Capital Feed

The Federal Housing Administration is about to make it even tougher to borrow money from Uncle Sam to buy a home.

Starting April 1, borrowers in ongoing disputes with creditors over debts of $1,000 or more may no longer qualify for FHA-insured loans. Even borrowers with perfect credit scores can be denied over a single $1,000 problem charge.

Before this, individual lenders decided whether debt disputes constituted grounds for denial. You could be fighting a charge, say a hospital bill, and your lender might still decide that your credit history merited an approval. Now, a lender will have to justify the approval to the FHA and back its decision with documentation.

Really – is this what the housing market needs? Should not always put credit over cash flow. Keep reading at CNN Money.

Over and over pundits and politicians say that we can’t recover without healthy banks. My question is why? Banks still have bad balance sheets, especially when you net present value the off balance sheet stuff that they are carrying, or write down loans to real market values. One of the reasons we have an easy credit Federal Reserve policy is to allow the banks to surf the curve and improve the cash flow from their balance sheets. This has created a huge gap in funding. Banks are perfectly happy to invest at no risk and earn 3%, while they are convalescing.

Beat up banks are risk averse. Bankers will tell you they will write a loan. But, the upfront costs and collateral required are pricing many small businesses out of the market. Banks will happily lend to big companies, but don’t want to lend to smaller deals. For example, if you have a small business and want to buy out a competitor, you are going to have a heap of trouble getting a loan. If you acquire the credit, you have to put up your first born, and their grandchildren to get the capital flowing. I have seen several people that want to start up lending facilities to help fill the gap.

No banks allowed – no governments either – if you want it to work. Keep on reading this article at Business Insider.

From her elegant17th Streetshowroom inFort Lauderdale, Joanne Lockhart serves an exclusive clientele of mega-yacht owners — including a royal family — with onboard luxuries such as Swarovsky crystal napkin holders by Isabella Adams, Robbe & Berking silver flatware and gold encrustation china by Raynaud.

The former yacht stewardess knows from experience that keeping a $2,000 sterling silver egg cloche in stock and coming though with quirky requests (like black toilet paper and matching Q-Tips) are vital for the success of Yacht Next, the interior design, decor and accessory business she opened in 2008.

“We’re doing fabulous. For starting a business when the whole world was taking a financial dip, I couldn’t ask for more,” Lockhart said.

The city’s “Marina Mile’’ — the stretch along the 17th Street Causeway — earns its name from businesses like Lockhart’s that flow from the mega-yacht industry. Fueling its success is the Fort Lauderdale International Boat Show, which opens Thursday.

Before the show ends Monday, more than 130,000 are expected to attend the 52nd annual event, which features 150-foot-plus yachts plus accessories, technology, boating seminars and, for the first time, a section for live-aboard trawlers.

With maintenance, repairs and upgrades for these yachts they are putting tradesmen back to work. To read more of this article go to The Miami Herald.

The economy just struggles on. And, it is expected to continue at least until the next Presidential election is over and we set politics aside and get back to the real work.

In the mean time, current financial market conditions will remain unchanged – meaning that small businesses, even those that are growing, will continue to have a hard time accessing capital.

• Credit score requirements will trend higher precluding those without the most stellar score from the credit markets while continued economic setbacks of small business owners will push their scores in the opposite direction.

• Positive cash flow requirements will play an even greater role in credit underwriting even while most small businesses are facing declining revenues.

• And, collateral requirements will continue to trend higher; with values of 100%, 150% and even 200% or more.

All bad news for business owners needing a business loan to stay float or to grow and innovate their companies through this turmoil.

However, not all is lost to these entrepreneurs.

Here are a couple of suggestions of raising money during this unending slow market:

To read more of these good suggestions of raising money go to Business Money Today.

In the latest sign that the economic recovery may have lost whatever modest oomph it had, more small businesses say that they are planning to shrink their payrolls than say they want to expand them.

That is according to a new report released Tuesday by the National Federation of Independent Business, a trade group that regularly surveys its membership of small businesses acrossAmerica.

 The federation’s report for May showed the worst hiring prospects in eight months. The finding provides a glimpse into the pessimism of the nation’s small firms as they put together their budgets for the coming season, and depicts a more gloomy outlook than other recent (if equally lackluster) economic indicators because this one is forward-looking.

While big companies are buoyed by record profits, many small businesses, which employ half of the country’s private sector workers, are still struggling to break even. And if the nation’s small companies plan to further delay hiring — or, worse, return to laying off workers, as they now hint they might — there is little hope that the nation’s 14 million idle workers will find gainful employment soon.

With the economy still struggling, it may seem like an impossible time to start a do-good social venture. It can be hard enough to operate any business profitably — let alone one that also tries to improve the world. But some observers believe that the tough times may be increasing interest in social ventures.

 “I get the sense that the recession actually has resulted in more people taking interest in investing in companies that are doing the right thing right from the start,” said Wes Selke, investment manager at Good Capital, a social-impact venturecapital firm in San Francisco. As one indicator, at least three social-impact funds have raised more than $100 million in the last couple of years: Ignia Fund, Leapfrog Investments and MicroVest.

 Marrying mission and money in one business can be tricky. This guide focuses on commercial, profit-making businesses and entrepreneurs who want to build self-sustaining social ventures, a term that encompasses nonprofit and profit-making companies as well as some new types of legal hybrids, like an L3C, which stands for low-profit limited liability company. These ventures are commonly thought of as enterprises that serve a so-called triple bottom line: people, planet and profits.

 To keep reading more of this article go to The New York Times.

With the recent (supposedly) possibility of a national default on its debt, the resulting passage of a bill that will do nothing to remedy the situation, tons of figure pointing with little action and the recent downgrade of U.S. debt (which probably should have been done a year ago), the Fed came out to ease markets last Tuesday.

The Fed is usually very tight lipped about what it plans to do and what it actually thinks the economy will do.

One reason is that the Fed does not want to artificially pump up or cause fear in the market.

Plus, the Fed really does not know what will happen tomorrow – much like the weather forecast.  Anything in the world can inject new data or new fears that throw everything off.

But, this time it might just be different.  The Fed should do something to ease our market fears – either by saying that all is well or by outlining what it will through its monetary policies (although it has very little left).

Will interest rates stay low and for how long?  Will they set a time frame?  And, if that time frame is a long-term time frame what does that mean for the expected growth of our economy.

Will they try another qualitative easing (the last two did nothing)?

To see what other options the Fed might have in bringing some confidence back into our economy, read this article by The Dallas Morning News.

While it seems our financial markets are on the strangest roller coaster ride in a century, it is good to see that simple business ideas that offer consumers products and services they want are still able to find the capital they need for growth and get paid for all their hard work in bring those product and services to market.

It would seem that with such a down economy over the last three years, the IPO window was closed.  Few deals have been going public and several large deals from solid companies were pulled.

Yet, this new, dynamic thing termed social media is finding its way through the crowd.  One example is LivingSocial and its dramatic, stellar rise over the last three years has changed the ways online consumers actually interact with standard brick and mortar businesses.

To see what LivingSocial has been up to and learn about its possible upcoming IPO, see this story from The Washington Post.

The quick answer is that it really shouldn’t.

While many banks and other financial companies do get much of their lendable capital from the government – and, if the government’s rates rise – they should pass that along to the banks; who will pass it along to you.

But, most banks no longer price their business loans base on their costs of funds.  Most either base their loan interest rates on what investors who buy their loans require (usually more than they can make from other investments) or based on their own investors – those investors that invest in these financial companies and expect a certain level of return.

But, the likely answer is yes.  The reason is that these same financial companies will use any excess to raise rates – in fact, even before this debt ceiling debacle even came to a head a few weeks ago, they had already started to use it to raise both their rates and fees.

To read more go to this blog “My Take On…”.

You can’t cheat death and taxes.  While a whole industry is focused on helping you stay alive longer and live in better health – your tax burden will continue to get worse.

Regarding taxes, you have to protect yourself at all time.  Trying to cheat may seem like a great idea but once done you can never go back.

Plus, with the IRS looking improve collection by having your neighbors and employees blow the whistle on your tax habits – you might have no where to hide anymore.

Your best efforts going forward may be just to embrace them and understand how to properly reduce your tax burden (use the rules to your advantage while they are still here).

The IRS puts out information on how to avoid scams and cheat and we though we would pass along their most recent information.

Whether you like them or not – taxes are here to stay:

Directly from the IRS: 

To read more go to this blog “My Take On…” .