04/29/2010
“We Gotta Live with Em!”
We often write about industry trends, news, and predict or prescribe how private money can react or take action.
Sometimes, we also have to remember that in order to move forward, we have to know what we can and cannot do as an institution and as a whole.
As our President Matt Burk said simply in a meeting as he referred to the decisions we make with private money loans, “We gotta live with em!”
The statement touches on the fact that in our field, the decisions we make should not only serve and affect our customer, break ground in the industry, make us remarkable, but should also serve the greater good of our vision.
Whether an institution suffers from immobility, the abundance of nimbleness with no direction, or whatever operational problem that needs to be solved, understanding the consequences and acting accordingly toward the greater vision of the business can change the scope of our industry for the years to come.
We can lament and learn from what has occurred in the past, but also learn much more from the business decisions we make starting today.
04/27/2010
We Could Be Heroes
Is the opportunity for small business recovery really lost?
Annie Lowrey presents a persuasive case in her article “Small Business Owners Represent Lost Opportunity for Recovery.”
Using the example of blossoming neighborhood Bloomingdale of Washington, D.C., Lowrey explains how the neighborhood continues to transform away from its violent past into a booming neighborhood.
As Bloomingdale’s small business owners seek expansion to continue to employ its citizens and rise towards its potential, banks are turning away potential borrowers. This is because of the perceived risk that small businesses have in today’s post-recession markets.
The red tape involved with turndowns fling business owners in a frustrating circle. Some owners could make job-producing improvements to their current businesses for as little as $50,000. Even these borrowers cannot find the financing they need to kick-start the much-needed growth.
As the House begins its assistance to loosen credit for small business, small business advocates feel that it’s too late.
Nimble, flexible private money stands a chance though. They could provide the opportunity to grow, just with a few different parameters than a borrower would have through a bank.
Small victories in places like Bloomingdale could become the crux for meaningful recovery momentum. Private money could become neighborhood heroes.
04/22/2010
Credit Unions Seek Business Lending Cap Increase
We revisited the story about the National Credit Union Administration seeking an increase in the percentage of capital each CU can allot to small business lending. The story was recently on the Portland Business Journal.
Currently the cap is at 12.25%. If the bills pending in the House and Senate pass, this cap could rise to 25%. This is a dramatic increase in the ability of credit unions to lend to small businesses.
Our last exploration of this story touched on the arguments that banks feel the move is unfair, since credit unions have particular tax incentives due to their limitations in competing with banks. Each entity has its own segment of the overall borrower market.
In a time of increasing transparency across industries, it looks like banking representatives will fight hard about amending credit union tax breaks if they are allowed to have a potential increase in their market share.
According to Pamela Leavitt however, Senior Vice President of Government Affairs for the Credit Union Association of Oregon, that argument “wouldn’t be as highlighted as it were if banks were out there lending to these small businesses.”
The loosening of credit through this move could help restart the slowly thawing lending arena. As we mentioned in our previous post, it does help on both a front end via production, as well as a back end via commercial mortgage exit strategies.
What’s your perspective? Loosen up the markets to get business flowing again, or leave the market shares in a status quo and wait out the current economic trends?
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