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

Unemployment Rises As Work Force Grows After four months of ongoing net losses, U.S. small business jobs showed a net growth of 0.002 workers per firm, according to data published by the National Federation of Independent Businesses. Although the gain was extremely slight, it marked a significant improvement over September’s 0.23 decrease in the number of U.S. small business jobs. Despite increased small business hiring, Bureau of Labor data showed that the national unemployment rate grew from 7.8 percent in September to 7.9 percent last month. 171,000 jobs were created last month, and the unemployment rate grew as more people began looking for work. The number of Americans who counted themselves as part of the labor force increased by 578,000 people, while only 410,000 people reported gaining employment. The Obama campaign has already begun citing the Bureau of Labor job growth figures in its talking points, but opponents point to a net gain in overall job growth of 0.2 million during his first term.

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

William C. Dunkelberg, chief economist for the National Federation of Independent Business, has issued a statement that small business hiring decreased for its second consecutive month. Dunkelberg’s statement was issued ahead of the NFIB’s monthly economic survey for September, which will be released on Tuesday, October 9. According to Dunkelberg, 10 percent of NFIB member business owners reported adding 2.2 workers on average for the past several months, while 13 percent reduced their workforce by an average of 3 workers. The remainder of respondents, totaling 77 percent, reported no net change in employment. The NFIB has recently faced criticism for its ties to both Karl Rove’s Crossroads GPS and the Koch brothers backed American Legislative Exchange Council. In 2010, the same year the NFIB led the legal challenge against President Obama’s Affordable Care Act, the NFIB received a $3.7 million contribution from Crossroads GPS. Additionally, its representatives have served on numerous ALEC task forces. SourceWatch.org also reports that, during the last 10 election cycles, over 90 percent

The Business Roundtable, a lobbying group representing many large US firms, reports that confidence among US CEOs has hit its lowest level in three years. The survey suggests that the looming “fiscal cliff” – the $380 billion in tax increases and $100 billion in spending cuts that are scheduled to take effect in January – have dealt a serious blow to US companies’ ability to conduct sound financial planning. Unless Congress acts to reach a new agreement regarding tax policy and budgeting before the end of the year, these changes will go into effect automatically. As members of Congress leave Washington to campaign in their local districts in the weeks leading up to the November election, the likelihood of such an agreement being reached is slim. The Bush-era tax cuts, which were renewed by President Obama at the end of 2011, are again scheduled to expire this year. Obama has expressed support for extending tax cuts on households with income below $250,000 and allowing other

Earlier this month, the Council for Community and Economic Research released a study which showed that Brooklyn is now the second most expensive city in America. The Council based its findings on a cost of living index that included the prices of 60 basic goods and services, including housing, utilities, food items, health care, and other expenses. While the  national index average was around 100, Brooklyn’s score was 183.4, second only to Manhattan, which came in at 233.5. As of August, the average monthly rent for a two-bedroom apartment in Brooklyn was $3,083. At the same time last year, this number was $2,824.  With rents increasing by 9 percent annually, many real estate investors are eager to finance construction of new rental units. Slow Mortgage Lending Causes Increased Demand For Rentals Even as other types of lending like small business loans showed gains in recent months, mortgage lending has not shown significant growth since the financial crisis began 4 years ago. With fewer buyers able

Job Losses Expected In Aerospace And Defense Industries As Pentagon Cuts Spending A report released by the Aerospace Industries Association on Thursday indicates that federal budget cuts scheduled to take effect in January could threaten nearly 1 million jobs at US small businesses. The report stated that 2.14 million overall job losses could be expected as a result of sequestration measures, 45 percent of which would come from businesses with 500 or fewer employees. Most of the expected job losses would come from contractors in the aerospace and defense industries, as the Pentagon faces a $500 billion reduction in spending. Many of the small and mid-sized government contractors that would be affected are highly specialized and often make just one product tailored to a specific government need. Such firms could be forced to lay off employees or close their doors if the government decides it no longer needs their product.

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