Small Business Loan
A small business loan is difficult to come by in today’s climate of scarce bank financing. That means that businesses must resort to other forms of money acquisitions (along with parsimonious spending).
Some small businesses can go back again to family and friends, while others may get additional help from their outside investors. Businesses are also getting creative regarding financing by acquiring loans from vendors, employees, customers, communities, etc.
But one place for getting a small business loan that many smaller businesses are not aware of is Peer-to-Peer Lending—obtaining a loan from your peers. Peer-to-peer lending brings anonymous people together…lenders and borrowers…electronically in a double-blind auction through technology similar to the type eBay uses.
All indications are that this type of lending is growing in popularity and has helped many businesses cope with the shortage of money from banks.
Peer-to-peer loans are usually small in size—currently around $25,000 maximum—but they have been much higher in the past and will likely increase again as the economy improves.
It is also necessary to have a fairly good credit rating to get an acceptable interest rate, which can run from 6% to 35%. Some lenders have minimum credit scores, while others apparently do not.
Here are some of the more popular peer-to-peer lending sites;
Us.zopa.com (UK headquartered)
If you’re looking for a small business loan to finance the acquisition of a piece of equipment. or a special project, peer-to-peer lending might just work for you.
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Lessons in Leadership
North America is producing a dearth of future leaders. Each generation seems to have fewer and fewer scientists, engineers, inventors, and “Lions of Industry.” Why is that?
One of my favorite business bloggers, Miki Saxon, recently posted some interesting information as to why this is. Here is a portion of Miki’s post:
You know the old saying, ‘damned if you do and damned if you don’t'; for kids it’s more like ‘damned when they do and damned when others don’t’.
Kids stand less chance of developing into strong, balanced, ethical adults now than in past decades; not just in the US, but globally—they are heading for mediocrity.
If you think I’m being overly pessimistic consider the following.
In yet another nod to the protection of fledgling self-esteem, an Ottawa children’s soccer league has introduced a rule that says any team that wins a game by more than five points will lose by default. …
“The new rule, suggested by “involved parents,” is a temporary measure that will be replaced by a pre-season skill assessment to make fair teams.”
Great lesson to teach our future leaders—don’t excel, don’t try too hard, don’t strive too much, don’t field a winning team and, whatever you do, don’t follow in the footsteps of Steve Jobs, Bill Gates, Magic Johnson, Dr. Jonas Salk or any of those who surpassed their peers by a wide margin.
Helicopter parents are nothing new, but their actions are getting more outlandish. And whoever said that life is fair?
Miki’s post also deals with some of the problems of our education system, so I encourage you to read her post in its entirety…you can access it here.
Does anyone agree, or do you think everything is just fine with the way we (the “Village”) are raising our younger generations…you know—the future Presidents and Prime Ministers of our nations?
Another View of Employment Numbers
Almost all business people are familiar with the company Intuit, Inc., and the software they offer, as well as their online payroll services. But I only recently discovered that they also publish a monthly Small Business Employment Index, based primarily on the data they have on the 50,000 small business payroll customers they serve.
Each of these customers have fewer than 20 employees, so this is a highly representative statistical sample of small business employment…probably better than the federal government’s numbers.
The Index was developed and is overseen by Dr. Susan Woodward, a nationally recognized economist. Here is what the Small Business Employment Index presents for May 2010:
- Small business employment grew by 0.1 percent, translating into approximately 25,000 new jobs in May. This compares to new jobs in February of 40,000; March of 50,000; and April of 66,000.
- Monthly hours worked declined in May to 101.6 per employee. This translates into an average workweek of 23.5 hours for hourly employees.
- Compensation in May grew by 0.3 percent to $2,566 per month. This translates to about $30,800 per year for all hourly employees.
The good news is that employment is still growing in the small business sector, although May shows a sharp decline in the rate of growth. Let’s hope that May was simply an anomaly and that June will continue to show a more robust growth in employment.
Remember, the Intuit Small Business Employment Index is based on a 50,000 small-business sample of all U.S. businesses with fewer than 20 employees. Also, that this sector makes up 87 percent of all businesses in the U.S.
Does Anyone Care?
Wars, prejudice, racism, egos, hunger, violence, unemployment, and on and on—all the things our modern media machines grind out daily…and all the things our governments spend their time and our taxpayer money on. Where is the balance? Where is the hope? Who is actually doing anything to make our world a better place to live…and where are their stories?
Well, here is one:
(email subscribers view on my blog)
I’ve written about Mark Johnson before…he is one of my favorite entrepreneurs…but if you missed it, you can check it out here. This is one person that every aspiring entrepreneur would do well to study.
Please enjoy.
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One More Roadblock for Small Business
Today the U.S. Senate is back at work, and one of their early agenda items is to work on the bill just passed by the House last week dealing with “carried interest.” This is pretty much a Wall Street term for some of their profits, and “carried interest” has always been taxed at the capital gains tax rate. The bill just passed by the House raises that tax rate from 15% today to about 35% on this profit.
Since this increased tax rate would apply to some Wall Street profits—who wouldn’t want to stick it to Wall Street? Unfortunately, this bill also includes Venture Capitalists in the mix. This means that “carried interest” (a portion of the profits taken from an IPO or merger) would be taxed at the higher rate, instead of at the capital gains rate.
If the bill becomes law, every Venture Capitalist will be taking a harder look at every potential investment, and will likely only invest in the most promising “cream-of-the-crop” deals. When factoring in additional expenses from higher taxes, VCs are not going to make any deals other than sure things.
Why should they? There are other places VCs can invest their fund money, e.g., hedge funds. Yes, hedge funds would also be taxed at the higher rate, but they also promise faster returns with less risk than founding businesses. Of course, hedge funds do not create new businesses or jobs.
I don’t know, maybe higher taxes on “carried interest” would be a fair and equitable thing—it has been discussed for many years in Washington. But could it be implemented at a worse possible time than right now?
The very politicians who proclaim that small business is the primary avenue to economic recovery for the U.S., turn right around and pass a bill that makes it harder for new businesses to start up and create new jobs. Venture-backed startups added over 13,000 new jobs in the first quarter of this year—why damage that kind of progress now?
VCs have lobbied to have their industry exempted from the bill, but of course the House members turned a deaf ear…and we’ll have to wait and see what the Senate does.
So, if anyone out there is working on an upcoming new business that will require venture capital funding—you had better get busy and let your Senator know that this new bill could make it much more difficult for you to start your new business. You may also want to let your Congressman know that they have likely jeopardized your chances at venture capital.
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