The Rise of Veteran-Owned Small Businesses

NEW YORK, NY (November 15, 2017) In the United States, veterans are a significant force in the world of small businesses. One in four veterans own a small business, a rate that is 7.7% above the national average - that's 2.5 million veteran entrepreneurs.

In "The top places in America for veteran small business owners", economist Lucas Puente presents the results of a national survey by Thumbtack and writes,

"The other thing veterans point to as being a catalyst to their success is being part of a supportive community. While every business’ needs are different, being in a place where veteran-owned businesses are valued by clients, bankers, suppliers, and others can help provide a leg up in the potentially harrowing process of starting and growing a small business."

Read the entire article here. 

Exposing Peer-to-Peer Lending Myths

 CLEVELAND, OH (November 13, 2017) The Federal Reserve Bank of Cleveland has released a new report uncovering the predatory nature of peer-to-peer (P2P) lending services that leave many Americans facing unexpected and dire consequences:

"We find that, on average, borrowers do not use P2P loans to refinance pre-existing loans, credit scores actually go down for years after P2P borrowing, and P2P loans do not go to the markets underserved by the traditional banking system. Overall, P2P loans resemble predatory loans in terms of the segment of the consumer market they serve and their impact on consumers’ finances. Given that P2P lenders are not regulated or supervised for antipredatory laws, lawmakers and regulators may need to revisit their position on online lending marketplaces."

Read the entire report "Three Myths about Peer-to-Peer Loans" here. 

Celebrating National Women's Small Business Month

WASHINGTON DC (November 10, 2017) Female business owners are on the rise, according to reports by the National Women's Business Council.

October was featured as Women's Small Business Month, marking the 29th anniversary of President Ronald Reagan's signing of the Women's Business Ownership Act, creating the National Women's Business Council and ensuring that banks could no longer require women to have a male co-signer for business loans. Here's a look at some recent progress:

• From 2002 to 2012, women-owned businesses increased at a rate 2.5 times the national average: 52% vs. 20%. Employment in women-owned business grew at a rate 4.5 times the national average: 18% vs. 4%.

• In 2016 there were 11.3 million women-owned businesses in the US, with nearly 9 million employees generating more than $1.6 trillion in revenue.

The report concludes: “The growth of women business enterprises over the last ten years is unprecedented; yet, women still lag behind, in earnings and receipts, and in the amount of venture capital and other forms of equity investment that they receive. This is a unique time, in many ways a perfect storm, and it is imperative that we work harder and faster to unlock the tremendous potential of women business enterprises,” said Carla Harris, Chair, National Women’s Business Council.

Click here to view the entire report. 

Survey: Millennial Entrepreneurs Plan to Expand and Seek Business Loans

RALEIGH, NC (November 7, 2017) In the next six to twelve months, 82% of millennial business owners plan to expand their business, and 34% plan to do so with the help of loans, savings or credit cards, according to First Citizens Bank's Small Business Forecast Survey. 

Click here to view the survey. 

Why You Need Financing as a Woman Business Owner

NEW YORK, NY (October 10, 2016) excerpt via BUSINESS 2 COMMUNITY - Women business owners are on the rise across the United States, as entrepreneurship offers some uniquely attractive benefits. 

"For one it allows them to bypass the 'glass ceiling'. The flexibility of being 'your own boss' is an environment which allows many women to thrive – you are in charge of your own career advancement!" the business blog Business 2 Community reports.

However, the blog continues: "Running a business as a woman also comes with a unique set of challenges- particularly financing. Not all women know about their resources and some don’t even bother apply for lines of credit, assuming they won’t get accepted. Instead, they rely on their own personal funding."

Click here to read the entire article.

5 Tips for Getting Your Small Business Loan Approved

WASHINGTON DC (October 9, 2017) The greatest challenge facing small businesses in 2016 was accessing necessary credit, according to a survey by the Federal Reserve. The survey revealed that while 72% of larger companies were approved for loans, only 45% of small businesses successfully secured financing. 

Kiplinger Personal Finance presents a guide to understanding bank loans.  

Click here to read the entire article.

Women-Led Businesses Find Support in Rochester

ROCHESTER, NY (October 6, 2017) excerpt from THE ROCHESTER BUSINESS JOURNAL - The Rochester region is open for business for women-owned enterprises, and several local female business leaders report that they have been able to find success for their companies no matter what type of industry they work in.

“The (Rochester business) climate is on fire for women,” says Lauren Dixon, chief executive officer of Victor-based ad agency Dixon Schwabl.

Dixon says that unlike some other communities, Rochester is “super-supportive of women and women-owned businesses. The mentoring and support that is going on in this community—in many other communities it is not going on to the extent that it is here.”

Christine “Chris” Whitman, the current chairman and CEO of Rochester-based package-fulfillment company Complemar, agrees.

“Rochester is very open,” she says. “There is a desire on the part of many companies to be able to find minority- and women-owned businesses to be able to provide services. I encourage both minorities and women to think about being entrepreneurs.”

Read the entire article here. 

7 Things About Funding Sources that Small Business Owners Don't Know - But Should

NEW YORK, NY (October 5, 2017) excerpt from SMALL BUSINESS TRENDS - Getting funding for your small business is essential but not always as straightforward as you might think. Here are 7 things about funding sources you might not know about but should.

You need to keep a positive ending balance. Hanna Kassis works for Segway Financial. He says a small business should not only have money in a bank account before they apply for a loan, but a specific amount at month’s end.

“Lenders want to see that you’ve got a positive ending balance,” he says. “Say you’re anticipating needing a merchant cash advance at the end of the month, go put $500 dollars in your bank account.”

Your personal credit score affects your business financing. Many small businesses like sole proprietors don’t know this when they try to get financing. However, if you’ve been through a personal event like a divorce that has dented your personal credit, your ability to get a loan can be affected.

Having a good business plan will help tip things in your favor.

Read the entire article here. 

Latinos Get Spotlight at the Minority Business Table

GREENVILLE COUNTY, NC (October 4, 2017) excerpt from THE DAILY REFLECTOR - It is more important than ever before to have a conversation about Latinos in Greenville and Pitt County, Juvencio Rocha-Peralta, executive director of the Association of Mexicans in North Carolina, told about 75 minority business owners and government officials during a Minority Enterprise Development Week luncheon at the Hilton Greenville hosted by the Greenville Financial Services Department

“Latinos have embraced communities and changed the culture of the United States,” keynote speaker Rocha-Peralta said. “We have grown extremely fast. In 2016, 27.3 million Latinos voted in elections, and 24 percent of private enterprise is Latino-owned, an amazing business statistic ... that shows a powerful movement to change the political climate.” 

Rocha-Peralta also said that most Latino business startups are self-financed, a claim apparently backed up by a 2016 report by JP Morgan & Chase on a study by the Stanford University Graduate School of Business. When Latino entrepreneurs start a business, 70 percent of their funding comes from personal savings, while six percent comes from commercial loans, according to the study.

Of the businesses surveyed in the Stanford study, more than 40 percent of non-citizen Latino business owners, all of whom are here legally, are rejected when they apply for their first business loans, according to the JP Morgan report.

Rocha-Peralta praised Greenville and Pitt County officials and residents for their recognition of the accomplishments of minority business owners, but said there still is much work to do.

To read the entire article, click here.

Women's Entrepreneurial Activity Up 10 Percent, Closing the Gender Gap by 5 Percent Since 2014

BABSON PARK, MA (October 3, 2017) excerpt from CISION - Over the past year, 163 million women were starting businesses across 74 economies worldwide—this according to the Global Entrepreneurship Monitor (GEM) 2016/17 Women's Report released today.

"This not only shows the magnitude of impact women entrepreneurs have across the globe, but highlights the contribution they make toward the growth and well-being of their societies," said Babson College Professor and report co-author Donna Kelley. "Women entrepreneurs provide incomes for their families, employment for those in their communities, and products and services that bring new value to the world around them."

Among the 63 economies surveyed in both this and the last report, GEM found that Total Entrepreneurial Activity (TEA) among women increased by 10 percent, and the gender gap (ratio of women to men participating in entrepreneurship) narrowed by 5 percent.

These same economies show an 8 percent increase in women's ownership of established businesses, and a near 10 percent increase in women's opportunity perceptions across Europe, North America, and Asia.

To read the entire article, click here.

Report: Baltimore Needs More Robust Financing System for Small Businesses

BALTIMORE, MD (October 2, 2017) excerpt from THE BALTIMORE SUN - Baltimore needs a more robust financing system to help small businesses grow and to attract new companies.

That’s the conclusion of a new report by the Johns Hopkins University’s 21st Century Cities Initiative, which evaluated access to venture capital funding and loans for startup companies and more established Main Street small businesses.

The report also found that growth among traditional small businesses may be lagging because of insufficient access to loans.

While lending to small businesses in Maryland has trended upward since the recession, loans to Baltimore-based companies have lagged, in part because of consolidation among community banks that traditionally have been a key source of financing for local businesses.

Local banks are more likely to provide bigger working capital loans than national banks, which often focus on credit card loans, according to the report.

To read the entire article, click here.

Advocates: Small Businesses Need Protection Against ‘Predatory’ Lenders

ANN ARBOR, MI (September 29, 2017) excerpt from INSIDE SOURCES - Anytime they take out a loan, American consumers enjoy protections embodied by a handful of decades-old laws designed to ensure that they know how much credit costs, and that they can comparison shop. But the American small business owner enjoys no such benefits, something a new coalition is trying to change.

As banks have reduced lending to small businesses in the wake of the 2008 financial crisis, other lenders have swarmed into the sector, creating what critics call a rising tide of abuse — this time aimed at struggling business owners — that resembles the subprime mortgage sector that led to bailouts and the worst recession since the Great Depression.

“Small business owners are human beings, and they get taken advantage of the way consumer human beings do. But they don’t have the kinds of protections in the law that consumers have,” said Michael Barr, a law professor at the University of Michigan and a former assistant secretary of the Treasury.

Read the entire article here. 

New Rules Would Target Discrimination in Small-Business Lending

WASHINGTON DC (September 28, 2017) excerpt from KQED NEWS - Banks could be forced to collect and report data on the small-business loans they approve and reject — including the ethnicity and gender of the business owners — under new rules being crafted by a federal consumer protection agency. Economists and regulators say the data could help identify whether lenders discriminate against minority- or women-owned businesses.

The new rules would aim to “facilitate enforcement of fair lending laws” as directed by Section 1071 of the Dodd-Frank Act. Congress approved the major financial reform legislation in direct response to the last financial crisis.

Mortgage lenders already collect similar data, which help to “shed light on lending patterns that could be discriminatory,” according to the Consumer Financial Protection Bureau, the agency tasked with implementing the reporting changes on small-business lending.

To read the entire article, click here.

Pricey 'Fintech' Lenders Put the Squeeze on Cash-Strapped Small Businesses

LOS ANGELES, CA (September 27, 2017) excerpt via The Los Angeles Times -  Mark Newman needed some fast cash last October to keep his small Studio City wine-importing business afloat. He went to his main bank but was rejected for a loan because of his relatively low sales.

So Newman, 61, turned instead to an online lending company called OnDeck. After submitting a handful of bank statements, he was quickly approved for a $65,000 loan, which allowed Newman to cover his wine shipments and keep his business running.

All good, right? Wrong, says Newman.

“These loans are predatory by nature,” he told me. Think payday loans for small businesses, he said, with interest rates well over 30%.

OnDeck Capital is representative of a new breed of online lenders known as financial-technology firms, or “fintech,” that have found a niche making money available to small businesses quickly and with minimal hassle.

Fairness in lending means clear and straightforward disclosure of terms and conditions. On that score, OnDeck seems to come up short.

For example, the company’s website boasts that term loans of up to $500,000 can be obtained with annual interest rates as low as 5.99%. Newman said that when he contacted OnDeck, he was hoping to get a loan at such a rate. But it didn’t work out that way.

“They were crafty about it,” he recalled. “They said they couldn’t offer me the lower interest rate, but they’d see what they could do for me.”

What he got was a 12-month, $65,000 loan, plus nearly $17,500 in interest and an origination fee of $1,625. That translated to an annual percentage rate of 55%.

In fact, OnDeck told me its average annual interest rate for term loans, excluding fees, is 38%.

To read the rest of the article, click here. 

Small Businesses Expand, Invest Despite Gridlock in Washington

WASHINGTON DC (September 26, 2017) excerpt via USA TODAY -  Small business owners are tired of sitting on their hands while Washington dithers.

Despite lingering uncertainty over tax and health care policy, U.S. entrepreneurs are moving ahead with investment and expansion plans that could juice economic growth.

Thirty-two percent of small businesses are planning capital outlays in the next three to six months, the strongest reading since 2006, according to the National Federation of Independent Business’s August survey. And 27% say the next three months is a “good time to expand,” the largest share in 13 years.

A September survey of economists by the National Association for Business Economics, out Monday, predicts that business investment overall -- by small and larger companies -- will grow 4.4% this year, up from their 3% median estimate in December. Businesses that expand, buy new equipment or build new structures typically hire workers to operate the machines or occupy buildings, while the factories that make the products generally need to staff up as well.

To read the entire article, click here. 

Latino-Owned Small Businesses Struggle to Grow Their Companies

PASADENA, CA (September 25, 2017) - More than 40 percent of the nearly 400,000 Latino-owned small businesses in the greater Los Angeles area have been denied capital because of low credit scores and other perceived risks, a new study reveals.

The report, “Fueling California’s Economic Growth: A Study on Latino Small Business and Capital Access” by the Small Business Finance Fund, defines the L.A. region to include Los Angeles, Long Beach and Santa Ana. But the statistics are reflective of the entire state.

Access to capital is important for all entrepreneurs, whether the funding is needed for a startup venture or to grow an existing business.

Small business lending by traditional financial institutions and household wealth contracted significantly in the wake of the Great Recession and access to capital remains problematic for all entrepreneurs, despite the economic recovery. But evidence shows that Latino small business owners are denied credit more often, charged higher interest rates and discouraged from applying for loans more often than their white counterparts, according to the report. That’s primarily because they tend to have lower credit scores, limited collateral and less startup capital.

And it has a ripple effect.

The lack of access to mainstream financial services and bank financing creates a financial disconnect, the report said, and it can be exacerbated by a lack of familiarity with the legal system, tax laws, local codes and standard accounting practices. 

To read the entire article, click here.

Collaboration as Competitive Advantage

WASHINGTON DC (September 22, 2017) — As noted by the Washington Post, “Bankers are worried, and rightly so. In a letter to shareholders of JP Morgan Chase, America’s largest bank, chief executive Jamie Dimon warned investors that “Silicon Valley is coming.” Goldman Sachs, according to Inc., “estimates that upstarts could steal up to $4.7 trillion in annual revenue” from incumbent banks, a potential payday that is driving venture investors to pour nearly $25 billion annually into the sector.”

• Click here to read the Washington Post article.

According to Accenture, “over the past five years, global financial technology (fintech) financing has grown rapidly, but the share of fintech investment directed at companies looking to compete against the financial services sector has remained relatively stable at 62 percent.”

In New York City, however, Accenture notes that explosive FinTech growth is “coinciding with a dramatic shift toward collaboration. As a result, NYC is quickly becoming the global center of a new kind of fintech innovation.”

• Click here to read the Accenture article.

Small Business Owners Are Retiring, And Millennials May Not Fill The Gap On America's Main Street

WORCESTER, MA (September 20, 2018) — A local hardware store in Worcester, Massachusetts recently announced that it was going out of business. This wouldn’t be big news, except Elwood Adams Hardware has been around since the Articles of Confederation. Dating back to 1782, it is (or was) one of the oldest hardware stores in the United States—continually open for 235 years under various owners.

According to the US Small Business Administration, small businesses account for 48% of national employment in the United States. In number, they represent 99.7% of all businesses in the country. Small business owners, some with staffs of 500 employees, others toiling alone in a home office, and plenty more in-between, are the stewards of an enormous segment of the American economy.

In the demise of Elwood Adams Hardware, we can see two forces at work that may figure to change the landscape of American small businesses and entrepreneurship. There is the continuing disruptive dominance of the Internet in the commercial sphere. And, perhaps less well-observed, there are the swelling ranks of retired-or-retiring Baby Boomers, and the emergence of the Millennials to replace them as the brunt of the workforce in the United States.

To read the entire article, click here.

Banks Loan Less to Detroit Businesses in Neighborhoods with More Minorities

DETROIT, MI (September 19, 2017) - A study looking at business loans in metro Detroit confirmed the adage that banks lend money to people who don't need it.

It also found a pattern of lending that could be a result of discrimination.  

The 42-page report,  released today by the Woodstock Institute in Chicago, found wide disparities in lending in Detroit and nationwide when considering income and race.

"If you are not lending in neighborhoods, entrepreneurs there can't create jobs," the study's author, Spencer Cowan, said in a conference call. "They can't sustain businesses. They can't provide needed services for local residents. The neighborhood declines."

To read the entire article, click here.

5 Ways Small Businesses Can Avoid Predatory Loans

HOUSTON, TX (September 18, 2017) — "Imagine starting your new business and going online to take out a loan. You find what you think is an attractive yearly rate of 9 percent. You think you are set until — after you sign — you are shocked to realize it’s 9 percent per month.

These kinds of soul-crushing predatory loans can put you out of business, sometimes before you’ve even started. Millennials, in particular, can be susceptible, as they are most likely to go online to search for a loan.

If you Google “small business loans,” ads for several FinTech lenders pop up even before the U.S. Small Business Administration’s (SBA) site. One lender offers loans from $15,000 up to $2 million, while another seeks customers by promising they can “get funded as fast as 24 hours.”

Some lenders condition their loans on switching to their merchant card-processing service, then add excessive fees to every transaction and subtract their payment from every credit card sale, eroding profits. Others charge interest rates north of 50 percent annually.

Another red flag is the prepayment terms. Often, these loans have a prepayment penalty equal to the sum of the remaining payments. So even if you pay it off early, you pay all of the interest and fees that would have been paid off if you made the scheduled payments."

To read the entire article, click here.