For months, small business owners have expressed uncertainty regarding the outcome of this year’s presidential election, and many have postponed hiring and other capital outlays until the outcome was decided. Now that President Obama has been re-elected to a second term, what can small business owners expect? Sarah Needleman’s column for the Wall Street Journal sheds some light on this question. Covering a wide range of issues, from health care and taxes to regulations and small business loan access, she provides an overview of the outlook for American small businesses during Obama’s second term. Obama’s re-election ensures that the Affordable Care Act, otherwise known as “Obamacare,” will remain the law of the land. Accordingly, by 2014 businesses with 50 or more employees will be required to provide their workers with health benefits or face penalties. The law also includes provisions for increasing taxes on dividends for high-income earners. Obama has also said that he supports ending Bush-era tax cuts for individuals earning over $250,000, while

In the wake of Superstorm Sandy, the U.S. Small Business Administration is offering low-interest loans to property owners in federally declared disaster areas. Disaster loans are available not only to small business owners, but also to homeowners and renters in affected areas. The SBA offers two types of loans for small businesses affected by the storm.  The first type of loan covers damage to property, while the second type replaces lost working capital resulting from unforeseen closure following the storm. Both types of loans can provide business owners with up to $2 million. Homeowners can receive loans of up to $200,000 to replace or repair their primary home. Both homeowners and renters may also be eligible for up to $40,000 to cover damaged or lost personal property. Vacation homes and second homes are not covered by the SBA’s disaster loan program. Property owners in disaster areas can apply for loans at local FEMA disaster offices or online. Applicants must first register with FEMA. Business owners

Big Banks Lending Less To Small Businesses

Wednesday, 24, October , 2012 by

Nation’s Largest Banks Shrink Small Business Portfolios Big banks have been making claims about increased small business lending for years, but FDIC data shows that the overall volume of small business lending among the nation’s 18 largest banks has fallen by 21 percent since 2009. As a percentage of the total assets held by these banks, small business lending fell 33 percent during the same period. The Huffington Post reports that while the top firms now hold 60 percent of total U.S. bank assets, they issue only 27 percent of small business loans. As the country’s largest banks reduce their small business lending volume, the burden of small business financing has increasingly fallen on small and mid-sized banks. Compared to 2009, there are now 938 fewer small and mid-sized banks in the U.S. However, these banks still provide 54 percent of overall small business loans – the same share they provided 3 years ago.

The Small Business Administration backed $30.25 billion in small business loans during the 2012 fiscal year, the second largest amount in the organization’s history. Although the figure marks a slight decrease from 2011’s record $30.5 billion, last year’s loans were stimulated by incentives enacted under the Small Business Jobs Act of 2010, while this year’s loans were not. The SBA’s Certified Development Company (504) loan program had a record year, backing a total of $15.09 billion in small business loans. This program was supported by temporary refinancing measures included in the Jobs Act. The refinancing program, which recently expired, accounted for 26 percent of 504 loans during FY 2012 and 34 percent of the overall dollar volume. SBA Administrator Karen Mills said that these numbers reflect growing confidence in the country’s economic  situation, suggesting that more robust credit markets will result in job growth as business spend more money.

According to the Biz2Credit Small Business Lending Index, a monthly report on 1,000 small business loan applications on Biz2Credit.com, approval rates for small business loans grew by 30% in September. Biz2Credit’s analysis shows that small business loan approval rates jumped from 10.9% in August to 14.2% in September among large lenders such as Citibank, Sovereign and Citizens Bank. September’s approval rates are the highest since the Index was created in 2011. Despite Improvement, Bank Approval Rates Remain Much Lower Than Alternative Lenders Although approval rates among big banks are improving, they are still significantly lower than approval rates among alternative financing providers, including merchant cash advance lenders, micro lenders, accounts receivable financers, and other financing sources. Approval rates among alternative lenders was 64.6% during September. It is important to not that Biz2Credit only analyzed loan applications from firms that had been in business a minimum of 3 years.  Additionally, the average applicant’s credit score was above 680. Business owners who have only been in business

August Marks Two Consecutive Months Of Lending Growth According to the latest Thomson Reuters/PayNet Small Business Lending Index report, the volume of U.S. small business loans grew for the second consecutive month during August. The index rose to its highest level this year at 109.9, up from 106.7 in July. Compared to August of 2011, small business lending was up 10 percent this year. PayNet also reported a decrease in both short- and long-term delinquent accounts. Accounts overdue by 30 days dropped to 1.16 percent, a new record low. Accounts 90 days overdue dropped to .25 percent, and accounts overdue by 180 days dropped to 0.32. These numbers indicate that small businesses are not experiencing as much financial strain as during previous months. The Small Business Lending Index is recognized as an indicator GDP change. Changes in the index are expected to correlate with changes in the GDP approximately 2-5 months later. Despite uncertainty about the upcoming presidential election, as well as the looming fiscal cliff, small

Amazon.com has launched a new program called Amazon Lending offering loans to online sellers. Although the program has not been announced publicly, retailers in Amazon’s marketplace have reportedly received e-mails with offers for financing from Amazon Capital Services, Inc., a new division of the company. The new merchant financing program targets online sellers  who do not have enough up-front cash to purchase inventory to be sold on Amazon’s marketplace. Amazon Lending provides loans to participating sellers and collects repayment by taking a portion of their sales revenues. Amazon is pre-qualifying certain marketplace sellers based on their sales, and is reportedly lending up to $800,000 to some merchants. Funds can be used to purchase additional inventory. Payments are automatically deducted from merchants’ accounts on a monthly basis. Like other funding providers, including direct lenders like Horizon, Amazon is stepping in to fill the demand for loans left by banks that have curtailed lending in the years following the financial crisis. By increasing the availability of financing, Amazon

Funding Bill Would Provide An Additional $123 Million For Small Business Loans Last Thursday the House of Representatives approved a six-month continuing resolution that would allocate $1.05 trillion to government agencies beginning October 1. Even as other agencies face budget cuts, the House voted in favor of increasing the Small Business Administration’s annual budget from $210 million to $333 million. This additional funding would help the SBA continue to issue small business loans despite a high rate of defaults on loans issued between 2005 and 2008. If the Senate approves the bill, the SBA would be able to provide up to $16 billion in 7(a) small business loans next year. During the current fiscal year, which ends September 30, the SBA has backed $13.9 billion in 7(a) loans. This number is down from last year’s record figure of $18.3 billion, which was bolstered by temporary incentives that included higher loan guaranties and lower fees for SBA loans. Despite this year’s drop, the agency is still

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