All Articles Tagged "financing"
The Rundown: Small Businesses Struggle to Get Loans, P.A. Judge Upholds Voter ID Law
Wikileaks founder Julian Assange. Image: AP
-A study by the Federal Reserve Bank of New York found that merely 13 percent of the small businesses in New York, New Jersey and Connecticut that applied for bank loans in April and May got the full amount they requested. Another 36 percent got a partial amount. More than half of applicants asked for a “microloan,” a loan of less than $100,000. “But lenders were more likely to turn down microloan applications than larger loan applications, likely because they were skittish about lending to newer firms and more likely to turn down startups,” reports The Huffington Post.
-A Pennsylvania judge upheld that state’s voter ID law. Liberal groups are already planning their appeals on the grounds that the laws will unfairly impact minority and poor voters. Judge Robert Simpson, a Republican, said the law is “a reasonable, nondiscriminatory, nonsevere burden when viewed in the broader context of the widespread use of photo ID in daily life.”
-Interactive Product Group, a division of fashion mag publisher Condé Nast, has created a new video game meant to appeal to the ladies. ”Fashion Hazard” places fashion models on the runway with the goal of avoiding obstacles that could ruin the show, like a flying cup of latte. The game will be available for iPhones and iPads starting today for 99 cents. Women and girls make up about half of the gamers today. In 2011, about $16.6 billion worth of games were sold in the U.S.
-Research conducted by Policy Studies, a liberal think tank, found that 26 large U.S. companies paid their CEOs $20.4 million on average, but paid little to no taxes on their profits. The average net income of those companies was more than $1 billion in the U.S. For example, James McNerney Jr., CEO of Boeing, made $18.4 million last year and the company got a $605 million tax refund. How do we get in on that deal?
-Big news lighting up Twitter this morning is the decision by the government of Ecuador to grant Wikileaks founder Julian Assange political asylum. Not sure what it’s all about? Here’s a good summary.
How To Start A Business In… Newark, N.J.
Image: Comstock
This summer, the Brick City Development Corporation (BCDC), Prudential Insurance and New Jersey Community Capital (NJCC) announced the BCDC Newark Fund, a loan program intended to help small businesses that want to set up shop in Newark, N.J. The program is just one part of a larger effort to bring companies to the city.
The largest city in the state, Newark is about 13 miles from Manhattan. It has experienced a resurgence over the past few years, boasting the area’s first new arena in a quarter century, the Prudential Center, which opened in 2007; a growing population, which is a big change from the previous decades when residents fled; and a landscape that’s being redesigned by an influx of new businesses, buildings, and green spaces, even urban farms. Just this week, Prudential, which has been headquartered in Newark for more than 130 years, got approval for a $444 million office facility.
Prudential has more than 50,000 employees around the world and $961 billion in assets under management. During the press conference announcing the new loan program, Lata Reddy, the company’s VP of corporate social responsibility noted that small business is “critical to the economic vitality of the city.”
With this latest fund, Marie Mascherin, chief lending officer at the NJCC, told us the partner organizations were trying to create an alternative to traditional sources, like banks, which have become more cautious about lending money to small businesses and startups. Add to that the lack of resources for minority-owned businesses and there’s a real need.
“We’re trying to fill a void that’s been created as a result of the banks pulling out,” says Mascherin.
According to BCDC CEO Lyneir Richardson, the goal of his organization “is to have a variety of tools” available to small business owners and minority entrepreneurs who need a helping hand.
“Our approach is to be proactive,” says Richardson. “We want to get the message out that if companies see an opportunity here, we can be the first stop.”
The organization has a number of funds, and millions of dollars have already been invested in building new businesses in the city, with “three or four deals in the pipeline,” Richardson says. Businesses that have already benefited from the BCDC’s help include a franchisee, a clothing retailer, two grocery stores (“solving the food desert problems,” says Richardson), a pediatric dentistry office, and hotels.
Besides the financial assistance the group offers, it also serves as the center of a small business network, connecting people and companies in a way that’s useful for all parties involved.
“Our work is more of a quarterback,” says Richardson. “Our goal is to make economic development happen.”
With all of that in mind, Richardson has four main reasons why small business owners should plant their flags in Newark:
- It’s close to New York.
- It’s a hub that’s accessible to Newark International Airport, home to to the third most active port in the country, and near trains and roads, which has proven handy for distribution companies.
- There’s great access to talent because of the five colleges (Rutgers and New Jersey Institute of Technology among them) and 44,000 students who live and study in the city.
- “Now we have this Mayor whose celebrity helps not only shine a light on the city, but on entrepreneurs,” says Richardson.
The Number of Black-Owned Businesses, And the Need for Resources, Is Growing
Image: Digital Visions
The latest Census numbers show that the number of black-owned businesses (defined as those companies in which African Americans own at least 51 percent of the equity, stock, or interest) jumped 60.5 percent between 2002 and 2007 to 1.9 million.
But, Reuters reports, only about 100,000 of these companies have employees. Far fewer, 14,000, gross $1 million or more in a year.
One vital necessity for any burgeoning business (besides customers) is resources. “Limited access to financing… restricts the ability of minority business enterprises (MBEs) to achieve viability, generate new jobs and, in general, fulfill their potential to contribute to the development of communities in which they operate,” write Timothy Bates, a professor at Wayne State University and Alicia Robb, a senior research fellow at the Ewing Marion Kauffman Foundation, in a guest article for Forbes. The two conducted research that found that MBEs rely on financial institutions more than other capital resources, but are more likely to run into issues like higher interest rates or outright rejection when trying to secure a loan or other funding.
MBEs trying to plant a flag in minority neighborhoods are also more likely to use things like consumer credit cards to get their businesses going, which also come at a steep financial cost.
Bates and Robb say the government and its regulators should be better at enforcing existing anti-discrimination laws, and they’re absolutely correct. They also suggest that breaking down barriers at the nation’s financial institutions would help minority-owned businesses get on their feet.
Reuters also provides a list of businesses and organizations that black-owned businesses can turn to for resources including the Department of Commerce’s Minority Business Development Agency, Black Business Women Online, the Small Business Administration and American Express, whose OPEN Forum program is especially for small businesses.
And working your personal network of resources, even if it’s just a good friend who can spread the word about your new business, can be helpful in building a cadre of loyal customers. Selling your product or service is a great resource as well.
0% Financing Often Too Good to Be True
(Bankrate) — Have you ever wondered about zero percent financing or deferred-interest plans offered by some retailers? If you’ve made a big purchase in the past few years, chances are you’ve been offered a deferred-interest plan along the lines of “no interest if paid in full in 12 months.” The programs are common in stores that sell high-dollar merchandise such as furniture, electronics and other pricey goods. They’re even popping up in doctors’ and dentists’ offices. What you may not realize: That offer is probably a credit card, says Chi Chi Wu, staff attorney with the National Consumer Law Center. Play by the rules, and you get a no-interest loan. However, if you go too late on a payment, misinterpret the payoff date or lose your ability to pay, you could end up with a hefty interest rate plus retroactive interest added to the bill.
Financing Business With A Government Loan Program
(YoungEntrepreneur.com) –One of the more positive economic indicators in the first quarter of 2010 has been that small business lending, particularly loans backed by the Small Business Administration (SBA), are on the rise. SBA loans are a solid option for entrepreneurs looking to fund start-up ventures or growth. The SBA loan guarantee (which was increased to 90% under provisions of the Recovery Act) reduces risks for lenders, making it more appealing for banks to fund higher-risk small businesses.
Financing Business With A Government Loan Program
(YoungEntrepreneur.com) –One of the more positive economic indicators in the first quarter of 2010 has been that small business lending, particularly loans backed by the Small Business Administration (SBA), are on the rise. SBA loans are a solid option for entrepreneurs looking to fund start-up ventures or growth. The SBA loan guarantee (which was increased to 90% under provisions of the Recovery Act) reduces risks for lenders, making it more appealing for banks to fund higher-risk small businesses.
The Best Places to Find Grants, Loans and Financing for Entrepreneurs
(Black Voices) — The best resource to find grants, loans and financing for entrepreneurs is the federal government’s website http://www.business.gov. There, you will discover a wealth of resources for all kinds of small business owners, including…
Bankers to the Inner City
(BusinessWeek) — In 2005, longtime bankers Tim Ferguson and Ron Walker created Next Street Financial, a bank offering financing and advice to inner-city companies
Why did you start Next Street?
Ferguson: There was a significant gap between what traditional financial services providers do and what small businesses in inner cities need: access to growth capital and high-quality advice.
