Any small business owner who recently tried to secure a loan will tell you it isn’t easy. Now data clearly shows the broader effects of this struggle.The Wall Street Journal recently reported that the 10 biggest banks in the country that issue small loans to businesses lent $27.8 billion less in 2014 than the industry’s 2006 peak, according to the Journal’s analysis of federal regulatory filings. (1) This decline has forced many small business owners to turn to higher-cost funding sources.The response is similar to that of individuals who are turned away by banks and then resort to expensive and risky alternatives. For businesses, these may be nonbank lenders, often in the form of online companies that require little or no collateral but that charge much higher interest rates than banks. While not all of these lenders are predatory, the space is still largely unregulated. For small amounts, some business owners are turning to nonprofit microlenders or crowdfunding to try to fill gaps, though both have serious limitations.But many businesses are simply turning to credit cards when they cannot secure traditional small business loans. According to the Journal, small business spending on credit and charge cards will total an estimated $445 billion in 2015, compared to $230 billion back in 2006, when conventional lending was readily available. (1)It may be more profitable for banks, but this solution is bad, and probably unsustainable, for business owners. As Robb Hilson, a small business executive with Bank of America, told The Wall Street Journal, “If someone wants to buy a forklift, it doesn’t make sense to put it on a credit card.” (1) Yet many small businesses have little other choice for now.This result is not surprising. Large banks generally find small loans unattractive, partly because of their relatively high costs and partly because of tighter regulatory requirements. A Goldman Sachs analysis earlier this year cited the reduced availability of credit as one of the principal reasons small businesses have faltered in the wake of the financial crisis while large enterprises have largely recovered. (2) As regulators cracked down, it became uneconomical for banks to serve clients other than the most creditworthy. Startups seldom make the cut.My own experience mirrors others. Even with a 23-year-old business that operates across the country, banks want hard collateral before they will make substantial loans. And when the chief assets of a business consist of loyal customers and really smart employees, the only available collateral is personal real estate. And even real estate was not enough at the first bank I approached; geography came into play too. If banks find our established firm too risky to make unsecured loans, many smaller or newer enterprises do not stand a chance.With big banks out of reach, small community banks should have been ready to step into the gap, eagerly courting new customers. But that has not happened, largely because the number of such banks continues to decline. This trend predates the Dodd-Frank financial regulations, but the regulations sharply accelerated the community banks’ loss of market share.This is not to say that all community banks are in immediate danger of going under. To the contrary, recent data from the Federal Deposit Insurance Corp. suggests that those that have held on have expanded their lending and narrowed the profitability gap with larger banks.While this is good news, it’s not enough to fill the gap in small business lending. And it seems unlikely to do so soon, since new bank establishments have dropped nearly to zero, thus cutting off a supply of lenders who are eager for new customers. According to an FDIC report from April 2014, there were only seven new bank charters total from 2009 to 2013, compared with over 100 annually prior to 2008.The small banks that have survived have largely done so by being just as risk-averse as the big banks with which they compete. Regulation has simply made it foolish to act otherwise. But this leaves all small businesses except those with established history, sterling credit and substantial collateral without the means to secure the capital they need to make their enterprises grow.Small businesses are crucial drivers of new jobs and new products for our economy; their credit struggles are probably a significant reason this economic expansion has been sluggish by historical standards. We have made it unattractive for big banks to serve small businesses, and small banks are not ready to fill the gap. We all pay the price.Sources:1) The Wall Street Journal, “Big Banks Cut Back on Loans to Small Business”2) Goldman Sachs, “The Two-Speed Economy”
Easy Home Based Business – Fact Or Fiction?
Easy home based business advertisements are everywhere these days. Our business is easy to make money with, or so they say. In order to determine if an easy home based business is real, we need to define easy. It isn’t a simple answer because easy means something different to different people. It is a matter of one’s perspective or expectation of what is easy. Even though you might think the definition of easy is pretty simple, the differences in understanding for people is more complex. When you look up the word easy, you’ll find more than seventeen explanations.
What may be easy for one person may not be so easy for someone else. What we should really be asking is what are individuals truly seeking in their search for an easy home based business? We should then ask what is actually being promoted when someone posts an ad about an easy home based business?
What Individuals Really Want With An Easy Home Based Business
Again, this is a difficult question to answer, as it may have several meanings. Are people looking for a get rich quick scheme or more for a simple way to generate an extra income? One group of people might want an opportunity that won’t require a ton of work. Some might want a business that allows them to stay in their comfort zone. Yet, others might need an easy home based business that can be implemented in a few easy steps. Whereas, having a highly sought after service, or a wide demographic, might be the definition of easy for someone else. The point being made is there is no one size fits all answer.
The Easy Home Based Business Advertising Trick
What is the real promotion in an easy home based business advertisement? Personally, I believe they are promoting a basic idea or a concept. The promotion itself leads people to believe they can make money easily from home. They’ll use some kind of pitch regarding the simplicity of their program, or how it’s so easy that anybody with a computer could do it. The infamous claim that it requires very little time at all usually follows. You can do it in just a few hours each week. You determine how little or how much effort you want to put into it. Finally the prospect of the potential income you can generate, working as little as possible, is dangled in front of your face. The idea of easy is basically an idea.
In order to know if it’s really that easy, you first need to find out what easy means to the person promoting the opportunity. Reality is, if you are looking for a legitimate opportunity, the word easy is usually not attached to it. You see, the majority of opportunities that return real measurable results are not being promoted as an easy home based business. Sure, if you want to make a few extra bucks to have some play money around the house, you might be able to find an easy home based business. The truth in most of these cases, is you usually trade blocks of time, doing a basic activity, for blocks of money. This can be a frustrating avenue however, because in my research of easy ways to make money at home, the income you produce isn’t worth the time and effort. A venture such as this hardly allows you to work smart, since you end up working more for less pay. In my book this is classified as a job, not really fitting into the category of business.
Is There Really An Easy Home Based Business?
The answer really relates to exactly what it is that you want. My personal thought is that if you want a career level income or to be able to replace your job, then I would have to say no. However, finding the right opportunity and being successful with a home business does not need to be super challenging either. It can actually be quite simple when you know what you are doing. Keep in mind, simple does not equate to easy.
If you’re looking for a solid home business, you might not want to focus your search on an easy home based business. You can find plenty of legitimate opportunities that provide training for basic systems. No matter how basic the plan, you should still have proper expectations, because learning something new can take time. Instead, you should focus on finding something that you can get passionate about. Nothing will destroy a business venture as swiftly as choosing something you are lukewarm about. I advise you to steer clear of the easy home based business claims. You will have a much better chance at accomplishing your goals if you learn how to find the best home based business for you, first.
Real Estate Auctions – The New Land Rush
On a sunny afternoon in Florida, an energetic crowd gathers on the lawn of a high end luxury estate. A loud and eager banter between an auctioneer, a group of bidders and bidder assistants fills the air. For several minutes the auctioneer asks for the next highest bid and the bidders respond. Suddenly the bidders grow silent. The high bidder holds his breath in anticipation of winning the auction. The auctioneer calls for one more bid. In a loud clear voice which rolls over the audience he says, “Fair warning, last chance” the auctioneer pauses, “SOLD!” And in less than 10 minutes another multimillion dollar estate has changed owners.
Successful real estate auctions like the one above are happening all over North America and the Caribbean. Recently real estate auctions have been on the rise, the increase in popularity is partly driven by growing inventories and fading buyer confidence. Properties that were selling in weeks using traditional methods are now languishing on the market unable to attract buyers even as seller’s lower prices. Many say the real estate boom is over but savvy buyers and sellers are profiting from real estate auctions.
Real Estate Auctions Work in Up or Down Markets.
Regardless of trends or market cycles, real estate auctions provide an open and transparent process for buyers and sellers. Properly conducted real estate auctions attract ready and willing buyers and motivate them to act now.
The auction method removes the “wait and see” attitude which serves to further depress real estate values. Buyers are always concerned about overpaying. Buyers gain confidence with their purchases at real estate auctions because they can see what others are willing to pay.
When market demand is high and inventories low, real estate auctions can deliver selling prices well above what a willing seller would have accepted in a negotiated private treaty sale. In good selling climates many property owners using traditional real estate methods; negotiating with one buyer at a time, leave thousands of dollars of equity on the table. During up markets real estate auctions are the best way to establish top market price.
Evaluating Your Real Estate for Auction
Not every property or seller for that matter makes a good candidate for auction. First of all sellers must be ready to sell now and for the current market value. Also a real estate auction will not fix problems caused by a downturn in market value of your property, if you owe more than a willing buyer will pay, be prepared to come to closing with your check book.
Properties that do well in real estate auctions have a high uniqueness factor. Ask your self, “What makes my property different from most others?” Maybe you own a resort property or high end luxury home, commercial properties and land do very well at auction. Real estate auctions thrive on uniqueness. If your property is like everyone else’s, the best thing you can do is offer the most competitive price.
Most importantly sellers must be reasonable about setting a minimum bid. A seller must look at the lowest, most current comps and price below that to generate the interest and urgency necessary for a successful real estate auction. Once the auction begins and qualified bidders start competing against one another you can watch the selling price increase.
Locate a Qualified Real Estate Auctioneer
Start by checking with the National Auctioneers Association, the best real estate auctioneers belong to this organization. These real estate auctioneers are well trained and adhere to a standard of practice and a code of ethics. Many attend the annual International Auctioneers Conference where the latest techniques and innovations in the real estate auction industry are presented.
Find out if the company you are interviewing is a full time real estate auction firm. Many real estate agents are getting auction licenses yet have no experience with the auction method of marketing. Conducting a successful real estate auction is nothing like (private treaty) traditional real estate sales. Go with a real estate auction pro.
You’re probably better of with an auction house that specializes in real estate auctions. There are many qualified auctioneers who have generations of experience selling personal property; furniture, dishes, lawn equipment and the occasional rare painting. Selling real estate at auction is a complex matter that should only be attempted by full time experienced real estate auction professionals.
Commissions and fees may vary, sellers must pay all marketing expenses up front and buyers typically pay 10% of the sales price to the auctioneer of which a share goes to participating real estate agents.
Types of Real Estate Auctions
Auctions are effective because they create a seller’s market. Professionally conducted real estate auctions create urgency, a reason to buy today and competition for the property. Terms and conditions of sale are established ahead of the auction. Real estate auctions will follow one of these three approaches:
Absolute Auction
The property is sold to the highest bidder regardless of price- using this process often returns the highest sale price.
Minimum Bid Auction
Seller agrees to sell at or above a published minimum bid price – this method is useful for internet auctions.
Seller Confirmation or Reserve Auction
With a reserve auction, the seller “reserves” the right to accept or decline any bids usually within 48 hours of the auction. Reserve auctions are used when there is a lien on the property from a lender or a court ordered sale with a minimum selling price.