Entrepreneurial

from The Edgy Optimist:

Amidst a banking dry spell, small businesses kickstart themselves

As the U.S. jobs market continues its slow, not-very-impressive-but-nonetheless-forward march, one area of the economy still lags. Banks have only very recently begun to lend. Both individuals and small businesses have faced tight credit standards enforced by risk-averse banks; mortgages have been hard to obtain, and small business credit has been tighter yet. From 2008 to 2011, loans to small businesses fell 20 percent. The net effect has been to mute an already muted recovery.

These trends haven’t been confined to the United States. Lending has been even tighter in Europe, particularly in stressed markets such as Spain. While there are some signs of a thaw, the days of easy credit spurring new and small entrepreneurs to create new and innovative companies seem increasingly of the past.

Or so the data points from the banking and credit industry tell us. What they don’t tell us is that as traditional sources of credit and funding have withered, alternate sources have blossomed. We have been so focused on the negative shifts triggered by the financial crisis of 2008-09 that we may have neglected to notice some new and powerfully positive trends.

Take the case of Kickstarter. It may be no coincidence that the site launched in April 2009, just as the global credit crunch was reaching its apex (or nadir, depending on your perspective). With the almost complete evaporation of traditional forms of financing, especially for high-risk entrepreneurial projects with shoot-for-the-moon ambition, Kickstarter took an entirely different approach: It used the Web to connect people with ideas to people with money. In Kickstarter’s case, however, the connection isn’t to people with lots of money ‑ it’s to anyone willing to put up a little bit for an idea that inspires, excites or intrigues.

Kickstarter is an exercise in what has been called “crowdfunding,” and its numbers are startling. According to its own published numbers, since the site launched less than four years ago, 3 million people have pledged more than $400 million to 35,000 different successful projects. The majority of them have raised $1,000 to $10,000, but more than 400 projects have raised $100,000 to $1 million. The most successful projects have been clustered in the arts (especially film), but the largest project is a smartphone watch called the Pebble E-Paper Watch that is expected to launch sometime this year; its creators raised more than $10 million in pledges made by almost 70,000 people. The launch has had several delays, but that has little to do with funding.

Small business owners turn to pawn shops

– Cynthia Hsu is a contributor to FindLaw’s Free Enterprise blog. FindLaw is a Thomson Reuters publication. –

Small business owners that are struggling to make ends meet sometimes need business loans – or a pawn shop. Pawn shop loans are now something that some business owners are turning to as a result of the tight economy and lack of lending.

Pawning is probably easier than getting a bank loan, though the interest rates may be significantly higher.

Small business at a crossroads

– Jeff Stibel is the chairman and CEO of small business credit rating agency Dun & Bradstreet Credibility Corp. The views expressed are his own. –

What is a small business owner to make of the headlines?

Right now, leading indicators – like lending, hiring and optimism – paint a conflicting picture of the direction of the country’s small business sector. It’s no wonder we’d be confused. It seems one index rises, while another falls.

Take, for example, small business optimism.  There’s no doubt we’ve come a long way from where we were at the bottom of the recession. But, the leading optimism index, calculated by the National Federation of Independent Business (NFIB), still looks like a seismometer in the days following an earthquake.

Big banks see slow recovery for small business

Marc Bernstein’s response to reports of loan facilitators advising small business clients to avoid big banks: “It’s simply bad information.”

The head of Wells Fargo’s small business lending initiatives then pointed to the $3.7 billion the country’s fourth-largest bank (by total assets) lent to small firms over the first three months of the year – an increase of 27 percent over the first quarter of 2010.

“That’s not small change,” said Bernstein, who added Wells Fargo is the largest national lender of loans under $100,000 and was recently honored as the Small Business Administration’s (SBA) 2011 Large 7(a) Lender of the Year. “We are trying to do everything we can to get people who apply for a loan approved, but the fact of the matter is that there are a lot of small businesses that unfortunately have been hit very badly by the downturn and are struggling and it’s hard to see how they’re going to handle more debt.”

“Loan doctor” to small business: Avoid big banks

Large banks are making noise about lending more to small companies this year, but financing expert Ami Kassar is still advising his clients to steer clear.

The founder of Philadelphia-based MultiFunding LLC, which brokers loans for small businesses, said his customers stand a better shot at success with regional and community banks.

“As a general rule we don’t get near big banks,” said Kassar, whose firm has arranged 28 deals since launching 15 months ago and has more than 60 others in the pipeline. “The big banks are, in my opinion, full of big talk in terms of their commitment to small business.”

Why America isn’t lending to small businesses

– Jeff Stibel is the chairman and CEO of small business credit rating agency Dun & Bradstreet Credibility Corp. The views expressed are his own. –

The “Great Recession” – the longest since World War Two – will have an even more prolonged effect on the economy if one trend continues: small businesses are unable to secure capital.

Despite significant government stimulus to banks and lending institutions, small business lending is actually down over the past few years. So why isn’t the banking industry lending to small businesses during a period in our history when it’s absolutely essential? The answer has a lot to do with credit-worthiness.

Small business bill passes, now what?

As President Obama gets set to sign off on the $30-billion small business lending bill, people want to know one thing: how will it help me?

That’s what small business owners like Bruce Freeman want to know. Freeman, who runs Proline Communications, a marketing and consulting business in New Jersey and writes a syndicated column “Ask The Small Business Professor”, said the the $12 billion in tax breaks included in the bill will help, but the larger $30-billion portion earmarked for small community banks should instead be given directly to small businesses.

“Give it to me. Don’t give it to somebody else to then hopefully, maybe, get it to me,” said Freeman, who would prefer to get the money in the form of tax credits, or some other more direct assistance. “Give it to me in the form of beer bottles with the name of my business on it, but give it to me. This loan stuff is ridiculous, because I don’t know if I could ever get one.”

Save the pelicans and small businesses

– George A. Cloutier is the founder and CEO of American Management Services and the author of the bestselling book “Profits Aren’t Everything, They’re the Only Thing”. The opinions expressed are his own. –

For the last two months we have been inundated with photos of oil-covered pelicans and other marine animals victimized by the oil spewing forth from the ruptured BP well in the Gulf of Mexico. The spill in the Gulf is obviously disastrous, but it pales to the economic “oil spill” that has destroyed small businesses over the last two years.

Pelicans and small business owners are faced with surprisingly similar situations: they are victims of disastrous events beyond their control. They are faced with a life-threatening struggle for survival, in which many have already passed due to lack of assistance, or are facing an uncertain future with promises of government intervention.

National Small Business Week: Who cares?

– George A. Cloutier, a graduate of Harvard Business School, is the founder and CEO of American Management Services, one of the nation’s largest turnaround and management services firms specializing in small and mid-sized companies. He is also the author of the bestselling book “Profits Aren’t Everything, They’re the Only Thing”. The opinions expressed are his own. –

Certainly not the Obama Administration and Congress (both Democrats and Republicans) who have repeatedly failed small business at every opportunity with soaring rhetoric, empty promises, and adopting Lilliputian aid programs.

Most of the twenty-nine million small businesses and their fifty million employees’ won’t be celebrating National Small Business Week because they’re fighting the worst economic crisis in recent history. The twenty-five thousand plus small businesses failing every week, and the owners who have lost their life savings and depleted their 401k’s, will not be celebrating either.

Small business confidence taking a beating

All those pundits who declared the current recession dead and buried, obviously haven’t been talking to small business owners.

Chapman University economists are the latest to announce the official end of the recession – with the codicil that the recovery will be more tortoise than hare.

In stark contrast to that report is the latest National Federation of Independent Business survey that shows small business confidence is locked in a downward spiral, that is worse than at any time during the last big recession in 1981-82.

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