Craig G. Francis

Of Trees and Taxes: How Should We Treat Capital Gains?

Could the current Congress actually pass a bill that would cut taxes? According to a CNN/Money article, this is exactly what the House has passed and President Obama is promoting. The plan would eliminate all capital gains taxes for investments made in 2010 and 2011 into qualifying small businesses. It would target so-called “angel investors” and other individuals who put money into C-corp businesses in certain fields. There would be a list of regulations - what government program is without them - but as the article points out, “if you dangle a tax credit, those with money will probably chase it.”

The article goes into some detail about the workings of the plan and has perspectives from different parties who would be affected. I would urge you to read it and learn more (the link is below). Rather than go into the details, I have some thoughts of my own on the idea of capital gains taxes.

“It is a mistake penalizing [investors] for helping the country's economy to grow.”

Over the past 50 years, there have been two presidents whose policies positively affected the country’s economy to a greater extent than any others: Presidents Ronald Reagan and John F. Kennedy. Presidents Reagan and Kennedy shared a number of qualities, one of which was the deep-seated realization that lower taxes promoted growth, and growth grew the real dollar-for-dollar tax revenues paid to the Federal government.  They were both supply-siders; Kennedy long  before this phrase was created.

Consider the phrase “capital gains.”  It is a gain of capital, a monetary product which has already been taxed once since the investor of capital  had to make that money before it could be invested. Most countries, some even more progressive than ours, do not have taxes on Capital Gains.  They realize that the wealthy who put their hard earned money to work, money that is invested at considerable risk, should reap the benefits of gains because of the good work these funds create. It is a mistake penalizing them for helping the country’s economy to grow.

Imagine, if you will, that you plant a tree.  As the tree grows more valuable the government taxes you for each incremental foot of growth, oftentimes before the tree has produced a crop.  For each foot of growth, the government takes 15-25% of the growth from your pocket.   Anyone with a lick of sense knows this is a crazy system and yet continues to grow the tree.  Why?  Because it is the nature of the entrepreneur to build something of value.  Yet you dutifully fork over the cash value of the tree's growth because it is the nature of the government to tax your growth.  This is a parasitic relationship that frequently dooms the entrepreneur.  But back to you, the farmer.

There are risks to growing the tree and costs to maintain its growth.  But you are forced to pay the government a part of your realized and often unrealized profits.  If the tree eventually produces fruit some years in the future, the government then takes more of your profits.  In olden days, this is exactly what the government did.  They took the fruits, vegetables, and grains from the farmer before they were harvested.  This planted the seeds, if you will, of our Declaration of Independence and Great Britain's Magna Carta, the two most important documents of the human evolution towards freedom from the rapacious growth of government parasitism.

But what happens when you, the farmer, decide that the government takes too much?  They take too much at each stage of your investment in labor and capital.  Do you continue to grow your tree - your business - even though it is becoming less valuable to you as the taxes increase? (Of course, if you plant it in a container you can pick up your container and go somewhere the taxes are not so high. This is what we are seeing in states such as California, where companies are packing up and moving to more business-friendly climates.) It is axiomatic that people of wealth are the ones who plant trees, start businesses and hire people.  I have never seen ANYONE hired by a poor person.

It takes wealth to beget wealth and take the risk of capital to its ultimate stage: the development of a employee-rich business.  When that happens, the economy booms.  The business owner helps his or her employees to a good job with decent wages and benefits. Some of these people go on to start their own businesses and continue the economic cycle generation to generation.

This does not happen when the government strip mines the hard-earned cash of the investors and entrepreneurs.  The wealthy harbor their capital until the economic, regulatory, and tax environment favors the safer allocation of their capital. Until that happens, the people with money essentially GO ON STRIKE.  Kennedy and Reagan knew this at a visceral level and worked a considerable part of their presidencies seeing that the environment was conducive to business growth.  The last time the wisdom of our political leaders embraced this philosophy was when Reagan repudiated the progressive taxes of the past administrations, and that set off the longest and largest peacetime period of economic growth in a century.  That period lasted 25 years.

This could happen again and in doing so, pay down the national debt and bring the unemployment rate back to a more normal level.  But that would take political courage, and that quality is lacking in our leaders today.

For more details about the bill, read “How a capital gains tax break could get cash to startups” at CNN/Money.com

Craig G. Francis is the owner of Francis Financial and The SBA Loan Store. He has been a top producer of SBA Loans since 1981, and has worked with Dun & Bradstreet and Bank of Commerce. Craig Francis has the expertise to steer clients through the often confusing rules and regulations associated with SBA Loans, having helped over 2,000 businesses acquire over a billion dollars in loans. He can be contacted through CraigGFrancis.com, SBALoanStore.com, on LinkedIn, or at 888-666-9722

Senate Moves Closer to Approving Small Business Bill

News out of Washington, D.C.,  early this week indicated that passage may be near for the Small Business Jobs Act. The bill, which includes the $30 billion lending amendment that survived special consideration last week, would provide many benefits to small businesses, including the extension of the successful SBA guarantee increases through the end of the year. The bill would also provide $13 billion in tax cuts for small businesses and exempt investors in certain small businesses from paying capital gains taxes.

The Hill reported on Wednesday that Democratic leaders were negotiating with Republicans to allow a limited number of Republican amendments to the final bill in order to secure passage. Senators George LeMieux (R-FL) and George Voinovich (R-OH) indicated that they would probably vote for the bill if the amendments were included. A third Republican, Olympia Snowe of Maine, did not commit to voting for the bill but indicated that including the amendments would be a “good step in the right direction.”

According to an Associated Press story, one of the proposed amendments would repeal the requirement that businesses report any purchases of supplies from one vendor over $600. This regulation was included in the earlier health care reform. Many small businesses have argued that the reporting would force them to handle more paperwork and very likely stifle growth. Repealing the regulation would mean that only services would require reporting, which is the current law.

As helpful as the $30 billion and the repeal of increased reporting would be, the extension of the SBA’s increased guarantee through the end of the year could be an even bigger benefit to small businesses. It was the increase to a 90% guarantee that has helped spur lending, and the end in May resulted in a serious drop in SBA loans in June and July. With the higher guarantee it becomes more attractive, especially smaller community banks, to make these loans because they can then sell the guaranteed portion to investors. This provides an immediate bump in the bank’s assets as it can credit a 10% premium to its books. Good for the banks, good for small businesses, good for the economy - sounds good all over.

Now that the SBA guarantee increase appears to be back on track, this might be a good time for small businesses to look into how an SBA loan could help. The SBA Loan Store can answer many of your questions about applying and qualifying for a loan. Contact us now and let us help you move forward.

Craig G. Francis is the owner of Francis Financial and The SBA Loan Store. He has been a top producer of SBA Loans since 1981, and has worked with Dun & Bradstreet and Bank of Commerce. Craig Francis has the expertise to steer clients through the often confusing rules and regulations associated with SBA Loans, having helped over 2,000 businesses acquire over a billion dollars in loans. He can be contacted through CraigGFrancis.com, SBALoanStore.com, on LinkedIn, or at 888-666-9722.

Senate Sends Small Business Lending Amendment to Floor

In a late-night vote, the Senate Thursday passed a $30 billion amendment out of limbo and back into a larger bill that should come up for vote next week. The amendment, which had been removed from the full bill earlier in the week, passed cloture on a 60-39 vote, which will now allow it to pass on a simple majority vote. There are still questions on the future of the overall bill, which should be up for vote sometime next week as well, but most expect passage.

One of the concerns of Senators opposed to the amendment was the possibility of another TARP-style program because it again would provide money to banks rather than directly to small businesses. Senator George LeMieux (R-FL) assured fellow Senators that this bill would be different because it would be providing money to small community banks, with incentives to lend to small businesses. The Independent Community Bankers of America (ICBA) had sent a letter earlier supporting the legislation and calling the fund “the core component of this legislation and the provision that holds the most promise for small business job creation in the near term.”

The Small Business Jobs Act is considered an important step in the recovery process in part because it would extend the Small Business Administration’s extended loan guarantees through the end of 2010. It would also raise the maximum 7(a) loan size from $2 million to $5 million and temporarily raise the 7(a) Express Loan limit to $1 million for one year from passage. SBA 504 loans would be permanently raised to $5 million to $5.5 million and for two years could be used to refinance existing commercial mortgages. These areas alone could make a huge difference in the ability of small businesses to weather the current financial storms. Additionally, the bill will make changes in SBA microloans and create another level between microloans and general loans.

Will this bill be a perfect solution to the lingering affects of the Recession? Of course not - nothing created by Washington is ever perfect. But the benefits to small businesses, and therefore to the overall economy, could be substantial. As always, the devil will be in the details, and we will have to wait to see all of those. For now, if you are interested in knowing more about the Small Business Jobs Act you can visit Senate Committee on Finance’s information page, or read a summary of the bill in the New York Times.

Here at SBA Loan Store and Francis Financial our goal is to help your business work through the often confusing layers of regulations and requirements that go along with applying for SBA-backed loans. With over 30 years of experience, we can guide you through the process or handle the details for you. Please visit our websites through the links below to learn more about how we can help you and your business.

Craig G. Francis is the owner of Francis Financial and The SBA Loan Store. He has been a top producer of SBA Loans since 1981, and has worked with Dun & Bradstreet and Bank of Commerce. Craig Francis has the expertise to steer clients through the often confusing rules and regulations associated with SBA Loans, having helped over 2,000 businesses acquire over a billion dollars in loans. He can be contacted through CraigGFrancis.com, SBALoanStore.com, on LinkedIn, or at 888-666-9722.

Small Banks May Be Caught in TARP Trap

As if we needed more evidence that TARP has in many cases been more of a TRAP, now a recent story in Bloomberg Businessweek reports that the Congressional Oversight Panel has expressed concerns that some small banks may have difficulty repaying money they received from the program. Any bank that does not repay TARP funds by 2013 will have the dividend payment nearly double from 5% to 9%. This means that those small banks that chose to accept a government handout could very well end up being taken over because they are unable to cover the costs of their decision.

According to reports, currently about 10% of the 690 small banks (assets under $100 billion) that took money under TARP have paid back the government, while 15% are currently behind in repayment. The question is, what is the status of the other three-fourths? How many of them are on track to repay the loans and how many are looking at falling behind? This is no doubt part of what some Senators were concerned about with the new Small Business Lending Act that was just passed out of committee.

A major concern is the possibility that some small community banks could be taken over or forced to close because of problems with raising capital to repay the TARP money they took. The Oversight Panel is recommending that the Treasury Department work to clearly detail how these small banks will be handled. According to the report, one bank has already missed six dividend payments and another eight are five months behind. Missing six payments is supposed to set off a provision in the law that allows the government to replace board members. Just how will this be done, and will it be done in a way that helps the bank or hinders its recovery? Time will tell, as the saying goes.

The good news is that not every community bank took advantage of TARP, and most of those that did are still in relatively stable condition. So there are many out there that are able to work with qualifying businesses, particularly with SBA-backed loans. SBA Loan Store and Francis Financial have worked with a variety of lenders to provide 7(a) and 504 loans to start-up and expanding businesses. If you are ready to grow your business, contact us for advice or to get the process started.

Craig G. Francis is the owner of Francis Financial and The SBA Loan Store. He has been a top producer of SBA Loans since 1981, and has worked with Dun & Bradstreet and Bank of Commerce. Craig Francis has the expertise to steer clients through the often confusing rules and regulations associated with SBA Loans, having helped over 2,000 businesses acquire over a billion dollars in loans. He can be contacted through CraigGFrancis.com, SBALoanStore.com, on LinkedIn, or at 888-666-9722.

SBA Loans: Bad News, Good News

The end of the government stimulus support for SBA loans in May resulted in a huge decline in small business lending in June and so far in July. An article in the New York Times (“S.B.A. Lending Plunged in June”) detailed how lending dropped by two-thirds from May to June, resulting in one of the worst months in years for SBA loans. Banks give a number of reasons for this, but most center around the 90% guarantee that the program allowed the SBA to provide, compared to the usual 75% guarantee.

For borrowers, this increased guarantee allowed them to get into a loan with less up-front collateral, important in this time of major declines in value of the property many of them use for that security. Lenders appreciated the higher guarantee because it allowed them to make loans with less of their own money at risk, and banks appreciate less risk, particularly right now with regulators peering over their shoulders. There is one other reason for the banks’ preference for the 90% guarantee that many people don’t know about - they make money. As Jerry Chautin points out in an article in the Huffington Post, small community banks, which make many of these SBA loans, sell the guaranteed portion of the loan to bigger investors and receive a 10% premium that is immediately credited to the banks balance sheet.. A 90% guarantee on a million dollar loan means $900,000 available to sell compared to $750,000 with a traditional guarantee.

While much of the news about SBA loans has been poor, there are some rays of light gleaming through the darkness. It is looking like the Senate may be close to passing an extension to the SBA stimulus program this week, which would renew the 90% loan guarantee. And one surprising bit of good news is the success of the pilot Community Express Program. This loan program provides loans of $5000 to $25,000 to businesses that only need small amounts of capital. The loans are guaranteed to 85% and there is no collateral requirement. In certain SBA-designated areas, such as low-income neighborhoods, these loans can be increased up to $50,000. The biggest boost to the program was the partnering of Sam’s Club with lender Superior Financial Group. According to the Huffington Post article, the demand has exceeded expectations, with over 2000 applications coming in during one week through Sam’s Club.

If your business is thinking about one of these smaller loans, SBA Loan Store can provide you with the paperwork you need to take to Sam’s Club or any lender that works with the Community Express Program. We can also answer questions that you may have on this or other SBA loan programs. And as always, we are experienced in working with small businesses looking for the traditional 7(a) and 504 SBA loans. You can contact us at 888-666-9722 or visit SBALoanStore.com.

Craig G. Francis is the owner of Francis Financial and The SBA Loan Store. He has been a top producer of SBA Loans since 1981, and has worked with Dun & Bradstreet and Bank of Commerce. Craig Francis has the expertise to steer clients through the often confusing rules and regulations associated with SBA Loans, having helped over 2,000 businesses acquire over a billion dollars in loans. He can be contacted through CraigGFrancis.com, SBALoanStore.com, on LinkedIn, or at 888-666-9722.

Jon Winick Speaks at Coleman Webinar

In a July 14 webinar on coping with distressed commercial real estate, Bob Coleman, founder of Coleman Publishing, spoke with Jon Winick, President of Clark Street Capital. In a clip from that presentation, Mr. Winick discusses the needs of banks in working with businesses and how the present selling is into a market with high IRR requirements. Many of those who bought into CRE in the last cycle are now distressed, and one problem they are seeing is over valuation based on the current regional market. Mr. Winick gives an example where the valuation is based on an assumption that is completely at odds with the reality of the situation.

This is an interesting overview in a short video that shows why property prices have dropped, banks are afraid of commercial real estate and what buyers, both owner-users and investors, should be using as a measuring stick to price properties.  There is more room for prices to fall, potentially 25% from present levels. Present levels are up to 40% lower than the market peak in 2007.  Let buyers beware.

 

 

Craig G. Francis is the owner of Francis Financial and The SBA Loan Store. He has been a top producer of SBA Loans since 1981, and has worked with Dun & Bradstreet and Bank of Commerce. Craig Francis has the expertise to steer clients through the often confusing rules and regulations associated with SBA Loans, having helped over 2,000 businesses acquire over a billion dollars in loans. He can be contacted through CraigGFrancis.com, SBALoanStore.com, on LinkedIn, or at 888-666-9722.

Fed Tries to Understand Drop in Business Loans

It’s no secret that small businesses have faced a funding problem during this Recession, and over a five month period ending June 30 the Federal Reserve held 43 meetings to try to understand why. From Lexington, KY, to Detroit, Miami, and Denver, to Shreveport, LA, the Fed has spoken to business owners and other in order to come to some understanding of the situation. The information is in, and on Monday Federal Reserve Chairman Ben Bernanke shared the results during a forum on small business lending. The reason for the drop in lending? Well, they aren’t certain.

A July 13 story in the New York Times’ “Deal Book” reports that the Fed chairman discussed three possible factors: decreasing demand for loans, poor financial condition of small businesses, and less credit available. Bernanke told those attending “No doubt all three factors have played a role.” His plan for turning things around? Telling banks to help small businesses to get the credit they need. Seriously?

Perhaps it’s time for Chairman Bernanke to take a walk out of the Fed’s ivory tower and take a closer look at what is happening. Yes, the Fed spoke to hundreds of business owners at those meetings, but the question remains - how much did they listen? From talking to long-time business owners, new entrepreneurs, and lenders, I have come up with my own list of reasons for the credit situation.

1.  Businesses are reluctant to borrow in uncertain economic, tax and regulatory time
First, and possibly most important, small businesses are reluctant to take on additional credit in a climate of uncertainty about the economy, taxes, and government regulations. With the yet to be determined additional levy for Obamacare and new proposed regulations - including cap-and-trade - this is not a time that inspires confidence among business owners.

2. The economy is bad and may be getting worse.  That makes it  much less likely that businesses will apply for loans
The regulatory and tax issues are on top of the declining economy that has seen most companies lose business as consumers cut spending to try to get by. With these factors, many business owners have decided to forgo plans to expand or to replace equipment until the full impact of everything is clear.

3.  Banks are completely hammered by the economy (that is perceived as getting worse) as well, making them fearful of lending in tough times
Banks are also dealing with a number of factors that inhibit lending. We have seen over 200 banks taken over during the past two years, and the remaining ones are more concerned with survival than with growth. This results in the banks circling the wagons, so to speak, to prevent additional losses. If you want to know more about banks and “credit culture,” I have a free report on “Understanding bank 'Credit Cultures' and how bankers think” just for visiting the SBA Loan Store and signing up for a no-obligation email or telephone session to answer your questions. You can also find several Power Reports based on my 35 years of experience in the financial field.

4.  Banks have serious deterioration of their capital base, making it impossible to loan to anyone in many cases.
Most of the money banks take in is normally loaned out to individuals and businesses for their use, in exchange for repayment with interest. However many of those individuals and businesses that took out credit have defaulted and the banks are left with empty collateral in the form of houses and buildings they currently cannot sell off. This depletes the bank’s resources, and in some cases they have had such a deterioration of their capital base that they are unable to make any loans at this time.

5.  Banks are being told not to make bad loans. That is Fed Speak for 'DONT MAKE LOANS'
And then there is the government watching over them. They are being told not to make “bad” loans - which is government-speak for “don’t lend.” The concern over defaulted loans has pushed the banks to tighten their standards to the point that even many viable companies are unable to get credit.

6.  New federal and state regulations are increasing pressure on banks to clean up their portfolios, increase fees, and make reporting more specific and within Federal regulatory requirements
Banks are being told to clean up the problems that previous government directives have created, plus add more fees to help cover the losses they have suffered. The banks are also being given additional reporting requirements - read “additional paperwork” - that they will need someone to handle. If you are having cash flow issues, would you hire more people or create less paperwork? Put it all together and you have strong dis-incentives to lend to small businesses. And now Bernanke is telling the banks to start lending? Which message do you think they are going to pay attention to?

This is not to say that there is no hope for small businesses looking for credit in the current economic situation. But it does mean that having someone who knows what to do and where to go can be an invaluable asset to any business owner looking for funding. An SBA-guaranteed loan is still the best choice for many looking for funding. I am still placing loans for businesses looking to improve or expand and am ready to work with the right companies. Contact me and we can discuss your needs and ways to meet them.

Craig G. Francis is the owner of Francis Financial and The SBA Loan Store. He has been a top producer of SBA Loans since 1981, and has worked with Dun & Bradstreet and Bank of Commerce. Craig Francis has the expertise to steer clients through the often confusing rules and regulations associated with SBA Loans, having helped over 2,000 businesses acquire over a billion dollars in loans. He can be contacted through CraigGFrancis.com, SBALoanStore.com, on LinkedIn, or at 888-666-9722.

Dealing with Declining Credit Scores

According to a new report from the Associated Press, more than 25% of American consumers, that's over 43,000,000 people, have a FICO score of 599 or less. These lower scores put them at the level of “poor risks” and means that most or all of these consumers will not be able to qualify for auto or home loans or credit cards - especially in this time of closer scrutiny by banks. Previously the historical average for sub-par scores was about 15% of the consumer population. In addition the number of consumers in the moderate range, approximately 650-699, has dropped from an average of 15% to under 12% since the Recession began.

This is important to know since nearly everything in your life is attached to your credit status. Home loans, credit from any source, leases, insurance, jobs and even lifestyle choices are affected by your report. So having a low credit score can impact more than just the ability to buy that big screen plasma TV you have been drooling over. But don’t think just because your scores have bottomed out that you are destined to remain at the bottom; there are ways of improving your credit score.

Take a close hard look at your credit reports.  You get one free look every year from each of the major credit reporting companies through www.annualcreditreport.com. In addition, www.myfico.com will provide you with your credit scores from Experian, Equifax, and Trans Union, although this will entail a modest cost. Once you have your reports, find any old or inaccurate credit items and get them removed by calling or emailing the credit agencies. You may also be able to work with a credit repair firm to help with this task.

To start the process of improving your score over the interim and long-term basis, work on paying down your highest rate debt and then work on the next most costly loans.  Get rid of debt and remove late payments if possible.  Take control of your score by removing or paying off debt that causes the most impact on your report, like high balance credit cards, retail consumer debt, and derogatory items that are not reflective of your credit standing today.

These actions can have a dramatic and immediate impact on your credit score and help you get out from under your debt burden.  This accumulative process is like a snow ball effect. The more you do the more results you will see and it will get your credit situation, overall debt, credit score, and financial life under control in the shortest possible time period.  It may have taken years to get into the shape you now in, and it may take years to get out of it, but it is worth it and will change your life to the positive in reasonably short order. For more information on getting your credit score under control, see THE FICO FACTOR AND PERSONAL CREDIT on the Francis Financial website.

Craig G. Francis is the owner of Francis Financial and The SBA Loan Store. He has been a top producer of SBA Loans since 1981, and has worked with Dun & Bradstreet and Bank of Commerce. Craig Francis has the expertise to steer clients through the often confusing rules and regulations associated with SBA Loans, having helped over 2,000 businesses acquire over a billion dollars in loans. He can be contacted through CraigGFrancis.com, SBALoanStore.com, on LinkedIn, or at 888-666-9722.

Why Aren't Small Businesses Hiring?

A recent article in the Los Angeles Times (“Small business sidelined in slow recovery from recession”) discussed how small businesses are not leading the way out of the recession as they have in the past. Writer Don Lee points out that “in every recession over the last three decades, it has been America's small businesses ... that stepped forward, began hiring and pulled the country out of the mire.” But this time it’s different. Why? As Lee indicates, there are many reasons, most of them enough in their own right to hold business owners back from hiring, and taken together creating an almost insurmountable obstacle.

I read this article, and on a micro level, boots in the street, this is very true.  Small businesses have little enough resources to start with, frequently relying on the home and business building equity to tide them over. Their war chest is frequently thin at best.  One rough patch and they are out of business.  Miss a payroll just once and the doors close. Fail to pay anyone, including lenders, vendors, bankers or the guy in the corner, and you close within 24 -48 hours.  That is why small businesses cant afford to promote hiring in light of the imminent threats of rules, regulations, taxes and the like.  They are not signing a suicide pack with anyone.

One of the major reasons small businesses are not hiring is there is no reason to. As one business owner told Lee, “If I got more people coming through the front door, then I'd need more people to take care of them.” Economists talk about cycles, and right now we are in the midst of a dangerous one - people are out of work, so they have cut spending; people do not buy as much when they cut spending, so businesses don’t sell as much; businesses are not selling as much, so they are forced to cut expenses, including staff; people lose their jobs and have to cut spending... Now throw into the mix increases in taxes and regulations and you have the veritable “perfect storm” of conditions for extended slow recovery or worse.

Ah, yes, regulations and taxes. These have become more of an issue with this administration as the President and Congress look for ways to fund Obamacare and pass cap-and-trade legislation, among other things. One small business owner explained to Lee that she can get through a slow economy, but “what I can't get through is a runaway government." In addition, the Bush administration tax cuts will run out soon and there is no move in Washington to extend them.

First of all, I hate it when I am right. At least in this type of situation. For some time I have been talking about how government interference, in the form of higher taxes and increased regulations, is making it much more difficult for existing businesses to expand and new businesses to begin. Starting a business should not force the entrepreneur to sign a suicide pact with the government.  At this time, business owners vote with their wallets.  They don't hire new employees since they do not know the short or long term ramifications of that hire, particularly  the legal, regulatory, or tax impacts resulting from the de novo employment terms. No new hires means the extension of the current jobless situation and thus the continued slow recovery.

And the worst part is Obama and his cronies. They have covertly declared war on small businesses.  They talk a good game but when you review the minutia of regulations, taxes, health care, minimum wages etc etc etc, you have that perfect storm that makes ANY business owner, new or established, deathly afraid of hiring.

Does this mean it’s time to throw in the towel and give up on business ownership? Of course not, but it does mean that current and potential business owners need to make certain they have all the information they can get before making any decisions. Find a mentor to help you plan your moves and discuss your options. Talk to a lending expert before committing to any decisions on credit. Do your homework and due diligence first, then make your decisions based on the best information you have. And never give up on the dream of having your own business. Remember that all cycles eventually return to the top.

Craig G. Francis is the owner of Francis Financial and The SBA Loan Store. He has been a top producer of SBA Loans since 1981, and has worked with Dun & Bradstreet and Bank of Commerce. Craig Francis has the expertise to steer clients through the often confusing rules and regulations associated with SBA Loans, having helped over 2,000 businesses acquire over a billion dollars in loans. He can be contacted through CraigGFrancis.com, SBALoanStore.com, on LinkedIn, or at 888-666-9722.

Is This the Right Time for a Franchise?

Believe it or not, this might be a good time for the huge numbers of people who are unemployed to look into franchises. From home-based franchises that could be started for $10-25,000 to the much larger franchises for $250,000, the commencement of businesses by the huge ranks of unemployed could precede an economic revitalization of this country only seen in the early 1980s when Ronald Reagan dropped tax rates and interest rates and promoted the formation of businesses, aided by SBA's very activist role in being a bully pulpit for the entrepreneurial class.

Bob Coleman, founder of Coleman Publishing, recently hosted a webinar on franchising with special guest John P. Hayes, PhD, an author and franchise expert. In his talk, Hayes pointed out that even in a recession there are certain products and services that people need and that “franchises, by and large, fulfill those needs better than other kinds of businesses are able to do." He suggested that the opportunities are there in the right kinds of franchises, if you fit the right profile. What is this “right profile”? For many franchisers, the right franchisee is someone who is interested in opening multiple units rather than just a single outlet. In fact, the opportunity for those franchise candidates is even better now than it was three or four years ago.

So let’s look at the possibilities. Imagine 1,000,000 people in the ranks of the unemployed (California alone lost nearly 750,000 jobs in 2009) start a business and within a year, on average, hire 3 people.  That is 4,000,000 of the unemployed now in gainful, productive jobs.  Multiply that by 3, when you take into account the spawning of new businesses from the first generation of entrepreneurs, and you  have 12,000,000 newly employed people working for these new businesses.  Unemployment problems solved.

Will it be as easy as this? Of course not, but for the right candidates the opportunity is there to make a real difference in their own lives and the lives of others. And as banks have become more critical in their lending, the fact that franchisers have also become more critical in choosing franchisees means that anyone approved for a franchise is in a much better position to qualify for the financing needed. An SBA loan can be an excellent way to fund your first franchise location, and an SBA loan expert is your best resource for information on applying. If you would like to speak with me about financing a franchise, I can be reached at CraigGFrancis.com, SBALoanStore.com or at 888-666-9722 or connect with me on LinkedIn.

Craig G. Francis is the owner of Francis Financial and The SBA Loan Store. He has been a top producer of SBA Loans since 1981, and has worked with Dun & Bradstreet and Bank of Commerce. Craig Francis has the expertise to steer clients through the often confusing rules and regulations associated with SBA Loans, having helped over 2,000 businesses acquire over a billion dollars in loans. He can be contacted through CraigGFrancis.com, SBALoanStore.com, on LinkedIn, or at 888-666-9722.