Small-business owners are being warned about a wave of scams, exorbitant fees and abusive marketing tactics related to federally guaranteed loan programs.
As lenders and borrowers slowly return to the loans guaranteed by the U.S. Small Business Administration, some are complaining about such abuses, the SBA’s Office of Inspector General warns.
Among the complaints:
* Firms charging small businesses high fees to provide assistance in applying for SBA loans. The allegations include guarantees that a business will get a loan if it pays the fee. SBA says it does not endorse or give preference to specific private companies or their clients.
* Firms call offering assistance and ask for the business’ bank account and routing information and then charging for services never requested. (Never give social security numbers, bank account information or credit card numbers especially to inbound callers.)
* Firms tell owners that they will be issued a “forfeiture letter,”making their business ineligible for any SBA funding for three years if the owners refuse to use the firm’s services.
To read more of this The Orange County Register article click here.
David Harmer didn’t think he’d have a problem getting a $50,000 line of credit for his 33-year-old air-conditioning business.
First Class of Cape Coral, Fla., was profitable. Harmer’s net worth was $2 million, and he’d never been late with a loan payment.
But Florida Gulf Bank denied his application last summer, saying First Class’ balance sheet didn’t show a profit. Harmer explained he reclassifies company earnings as his wages at year’s end to lower his taxes, a technicality that hadn’t posed a problem for his previous credit lines at other banks.
To read more of this USA Today article click here.
One trend is clearly visible today. Hi rents are driving many small businesses out of existence in the Pasadena area. The affected groups are restaurants, retail and service establishments. Landlords in the area are not as sensible to small businesses as their counterparts from the beach cities. The result is that many establishments are replaced with For Rent signs.
An unscientific survey among local business owners reveals that loss of revenue and high rent are the main reasons driving them out of business. Today’s bad economy does not produce high revenues. Vast majority of businesses are affected.
While property owners in the affluent coastal areas responded with lowering the rent rates to $1.50 – $2.50 per square feet, tenants in the Pasadena area do not feel the same effect. Many landlords still hope that the economy will turn around soon and business will continue as usual. The result of this thinking is visible in many for rent signs.
Current econimic conditions are challenging for both tenants and lendlords. Obviously, the former cannot support break even or money loosing businesses indefinately. It is interesting to see for how long the later can afford to have empty spaces.
WASHINGTON -(Dow Jones)- Nine of the largest banks to receive money through the government’s $700 billion financial market rescue program cut back lending to small businesses in January.
The total volume of small-business loans outstanding at the banks fell 1% in January, the U.S. Treasury said in a report released late Monday. New loan originations for small businesses dropped 28%.
Meanwhile, total average loan balances at the institutions rose 2% to $1.064 trillion in January. Overall new loan originations were down 35%.
To read more of this NASDAQ article click here.
Ryan Fochler’s life changed six years ago when he left his job in the computer industry to buy an Arlington County-based dog-walking business with $50,000 in personal savings and a home-equity line of credit. The firm grew quickly, with revenue more than doubling each year. By 2008, Fochler was ready to expand the business into a full-fledged pet day-care service called Dog Paws ‘n Cat Claws.
The only problem was money.
To read more of this Washington Post article click here.
Small businesses are showing signs of an economic rebound. This is the main finding of the just-released Intuit Small Business Employment Index, a new, monthly report that provides unique, near real-time insight into employment trends of the smallest of small businesses.
Intuit Inc. /quotes/comstock/15*!intu/quotes/nls/intu (INTU 32.81, -0.10, -0.29%) , the nation’s leading small business payroll provider, based its report on data from businesses with fewer than 20 employees, which comprise 87 percent of the total U.S. private employer base. While the Intuit Small Business Employment Index offers macroeconomic insight about the economy generally, it does not indicate or represent changes in Intuit’s business results for any period.
To read more of this MarketWatch article click here.