Udall Proposal Would Make $10 Billion Available for Small Businesses

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Senator Mark Udall of Colorado has introduced legislation which would allow Credit Unions to make loans to small businesses up to 27.5% of their assets, compared with the current limit of 12.5 percent, “Bloomberg Business Week” reported.  If adopted, the amendment would make an additional $10 billion available for small business lending, and create up to 108,000 new jobs in the next year, according to Bill Cheney, head of the Credit Union National Association.  If any reader knows why the current limit is 12.5%, please post a comment!

Credit Crunch Hitting Small Businesses Hard

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Only half of small businesses that tried to borrow last year got all or most of what they needed, while in the mid-2000’s 80% got the loans they needed, according to the National Federation of Independent Businesses.   As reported  by Emily Maltby in the 6/21/2010 “Wall Street Journal,” possible explanations range from over-zealous bank examiners to small business owners turning more cautious in the face of a weak economy.  In mid-June, the House passed a $30 billion initiative for community banks to borrow from the government’s TARP fund at low rates, which may help stimulate small business lending, if and when the Senate passes the bill.

Even without passage of the initiative, “community banks are still lending,” notes Wharton lecturer and small business expert Robert Chalfin.  Community bank loans to small businesses are only down slightly in 2009 to about $680 billion outstanding, from about $700 billion in 2007, according to the Bureau of Labor Statistics and the American Bankers Association.

Why Businesses go Bankrupt: Muzak

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According to “Rock&Roll Daily”, Muzak had nearly $500 million in debt but its assets totaled only $50,000, leading to its Chapter 11 filing in early 2009. Hard to believe, Muzak was founded in 1934!

Lesson learned: When the market you compete in changes, it’s probably time to change your business plan.

Outsourcing Opportunities for Small Businesses

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Dr. Alok Aggarwal, founder and chairman of Evaluserve, said that the key for smaller businesses looking to outsource is to form buying cooperatives that sufficiently aggregate demand, the Westchester County Business Journal reported. Participating at a June 23rd panel discussion at Pace University, Aggarwal said that India has attracted $17 billion in exported business activity, making it the world’s current outsourcing leader. India is challenged by its slow judicial system, and will face increasing competition from Canada and Europe, Aggarwal noted.

Sarbanes Oxley Impacting Smaller Companies

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Many private companies are strengthening their accounting practices so their large company customers can comply with the Sarbanes-Oxley act, Business Week reported. Financiers are also holding companies to a higher standard as conditions for deals, requiring documented audits and oversight committees, both Sarbanes-Oxley requirements. Colleen Cunningham, CEO of Financial Executives International, says compliance is not a matter of if, but when.