well, mainly due to its ability to leverage on the group’s strength in both import and export trade financing.

“Additionally, there is an increasing focus on more value-added transactions, especially in cross-border trade financing,” he said.

In such challenging times, there is increasing demand for risk mitigation products. HSBC has the strength and expertise in designing financial structures to cover all parties involved in the supply chain.

Yong said based on prevailing statistics, on a general basis for the banking industry worldwide, the percentage of documentary mistakes/discrepancies could be quite high.

“Discrepant documents in trade transactions can delay/affect the collection of payments. It is, therefore, important that the documents are compliant and free from mistakes,” he said.
Source: TheStar

Seminar for small business planned - Take it !

2009-08-24T22:26:00.000-07:00

AVON PARK - "Steps To Start A Small Business" is a free two-hour seminar presented by the Small Business Development Center at University of South Florida. It will be held from 2-4 p.m. Wednesday, Aug 26 at South Florida Community College in building T.

It is designed for persons thinking of starting a small business or who have started a business and want to make sure they did it correctly. Licenses, marketing, entity selection, and business planning are among the items discussed.

The seminar will be presented by Bill McKown, certified business analyst with the SBDC. Call McKown at 784-7379 to reserve a space in the seminar
Source: Newsun

Starting a Business : is my Plan B

2009-08-24T10:17:00.000-07:00

CALL them accidental entrepreneurs, unintended entrepreneurs or forced entrepreneurs. A year and a half into the Great Recession, with the jobless rate hovering near double digits, corporate refugees like Lisa Marie Grillos of San Francisco are trying to fend for themselves.

Along with her brother Hernan Barangan, Mrs. Grillos started Hambone Designs, after her full-time contract position with Williams-Sonoma as a production manager wasn’t renewed in January. The new company makes bicycle bags that hold things like keys, wallets and cellphones.

“You have the time — why not focus your energy on something, rather than just trolling Craigslist and sitting and watching TV?” Mrs. Grillos says. “It’s really taking matters in my own hands.”

Mrs. Grillos, 34, built a Web site called hambonedesigns.com, opened a virtual shop on Etsy.com, an online marketplace, and hit San Francisco street fairs. So far, between the online marketing and the street fairs, she and her brother have sold 70 bags, which retail for $20 to $40. Each sale results in a profit.

“We have been talking about mass producing, but we’re not there yet,” Mrs. Grillos says. “It is a whole other thing, approaching stores and having the inventory.”

To help make ends meet, Mrs. Grillos also does textile design and photography projects, and it helps that her husband has a full-time job.

Others among the unemployed are taking the entrepreneurial route. The most recent Index of Entrepreneurial Activity by the Kauffman Foundation showed a slight uptick of new businesses in 2008 — a full recessionary year — over 2007. An average of 320 Americans out of 100,000 formed a business each month, Kauffman said. What’s more, it found, the patterns “provide some early evidence that ‘necessity’ entrepreneurship is increasing and ‘opportunity’ entrepreneurship is decreasing.”

Accidental or by design, entrepreneurship is on the rise again this year. LegalZoom, the online legal document service, says the number of new businesses it helped to form was up 10 percent in the first half of the year, compared with the period a year earlier.

“We were surprised,” says Brian Liu, co-founder and chairman of LegalZoom. “We expected there to be a drastic downtick.”

LegalZoom’s top five areas of incorporation, he says, are real estate, consulting, Internet (including electronic commerce), retail, and construction and contractors.

To be sure, a vast majority of corporate workers who have been laid off since December 2007 have sought another corporate job. After all, starting a business in the worst downturn in decades seems especially risky. Only two-thirds of new small businesses survive at least two years, according to the Small Business Administration. That survival rate falls to 44 percent at four years, and to 31 percent at seven.

The silver lining may be that the survival rate is about the same in expansions and recessions, says Dane Stangler, senior analyst at Kauffman.

WHILE the Internet has made the formation process quick and inexpensive — papers can be filed with LegalZoom, for example, for $149 in addition to state filing fees — the costs of owning a business add up quickly. There are state and local taxes and fees, insurance, salaries and contract pay, overhead, inventory and the like. And these days, lenders are none too generous when it comes to forking over money to new businesses.

These factors, combined with the lack of a steady paycheck, often-inadequate health insurance and the sheer emotional stress of being unemployed, may prevent many people from setting out on their own.

But research on what is known as post-traumatic growth has found that some people become more resilient when faced with adversity, says Shawn Achor, a Harvard researcher. Creativity surges, he says, as they adapt to a new situation.

“Their brain is actually learning at a faster pace than when they are not challenged,” Mr. Achor says. “As a result of this, some individuals, the accidental entrepreneurs, they are the ones who in the midst of crisis actually respond with growth.”

In a report this summer on innovation, Ernst & Young wrote, “Experience shows that entrepreneurs should not give up on start-ups in a down economy.”

Many companies with billion-dollar market capitalizations were started during a recession, the report said, including Starbucks, Intuit and PetSmart.

Research from Kauffman in June found that more than half of the companies on the Fortune 500 list in 2009 and nearly half of the companies on the Inc. magazine 2008 list were founded during a recession or bear market.

Lynn Zuckerman Gray, 60, hopes to be one of the success stories of this recession. She lost her job at Lehman Brothers almost a year ago, when the firm collapsed. A former chief administrative officer of its global real estate group, she found herself competing with a rising number of job seekers for a dwindling pool of jobs.

Ms. Gray ended up participating in a New York City program, offered in conjunction with the Kauffman Foundation, called FastTrac NewVenture. The program, for employees displaced by the financial crisis, sent Ms. Gray in a direction she never thought she would go: starting an on-campus recruiting company called Campus Scout.

“I guess I had an entrepreneur simmering inside me because I’ve always been very creative,” she says.

The cost has been hundreds of dollars here and there, she says. Still, the reality of her financial situation is daunting. Her severance pay from Lehman ended this month, and she is now eating into her savings. So far, her new venture, Campus Scout, is in start-up mode and does not have any clients.

She says she is going to try to get part-time work, teach university classes and do some freelance writing to generate cash flow so she can keep her business going for at least two years.
Source: NYTIMES

Now, Credit Crisis Is a Big Draw for Finance Museum

2009-08-23T22:07:00.000-07:00

The Museum of American Finance was faced with an awkward situation recently: some of the corporate sponsors of the museum — dedicated to glories of free markets — had, well, failed.

Lee Kjelleren, the museum president, said the purpose of the exhibit was to illustrate the “forces that affected everybody’s lives.”

Rather than fretting, the museum tapped its own entrepreneurial spirit and mounted an exhibit — “Tracking the Credit Crisis” — that reveals what the museum’s president, Lee Kjelleren, calls the “greed, recklessness and arrogance” of Wall Street.

Probably not what Lehman Brothers, Merrill Lynch or the American International Group had in mind when they donated money to the museum.

But in the wake of the financial crisis, attendance at the museum — located at 48 Wall Street, near the epicenter of last year’s market collapse — has risen to about 200 visitors a day, nearly double its tally last summer. (The Metropolitan Museum of Art averages that many visitors almost every 90 seconds.)

And where else can you buy a poster for just $12 chronicling the lowlights of the credit crisis — so many, in fact, that it’s a five-poster set?

Among the biggest attractions for visitors? The morbid curiosity of a financial train wreck.

“This is about the market crashing,” said Lizzie McNeely, 26, a high school teacher from Toronto, as she wandered around the museum one recent afternoon. “I am interested in how they are going to represent that.”

For the $8 price of admission (or free Tuesday to Saturday from 10 to 11 a.m. through October), visitors who have seen enough van Goghs at the Met and Pollocks at the Museum of Modern Art can get a detailed look at the events that brought the global economy to its knees.

The most popular sections of the exhibit, Mr. Kjelleren said, describe so-called toxic assets and how these were exported from America around the world — “As if the rest of the world didn’t already love America enough!” — as well as the dubious role of the ratings agencies in concealing the riskiness of subprime mortgages and the securities based on their values.

A film about the crisis includes a still photograph of Richard S. Fuld Jr., the vilified former chief executive of Lehman Brothers, being harangued by an angry crowd, including a person holding a sign with the word “Crook” scrawled across it.

In curating the installation, Mr. Kjelleren said one of the things he wanted to capture was how “dumb” the banks had been about investment vehicles like credit-default swaps. “It was dumb, it was more than dumb, and it was occasionally reckless and irresponsible,” he said.

He pointed significantly to a section of the exhibit that discussed the so-called Lehman weekend last September, and the government’s decision to allow Lehman Brothers to fail, which Mr. Kjelleren characterized as a big mistake.

But he reminded visitors that the museum was all about learning from past mistakes.

One group striding by — five bankers from Goldman Sachs — seemed more focused on avoiding the educational experience of the exhibit devoted to the credit crisis.

John Cirincion, 60, one of the museum’s volunteer guides, beckoned to them to take a closer look, but the bankers shook their heads.

“We lived it!” one said, as the group headed instead for an exhibit titled “Women in Finance.”

The museum presents the global financial crisis employing a video and a dense timeline that catalogues what Mr. Kjelleren breathlessly describes as what may have been “the most challenging man-made calamity in modern experience,” excluding wars.

The color-coded timeline depicts crucial events from February 2007 through March 2009 in presenting an overview of the crisis, and provides definitions for important financial terms like subprime mortgage.

Mr. Kjelleren, a former banker for JPMorgan, said, “The idea was to create an awareness of the nature of the driving forces that affected everybody’s lives.”

One of the best measures of the scale of the crisis is not on display, but can be found in museum literature detailing its corporate sponsorships.

Goldman Sachs, Citigroup, Morgan Stanley and Wells Fargo generously opened their wallets here a year ago, long before they became part of Exhibit A in a display on the financial crisis.

And Lehman Brothers and Merrill Lynch are effectively gone, and American International Group is a shadow of its former self. The government owns nearly 80 percent of that company.

Alina Sichevaya, an 11-year-old whose father works for Credit Suisse, had just completed a weeklong finance camp for children at a Camp Millionaire program in her hometown of Cary, N.C. She strode into the gilded halls of the museum and made a beeline for the credit exhibit, staring intently at the giant panels of color-coded cards.

Though she had just learned at camp about complicated concepts like taxes and depreciating assets, Ms. Sichevaya said she found the exhibit “kind of confusing.”

“It’s a lot of information,” she added, as she and her mother, Olga, headed off to catch a sightseeing tour of the Brooklyn Bridge.

Even in the best of times, it was never going to be easy to curate an homage to high finance.

Correction: An earlier version of this article misstated the address of the Museum of American Finance.
Source: NYTIMES

Is commercial real estate finance a house of cards?

2009-08-21T09:04:00.000-07:00

This is a good question for all readers, anyway The credit freeze, falling values, highly structured debt and the unstable economic environment have created a perfect storm for commercial real estate loans. The capital markets are likely to see unprecedented levels of loan defaults, which will test much of the structure underlying these loans. PLI On-Demand examines the problem and solutions with the 68-minute PLI On-Demand presentation (audio only) Overcoming Challenges in Structured Commercial Real Estate Workouts 2009.

Source :Smartbrief

SBA to host downtown small-business fair -Thursday

2009-08-20T08:58:00.000-07:00

The U.S. Small Business Administration will host a resource fair in downtown Denver on Thursday, Aug. 20, for those who own a business or are thinking of starting one.

The free "Small Business Resource Fair" will be held at 10:15 a.m. to 3:45 p.m. at the Denver Public Library's Central Library at Civic Center, in the level B2 conference room. The library is co-hosting the event.
No advance registration is required.

On hand will be representatives from commercial lenders, federal prime contractors, business assistance organizations, local chambers of commerce and state and federal agencies.

The fair is intended "to answer questions relating to all aspects of starting, operating and growing a business. Small business owners will also learn how they can take advantage of the various programs initiated by the American Recovery and Reinvestment Act," SBA said in a statement.

Source: Bizjournals.com

U.S. business: welcomes Obama export control review

2009-08-19T16:54:00.000-07:00

U.S. high-technology exporters on Friday welcomed President Barack Obama's decision to undertake a comprehensive review of U.S. export controls rooted in Cold War fears of the former Soviet Union.

"The economic and security challenges our country faces continue to grow more complex, and we must have a modern export control system that protects U.S. technology while allowing us to cooperate and trade with our close allies and partners," Marion Blakey, president of the Aerospace Industries Association, said in statement.

Many U.S. companies are frustrated by licensing and procedures that limit export sales of commercial high-tech goods that also have military applications. They complain countries such as China can easily buy some of the technology on the open market from other suppliers.

Beijing also has pressed Washington to loosen restrictions, arguing that would help close the U.S. trade deficit with China, which reached a record $268 billion last year.

"The U.S. has one of the most robust export control systems in the world," White House spokesman Robert Gibbs said on Thursday. "But it is rooted in the Cold War era of over 50 years ago and must be updated to address the threats we face today and the changing economic and technological landscape."

That statement accompanied Obama's decision to extend the Commerce Department's emergency authority to continue administering export controls for another year.

The 1979 Export Administration Act expired in 2001 and since then Congress has been unable to agree on reforms to replace the highly technical piece of legislation.

"Export control reviews are frequently announced, occasionally begun, and never completed. The really good news will be when it is finished," Bill Reinsch, president of the National Foreign Trade Council, said in a statement.

Representative Howard Berman, chairman of the House of Representatives Foreign Affairs Committee, has already begun a congressional review of U.S. export controls and plans to introduce reform legislation early next year.

Health finance reform needed

2009-08-18T16:44:00.000-07:00

The behavior of opponents of health reform is completely embarrassing and also seems to miss the main point -- our current system of financing health care in this country is completely unsustainable.

With the increases of between 10 and 20 percent annually for private insurance coverage, eventually all small businesses will have to stop subsidizing employee health insurance. Already many companies, large and small, are in effect reducing employees' wages by increasing the amount each must contribute for health insurance -- a process that will only increase over time and harm the average American's standard of living.

Meanwhile, those without insurance often use emergency rooms for their care and end up with hospital bills that they can't pay and therefore harm their credit or end up in bankruptcy. Then the cost of uncompensated care is passed on to those with insurance.

Our public health insurance system is also a mess. Medicaid seems to be chronically underfunded, resulting in large numbers of providers refusing to accept Medicaid coverage. Medicare reimbursements reportedly are also insufficient, yet the expenses of Medicare continues to rise and, with the upcoming spike in the 65 and over population, will bankrupt our federal government by about 2020 without more cost controls being put in place.

Solving these problems is far from easy, or else solutions would have been enacted long ago -- but the status quo is not acceptable. Rather than ranting and raving, the opponents attending town hall meetings should discuss constructive suggestions to these problems. All Americans need to have access to decent, affordable health care, and those Americans with the means (and desire) to pay for "premium" health care services should be free to spend in that manner.

Source: Baltimoresun

Commercial real estate deals off, prices up !

2009-08-17T16:31:00.000-07:00

Commercial real estate sales in metro Denver dropped 68 percent to $1.68 billion for the 12 months ended June 30, from the same period last year, according to a recent report by LoopNet Inc.

Though overall sales volume was down period over period, selling prices per square foot in some property categories actually increased, often countering the national trend.

Metro-area office buildings, for example, sold for an average of $194 per foot during the recent 12-month period, compared to $165 a foot for the prior period. Per-square-foot selling prices nationwide, on the other hand, dropped during those periods — to $227 from $251.

Average selling prices for industrial buildings such as warehouses and distribution centers also rose — to $72 per square foot in the 12 months through June from $63 a foot for the previous 12-month period. Similar prices nationwide dropped in those periods, to $68 from $73.

LoopNet, an online commercial property listing service, included sales of office, industrial, retail and apartment properties of more than $2.5 million in its Denver-area data.

Here’s what local sales performance looked like, comparing the 12-month periods, by building type.

Office properties:

• $677 million in total sales volume, compared to $2.42 billion in sales for the prior-year period.

• Downtown Denver’s total sales volume ($469 million) topped suburban sales ($208 million).

• Leading buyers of office buildings included Jones Lang LaSalle Inc. (NYSE: JLL), HRPT Properties Trust (NYSE: HRP) and GDA Real Estate Services LLC.

• Leading sellers included Broadreach Capital Partners LLC, Transwestern Investment Co. and JPMorgan Chase & Company (NYSE: JPM).

• Top lenders for office deals included Goldman Sachs Group Inc. (NYSE: GS), Wachovia Corp. and FirstBank of South Jeffco.

• Biggest sales were the World Trade Center ($157.8 million/$206 per square foot), Seventeenth Street Plaza ($134.3 million/$201 psf) and Regency Plaza ($55.5 million/$179 psf).

Industrial properties:

• $261 million in total sales volume, down from $694 million period over period.

• Biggest sales included 345 Inverness Drive South ($25.7 million/$145 psf) and ProLogis Park 70/Building 8 ($19.3 million/$54 psf).

• Top buyers of industrial properties included Hines Interests LP, TA Associates Realty and JMDH Real Estate LLC.

• Major sellers included SVN Equities LLC, First Industrial Realty Trust Inc. (NYSE: FR) and Denver-based ProLogis (NYSE: PLD).

Small Business : Starting a new small business now !

2009-08-16T04:16:00.000-07:00

Well, last night I was checking examiner.com and I check and interesting article by Jim Fletecher, and I understand that how to get some more money and some tips that can help somebody...

The desire to own and operate a successful business is one that is familiar to most of us. We dream of the independence, wealth and fulfillment that our own businesses can provide. Our motivations are as varied as our ideas. Some of us need the money, some need to have something to fill our day, and some of us need to make our mark on the world. Whatever our motivation, desire is only the kindling for our bonfire; but, all fires start with a very small flame. From there, we must carefully build and tend to our fire until we either allow someone else to tend it or decide to douse it. The trouble is – many of us don’t know how to build a fire, and a good number of us don’t even know how to strike the match. Even worse, some of us just aren’t capable of the task. The good news is that, no matter which category we fit into, we can be successful with our businesses if we go about it correctly.

If there were one piece of advice I’d offer over any other, it would be to utilize every available resource to us, whether it be our friends and family or professional consultants. Recognizing our own shortcomings is important to our success. I also advocate the use of the resources available through the Small Business Administration. This wing of our government can provide us all with the necessary information to begin and operate a successful small business, and best of all, it's a free resource, paid for with our tax dollars.

A number of years ago, I attended my very first seminar aimed at helping the small business person get started. The most significant statistic shared with me in the opening presentation was an eye-opener, to say the very least. Many more small businesses fail than succeed. The numbers vary according to the sources, but they generally point out a sobering reality: it isn’t enough to have a great idea.

Commitment to the excellence of the idea and to the small business it supports makes the difference. Another way to say it is “survival of the fittest.” The reasons for failure or success are many and varied, but in almost every case, the successes are guided by actions that have their roots in commitment and tapping into the plethora of help available to us in our journey. In truth, most small businesses don’t create great wealth – but they do provide us with the opportunity to obtain wealth.

Wealth is typically the result of sacrifice and hard work. There is no magic formula that ensures we don’t work harder, faster or better in order to succeed. In fact, just the opposite holds true. Assuming that our idea is a good one, our success is directly proportionate to the level of commitment we apply to it. That commitment begins with the idea and is evident in everything we do. At this critical stage, our commitment is simply to decide whether our idea is one that has merit. The worst mistake we can make is to jump on the bandwagon without carefully thinking it through – a sanity check, if you will.

Let’s look at a very simple, but far from complete, sanity checklist:

a. Why do I believe my idea is great?
b. Why do I believe people will buy it?
c. Do I have (or can I make) the time it takes to do it right?
d. Do I have (or can I get) the resources to see it through?
e. Do I believe in it enough to make the sacrifices?
f. Am I willing and able to overcome setbacks?

Just looking at this short example should tell us something – there’s a lot of soul searching for us in this phase that requires our honesty with ourselves. We can’t lie to ourselves if we intend to succeed. Remember, the worst thing we can do is to fail ourselves by not being thorough in our sanity check; however, the second worst thing we can do is to let it drag on too long before we reach a conclusion. Momentum is very important to our business, and if we cannot make a decision in a reasonable time, we’ll sit in our think tank forever doing nothing - while someone else takes action. More opportunities are lost by lack of action than we know.

A true entrepreneur will be able to “go for it”; however, many of us don’t have one or more of these essential traits. It’s imperative that we recognize our own shortcomings and either change them or find a way to productively deal with them.

Great ideas are often left unrealized due to our own lack of commitment. As an example of tenacity, let’s look at Thomas Edison’s electric lamp. Most people think the electric light bulb was Edison’s idea, but they don’t know that his patent wasn’t for the light bulb. Inventors had successfully created light bulbs for almost 50 years prior to his patent; rather, his patent was for a filament that made the life of the bulb long enough to make it commercially viable. Edison’s labs began working on the project in 1878 and experienced thousands of failures before they succeeded. They viewed each failure as a success in how NOT to make a light bulb. It took two years for them to strike pay dirt, and they created a business with the success of their idea. It is this same commitment to our idea that is absolutely necessary. Perseverance is key.

Failures should not be perceived as setbacks; rather, they should be viewed as learning experiences that lead to our eventual success. Once we have confidence in our idea and our commitment to see it through, we’re ready to look outside ourselves to obtain more objective data that can help us to make the right choice for our business.

Treasury announces energy tax credits

2009-08-15T15:58:00.000-07:00

The U.S. Department of the Treasury and the Department of Energy today announced more than $2 billion in tax credits for energy manufacturers available through the stimulus.

The 30 percent tax credit will be provided to qualifying manufacturers of wind, solar, geothermal energy equipment, fuel cells, microturbines, batteries, electric cars and electric grids that support renewable energy transmission, plus energy conservation technologies and carbon sequestration equipment.
“This program will help encourage innovation in design of clean energy technologies,” said Treasury Secretary Tim Geithner.

The Bay Area is home to many cleantech companies including those that manufacture renewable energy equipment, batteries and electric cars.

Small Business Optimism Continues to Drop

2009-08-15T15:05:00.000-07:00

Proprietors of small businesses have become more pessimistic as their worries grow about whether business conditions will improve in the next six months, according to a survey released this week.

Reuters reports that the National Federation of Independent Business said the index fell in July for the second straight month, dropping 1.3 points to 86.5.

Small businesses produce half the private GDP, employ the bulk of the private sector work force and generate most of the new jobs created, and now face a plethora of proposed taxes: unemployment, gas, cap and trade, NFIB said.

"Now they are expected to finance the new experiments of Congress and the president such as healthcare reform, auto industry bailouts and union pension fund bailouts," said William Dunkelberg, the NFIB's chief economist.

"Even with good news on the economy, it's hard to be optimistic—and commit funds to the future—with these prospects facing small-business owners," said Dunkelberg.

Only 5 percent of small-business owners think now is a good time to expand their business, and more firms expect their real sales volumes to decline than grow, the group said.

The percent of owners expecting business conditions to deteriorate lost 10 percentage points from June, 15 points from May, this in spite of increasingly positive signs that the economy is improving, the group said.

Plans to invest in inventory improved, but remained negative, with 5 percent more planning to reduce stocks rather than to increase them, NFIB said.

"The recession is wearing Main Street folks down," said Dunkelberg. "And unfortunately, lawmakers in Washington are doing more to scare small business owners than to reassure them of an economic recovery."

ALL BUSINESS: What is fair executive pay?

2009-08-15T14:57:00.000-07:00

The scrutiny of executive pay in Washington isn't knocking down the compensation of banks' head honchos. It's just changing what form the money comes in.

Just look at Wells Fargo & Co.'s recently altered pay plan. Earlier this month, the San Francisco bank raised CEO John Stumpf's salary to $5.6 million, through a mix of cash and stock. That's more than six times his salary last year.

The generous bump doesn't violate any rules Wells Fargo is bound by under the Treasury Department's Troubled Asset Relief Program, which doled out $25 billion to the bank last fall to shore up its capital base. That's because the new pay scheme doesn't include a bonus, just a guaranteed higher salary.

But the move stretches what's allowed to its limits. It's that tactic the Obama administration's new pay czar Kenneth Feinberg has to be on the lookout for in the coming months as he reviews the compensation plans of seven companies that have received "exceptional assistance" from the government. Feinberg received the pay information over the last week, and his findings due in October are expected to be a blueprint for pay programs throughout the financial industry.

Wells Fargo isn't one of the companies on Feinberg's to-do list, but it well illustrates the struggle to determine what is "fair" pay in today's corporate world.

"There is no denying that some of these executives have really hard jobs," said J. Robert Brown, a professor of business law and corporate governance at the University of Denver. "But there is another element to all this over what is politically acceptable."

Soaring bonus payouts to financial service company executives tied to short-term results clearly played a role in the financial crisis. In recent years, 80 percent to 90 percent of executive compensation was driven solely by annual performance, according to compensation consultant David Wise of the Hay Group.

That led to excessive risk-taking, which ultimately backfired and resulted in losses so large that the government had to step in with multiple rescue plans.

Congress and the White House have been wrangling over how to shift the compensation paradigm. The House on July 31 voted to prohibit pay and bonus packages that encourage bankers and traders to take risks so big they could bring down the entire economy.

The Obama administration has proposed giving shareholders at all public companies a nonbinding vote on compensation packages. In addition, it wants to diminish management's influence on pay decisions by banning members of board compensation committees from having financial relationships with the company and its executives.

Feinberg is the first federal official to have veto power over the how much private-sector executives are to be compensated. Included in his review are pay plans submitted by American International Group, Citigroup, Bank of America, General Motors, Chrysler and the financing arms of the two automakers.

All this political intervention isn't intended to drag down executive pay to nothing. In fact, financial companies will continue to pay sums to executives that will likely astonish average workers.

The goal is to force companies to come up with compensation programs that better align shareholders' and executives' interests. Getting there won't be easy because there isn't a magic metric for fair pay.

The compensation changes at Wells Fargo shows how deciding what's appropriate can get murky.

Its CEO Stumpf will get $900,000 in cash as part of his 2009 salary, the same as last year. But he will also get another $4.7 million in stock that has been labeled as being part of his salary. Stumpf and three other executives who also got large salary increases can't sell these new shares until the company repays the government's bailout money.

Stumpf will also receive 108,528 in restricted share rights this year, valued at $2.8 million when they were granted earlier this month. Those shares will begin to vest in 2011.

That brings his total compensation in stock and cash at the time it was granted to $8.4 million for 2009. Last year, his total compensation in cash and stock options was valued at about $8.8 million when it was granted.

"We are using stock to increase their salaries to keep the pay of these leaders closely tied to the success of the shareholder," said Wells Fargo spokeswoman Melissa Murray. "We must pay our senior leaders competitively for the long-term success of our company."

But another way of looking at this is that Wells Fargo's top brass are getting guaranteed pay not necessarily tied to financial results. At the end of every two-week payroll period, Stumpf will get a portion of that $4.7 million in stock, with the amount of shares determined by where the stock is trading then. If the stock goes down, he gets more shares; if it goes up, he gets fewer.

That means a short-term drop in Wells Fargo stock could actually benefit the bank's executives. They also benefit from the fact that the stock now trades around $28 each, about a third less than what it was last fall.

"How can this be called a well designed plan because all the executives have to do is sit around in order to get paid?" said Paul Hodgson, a senior research associate at The Corporate Library, an independent corporate governance research firm.

Hay Group's Wise said financial companies that took government money don't have many options in how they can structure their pay programs at a time when there is talk of a potential brain drain of top talent. He believes the amount of compensation won't change much, just the makeup — most likely meaning salaries will grow while bonuses could shrink.

"Wells Fargo is doing exactly what the taxpayers were afraid banks would do, and the Treasury led them there," Wise said.

The coming months will be very telling for the future of executive pay, especially for financial firms. Feinberg's recommendations for the seven firms he reviews will be closely watched, and likely mimicked.

What's becoming ever more apparent is the fine line between allowing for competitive compensation and creating imbalanced incentives.

Source: Rachel Beck

Expanded SBA program helps East Bay Business

2009-08-15T14:52:00.000-07:00

Service West provides contract furniture installation, commercial moving, delivery and warehousing services.

So, Service West Inc. is taking advantage of an expanded government loan program that rewards increased energy efficiency to purchase a 132,0000-square-foot commercial office building in San Leandro.

The $10.5 million loan for the company's new property was serviced by TMC Development and represents the first loan made by TMC under the Small Business Administration’s Energy Efficiency and Public Policy Goals program.

The small business administration expanded its 504 loan program to offer financing up to $4 million for any project designed to reduce energy consumption by at least 10 percent or which will generate renewable energy or fuels. The previous loan cap was $2 million. SBA loans finance some of the loan while private banks and the companies provide the rest.

"Service West is a perfect example of how recent changes to the SBA 504 loan program make this type of financing an even better fit for larger projects," said Barbara Morrison, CEO of TMC Development.

Michael Barry, Senior Vice President at CB Richard Ellis, brokered the sale on behalf of Service West.

In Pursuit of Small Business Loans !

2009-08-15T14:14:00.000-07:00

At a recent meeting with Frank Burke, right foreground, who was representing Senator Frank R. Lautenberg’s office, South Orange business leaders discussed the need for credit. From left, Carole Anzalone-Newman of Main Street South Orange; Brian Boele of Bonte; Terrence Brooks of Vision Barber Salon; and Evelyn Lee, a reporter from NJbiz.com.

Joanna D’Angelo knows that starting a new business is no small accomplishment. Dealing in fine organic tea and jams from France, Ms. D’Angelo set up Tea Together, her storefront in Millburn, last November.

“We felt it was an up-and-coming area, and it was right for us,” Ms. D’Angelo said.

Business has not been bad, but she needed a small loan to keep momentum going until the busy season. While shopping for loans last month, Ms. D’Angelo walked into Chase, a preferred lender of loans backed by the federal Small Business Administration, and walked out a short time later — minus any money.

“We tried a few other banks, but they all had impossible conditions,” she said. “We did not qualify for an S.B.A. loan, something they were very adamant about.”
According to Ms. D’Angelo, Tea Together failed to qualify at Chase because the business was fewer than three years old, though she did not know if that was the Small Business Administration’s or Chase’s rule.

Ms. D’Angelo joins other owners of small local businesses who are finding credit hard to come by, even with the help of federal stimulus money directed to help. The dearth of small business loans nationally described in The Times’s article on Thursday seems to be playing out locally as well. So far in South Orange, only four S.B.A. loans have been approved from Oct. 1, 2008, through the end of June 2009, according to federal statistics. This is down from eight loans in the last financial year, from Oct. 1, 2007, and Sept. 30, 2008.
An S.B.A.-backed loan is intended for small businesses that might not qualify for a commercial loan. After being rejected, a small businesses can apply, often at the same bank, for an S.B.A.-backed loan.

Since the financial crisis began in September, the credit market dried up, hitting small businesses hard. In response, $730 million from the federal stimulus package was funneled to increase the guarantee on S.B.A. loans to 90 percent. However, even with the guarantee, loans can be hard to come by.

But who is responsible for the bottleneck? Is it the S.B.A., where mountains of paperwork are required? Or are the banks not wanting to go the extra mile to assist small businesses? Or perhaps, are small businesses considered a poor investment?

From the eyes of the banking industry, the problem centers around the red tape that entangles all areas of the S.B.A. loan process.

Sheila Spangler, who worked in the banking industry for more than 20 years and is now a business strategy coach, said she believed that banks are not lending because of the excessive paperwork required for an S.B.A. loan. Banks and the S.B.A. have their own qualifications, and both apply when a small business wants a loan.

“Just because the S.B.A. may be willing to guarantee the loan, the bank may not necessarily want to make the loan,” said Ms. Spangler, who calls herself a proponent of the federal agency.

She explained the S.B.A. guarantee is not real money. It is available only if the borrower defaults, so the bank must initially provide its own money for the loan. And when it comes to receiving the guarantee, from her own experience and from being in constant contact with bank managers, Ms. Spangler said it can take one or two years.

“It is a long, drawn-out process,” she said.

Furthermore, if the borrower defaults, there is also a chance that banks will not get their money back from the S.B.A.

“If the bank does make the S.B.A. loan, the package has to be done perfectly, or the bank risks not being able to exercise the government guarantee,” Ms. Spangler said.

Jonathan Swain, a spokesman for the Small Business Administration in Washington, countered that it did not take terribly long for a loan to receive a guarantee.

“We have made a commitment to lenders to turn their application around in 45 days or less,” Mr. Swain said, referring to the amount of time it takes banks to receive the guaranteed amount for a defaulted loan. He said the S.B.A. averages a 30-day turnaround, and that 95 percent of the guarantees on default loans are paid to banks.

Mr. Swain also noted the low default rate on S.B.A. loans in the first place.

“Our default rate is about 5 percent,” he said, “which is more than what it was historically. However, that is what you would expect in this economic time.”

A new initiative of the S.B.A., America’s Recovery Capital Loan Program, is also causing confusion for some would-be lenders. Operating for less than two months, this program provides $35,000 in short-term relief to struggling small businesses. Like in a standard S.B.A. loan, the business must be eligible by the standards of both the S.B.A. and the commercial lender.

“Over 1,000 A.R.C. loans have been offered across the country,” Mr. Swain said. “We feel good about where it is, and we expect to see those numbers go up.”

But so far, only four of those loans have been in New Jersey through the lenders JPMorgan Chase & Company, PNC Bank and Woori Bank. (They tend to head to businesses in Minnesota, Wisconsin and Iowa, according to The Boss blog.)

While there are 190 banks in New Jersey that partner with the S.B.A., some are part of the preferred or certified lenders program, and are able to get an accelerated application process for loans they approve. Here is a list of those banks [pdf].

Ms. Spangler said A.R.C. provides little incentive for commercial lenders to administer the loan.

“The mound of paperwork and knowledge is the same as for a million-dollar loan,” she said of the relatively small A.R.C. loans.

Mr. Swain said this was necessary to prove that the business was viable and still a good investment.

Elizabeth Boele, co-owner with her husband, Brian, of Bonte, a cafe and waffle shop on South Orange Avenue, was not granted an A.R.C. loan because she could not demonstrate financial difficulty on paper, a qualification for the loan. Instead, the business had been cutting back in other areas to avoid defaulting on other loans.

“If we had not been making our repayments, we would have been better off,” Mrs. Boele said she told an S.B.A. representative recently.

Mr. Swain encouraged business owners like this to speak with the New Jersey S.B.A. office, as options still might be available to them.

There are some who argue that market forces, not the government, should determine who stays in business. While the S.B.A. loans may be helpful, are they keeping people afloat who simply should sink?

“Small business that are barely making it should not get a loan,” said Mary Anne Spencer, from the Tenth Muse Gallery in Maplewood, who was able to use her own equity to start her business. “People are going in with no business plan, no demographic study … what are you going to give them a small business loan for?”

Ms. Spencer was concerned for those small businesses that were barely breaking even, operating under false hopes that the economy will suddenly improve, and taking on the added burden of new debt.

“People’s spending has changed, and it is going to stay that way for some time,” she said.

When this thought was posed to Mr. Swain, he said he believed that many of the businesses the S.B.A. supports have been profitable businesses that need an extra hand.

“There are a lot of good, viable small businesses who do not have access to the capital that they would have had in good economic times,” he said. Mr. Swain said S.B.A. loans were useful to businesses that were in the “maybe stack” of getting a commercial loan, and he stressed the loans were not there for businesses that are not viable.

Mr. Swain did have some good news for small business regarding the dollar amount of S.B.A. loans recently. Since February, “we have actually seen our loan volume increase 50 percent,” he said. “July was the highest months in terms of volume since last September.”
Source: NYTimes

Finance Site Mint.com Raises $14M in New Funding

2009-08-15T10:31:00.000-07:00

Personal finance site Mint.com has raised $14 million in its latest round of venture funding, which was led by DAG Ventures.

The Mountain View, Calif.-based startup said this week that it secured financing from The Founder's Fund, current investors Benchmark Capital, Shasta Ventures, First Round Capital and Sherpalo.
The company did not disclose its current valuation. Since its launch in September 2007, the company has raised $31 million through three rounds of funding and a seed round.

Mint said it will use the funding to hire more engineers and to speed up product upgrades and partnership launches that are planned for the next six to 12 months.

Mint, which has more than 1.4 million registered users, is also set to roll out upgraded features on its site next week. These will mostly relate to Mint.com's budgeting functions, which let users see how they spend and save their money.

Source: NYTIMES