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From The Grio

Thousands of students couldn’t afford to go to college this school year because the U.S. Department of Education made changes to a popular loan program.

The agency is putting more scrutiny on the PLUS loan program as part of an effort to more closely align government lending programs with industry standards and decrease default rates.

Read more at TheGrio.com.

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Some high-tech startups have come up with a way to determine your credit worthiness using not only your financial data, but your social media profiles. The conclusions are drawn from things like whether you “shout” in all caps online or never bothers to capitalize at all;  how many friends or connections you have; and if you are the type to fire off negative or racist commentary.

“On a public forum like Facebook, it’s like talking in public,” Navin Bathija, founder and CEO of Neo told Time magazine. Neo evaluates car-loan applicants (with their permission) based not only on traditional lending metrics but on the strength of prospective borrowers’ professional networks on LinkedIn.

According to Bathija, if you have a robust network you’re more likely to repay a loan. If you have a big network combined with a solid employment history it not only means you probably have the means to pay back a loan, but with more connections, you can find a new job if you’re laid off from work.

Neo is working on a way to determine how racist tendencies on networks such as Facebook correlates with a lack of creditworthiness.  “The theory goes like this: People who express racists beliefs online probably vocalize them in the real world, as well. In the workplace, this could lead to conflicts with co-workers, clashes with suppliers or customers, and even legal trouble,” explains Time.

There are other companies like Neo offering similar data analysis, such as a startup called LendUp and ZestFinance, which is a lending site that uses a mashup of “Google-style machine learning” and “Capital One-style credit scoring” according to its website, to yield default rates 40 percent lower than comparable services that target under-banked Americans, explains the magazine.

This method of determining loan repayment potential might benefit African Americans, who are often penalized on loan applications because of low credits scores. Minorities, immigrants, and young people it is theorized “would no longer be penalized by a lending system that takes a ‘guilty until proven innocent’ approach.”

Of course, if you’re posting crazy things on social media, your troubles could continue.

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Too often at the beginning of a New Year, we don’t address one of the biggest problem areas in our lives: our finances. Instead of striving to be financially fit, our physical fitness is more important. While health and wellness should be a main priority in our lives, our finances should also take some type of priority as well. And as 2013 approaches, striving to be more wealthy should be another resolution to put on our list.

If you are looking to make a few changes in your financial part of life this New Years, here are a few suggestions of resolutions for your finances. Get in better financial shape in 2013!

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The Small Business Administration, which talked up Small Business Saturday late last week, is putting its money where its mouth is with respect to black businesses.

During fiscal year 2012, black businesses were the only ones in the Washington DC area to see an increase in the number of loans they received from the government body, and the group to see the smallest decrease in the amount of money lent for the period.

According to the Washington Business Journal, African Americans got 14.5 percent of the loans administered for the year ending September 2012, an increase from the 10.4 percent the year before. (Black businesses had received 31.3 percent of the loans given in 2008 before taking a huge drop the following year to 17.6 percent.)

Moreover, the amount of money that was lent was up to 7.1 percent of the total given, up from 6.3 percent the two previous years.

The Washington Business Journal also lists the top lenders; the three biggest were M&T Bank (19 loans totaling about $1.8 million), BB&T (10 loans totaling $1.675 million), and Business Finance Group (five loans totaling $3.7 million).

Black businesses typically struggle for funding despite the entrepreneurial spirit that thrives in the African-American community. Let’s hope that other cities will see similar results.

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.

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.

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The city of Newark, NJ along with the Brick City Development Corporation (BCDC), an economic development group, Prudential Financial, and New Jersey Community Capital (NJCC), a nonproft that provides assistance for housing and community development, today announced the BCDC Newark Fund, a loan fund to support small business growth in the city.

The fund will make loans up to $400,000 to small business owners looking to set up shop in Newark. Loans are available to Newark residents as well as those wanting to head to Newark.

The fund will “enable business to have access to capital and start new businesses,” Lyneir Richardson, CEO of the BCDC said during his opening remarks. He told Madame Noire that restaurants, grocery stories, and companies in other industries have already taken advantage of BCDC assistance. He says the city could use more retail outlets.

Besides providing help for entrepreneurs, the organizations involved with the Fund see it as a way to build Newark’s communities. Lata Reddy, Prudential’s VP of corporate social responsibility, said small businesses, and providing capital to small businesses, is “critical to the economic vitality of the city.” Prudential Financial has been headquartered in Newark for more than 135 years.

“It’s important that small business come to downtown” as well as other neighborhoods, said Wayne Meyer, NJCC president, because they provide “jobs for residents, build wealth, create safe spaces… and are vital to build and stabilize communities.”

The Fund wants to attract, not just small businesses, but minority-owned businesses, and businesses owned by women. Loans can be used for things like inventory, equipment, and real estate purposes. Loan interest rates start at eight percent and last for a maximum of five years. Anyone interested in learning more is asked to contact Ryan Johnson at the BCDC (johnsonr@bcdcnewark.org).

Perhaps you’ve never thought of opening your business in Newark. Mayor Cory Booker was on hand to address that.

“In the depths of the worst economy that I’ve ever seen, something powerful is happening in Newark,” he said, adding that the city is experiencing the largest resurgence since the 1950s. The city, he said, has “some of the ripest soil in America for opening a business.”

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It’s that time of year again when “Pomp and Circumstance” is being filtered through the ears of graduates and their proud families. After four long years, sometimes even longer for some in college, the day has come for that diploma to be placed in one’s eager hands to show off. As Etta James belted out, it’s a good feeling. Damn the Rick Santorum’s of the world who would shame you into believing you’re a snob for this moment of glory. You earned the right to revel in this moment of triumph.

It’s a beautiful moment, but one that is no longer translating into good paying jobs to help cover the cost of that degree. It certainly didn’t come free. The pomp is soon gone and circumstances set in.

Parents send their children off to institutions of higher learning so that they can better themselves. However, it’s becoming an all too familiar reality that young adults are graduating college only to move back home and sit on their parents couch for an infinite amount of time. This growing trend has begged the question of whether or not college has become like VHS: irrelevant.

Recent statistics have shown that one in two college students are either jobless or unemployed. The market is at one of its weakest points and the debtors give you only six months to get a job and repay your loans before the non-stop calls begin. One can ask for a deferment, but putting off the inevitable only amplifies the central issue: there are no jobs.

Disillusionment has set in for many college grads who have been unable to get jobs in their chosen fields. They studied, wrote papers and subjected themselves to the whims of internships and it seems to have been in vain. It’s particularly unnerving to see someone who crossed college off the to-do list winning because of a sex tape, acting ratchet on a reality TV show or finding the right pro athlete to get pregnant by. There used to be a time when relying on one’s look, reliable weaves and becoming a stereotype were frowned upon, but it’s the new norm. You no longer necessarily need the right degree, but rather a marketable personality for the masses; dumbing one’s self down may be a blow to the pride, but it has it certain perks these days in comparison to contributing to $1 trillion in loans.

Did college grads really survive on crackers and noodles to make Sallie Mae rich? College is meant to be an investment on the individual’s future, but generation X and Y are shackled to debt before they even walk across the stage. Joe Clark wasn’t wrong. There is a system in place to keep those who can’t afford college without financial assistance  in a permanent underclass. Tuition’s are rising, the debt is ballooning and there doesn’t seem to be much relief in sight.

Unfortunately, until the game is changed, you just need to learn the rules, play and hope for a win. It used to be that you only needed a high school diploma or a G.E.D. to qualify for the most basic job. The bare minimum is now a Bachelor’s degree to get an interview, and those who have a Master’s have the advantage. A person needs two or three degrees for an edge. You need one just to get in the game and make a good impression. So while it might seem like a gamble to see if a degree will actually bring you a job in your field, college degrees aren’t irrelevant. Especially not when you need one a majority of the time just to get your foot in the door.

A college degree is like having sex. Protect yourself.

What do you think?

Stephanie Guerilus is a journalist and author. Follow her @qsteph

According to The Uptowner, immigrant women are one of the fastest-growing groups of entrepreneurs in the nation. They are 57 percent more likely to start businesses than American-born women and with their ambition; they’ve captured the interest of local and international microfinancing groups.

One of those groups is Grameen America, a division of Bangladesh’s Grameen Bank founded to give loans to women. Since its start in New York in 2008, the microfinance enterprise has provided $16 million to over 5,500 people living below the poverty line in the US. 65 percent of its loan recipients are immigrant women.

Matou Mukamabano is one of those women. After settling in New York from Senegal, she worked several retail and security jobs before securing a $1,500 microloan from Grameen America. Now she owns and operates Africa Hairbraiding, her salon on West 116th Street in Harlem. Her hair business brings in about 10 to 15 clients a day at rates ranging from $50 to $200 for braids. As a businesswoman her salon requires a lot of “woman-hours,” as she calls it, generally about 16 hours a day.

Mukamabano believes strongly in owning her own business and wouldn’t want it any other way. But there is a downside to microfinance loans—high interest rates. Mukamabano is paying 15 percent a week. Unfortunately for many immigrant women, there are few alternatives. Microfinance organizations do not require credit histories or collateral unlike bank loans, making them easier to secure for people who may not meet bank standards.

Noor Shams, a Grameen America project manager, tells The Uptowner that despite the high interest rates, a microfinance loan is a much better option than predatory lenders, who often exploit foreigners’ lack of understanding of America’s finance system.

“Grameen’s model allows women to form support groups, so they are not alone,” Shams said. “Every microfinance firm has a different approach, but everyone wants to make sure their borrowers are empowered.”

In addition to Grameen America, other microfinance organizations such as ACCION USA also serve the immigrant community in the US. ACCION USA has been in the US for 20 years, providing 18,000 microloans in that time, a total value of $119 million. Women make up 40 percent of its business.

Despite the rising availability of microfinance loans to immigrant communities, there still aren’t enough. Jeffrey Ashe, director of community finance at Oxfam America, notes that another financial system used by immigrant communities is rotating savings and credit associations. This system allows small groups to save together. Members contribute the same amount weekly or month and the group total is lent to each member until all members have received funding.

By Charlotte Young

As Congress is deep in talks to fine-tune the debt ceiling deal and take a vote, it looks like who they really should be asking advice from are the big players at Apple.

According to the BBC, Apple has more cash on hand than the US government.  The US Treasury Department shows an operating cash balance of $73.7 billion dollars, compared to Apple’s most recent sales report, which put its reserves at $76.4 billion.

In the midst of a financial downside for many, people seemingly don’t mind spending extra to buy the latest in technology. Apple’s revenue reportedly jumped 82 percent in the past quarter, a company record.  The latest iPhone shipment was at 20.3 million, while there were about 9.25 million iPad shipments.

Even President Barack Obama is an Apple user; he owns an iPad, along with the 28 million other iPad users.

Tuesday is the US’s deadline to escape defaulting on payments to investors in Treasury bonds, recipients of Social Security pension checks, people dependent on military veterans’ benefits and businesses that work for the government.

A deal was reached on late Sunday night after heavy debating all weekend long, with the Tuesday default deadline steadily approaching.

If the country defaults on its loans, it could face a downgrade in its triple “A” credit rating. In addition, if enough cuts aren’t identified or if Congress doesn’t act on recommendations, there will be a decrease in federal benefits across the board, including in Medicare.

Democratic and Republican leaders are in meetings Monday to give their final remarks on the debt ceiling deal. Vice President Joe Biden has been meeting with Democratic lawmakers in both the House and Senate in back to back closed door sessions.

Senate Majority Leader Harry Reid and House Majority Leader Eric Cantor both say that depending on how these meetings go, the vote could come on Monday evening.

While some are relieved, no one is happy with the deal. The NY Times reports Senator Reid remarked that “ people on the right are upset. People on the left are upset. People in the middle are upset.”

The report also says that despite the discontent, Senator Reid believes the deal is a “remarkable agreement which will protect the long-term health of our economy.”

Maybe if Congress puts together a computer even cooler than Apple, they’ll reach an even more remarkable agreement that not only protects the economy, but provides happiness and entertainment for all.