Hey all,

We received some information from our friend Dr. Bill. It is very timely and helpful for small businesses thinking about obtaining financing either for expansion or working capital requirements.

Don’t work too hard!

StormDawg

From Dr. Bill…

The fact is, at the present time there is practically no conventional bank or Small Business Administration guaranteed financing available for a new business (despite what the SBA otherwise claims). Given that as a start, here are some further thoughts:

• The requirements have become much more stringent for small business lending. Banks and other conventional lenders are open to requests, but only from solid companies with a 2-3 year successful track record, a clearly documented ability to repay the loan, and great collateral.
• Where there may be an opportunity for bank financing, you will need a complete business plan (you should have one anyway, of course). There are many public agency and nonprofit business counseling resources that will help put this together for no cost – this can be an extremely valuable resource in the broader sense of getting good advice on all aspects of business development. Often these agencies have connections with local lenders and can make a helpful introduction. These programs are all listed at www.BUZGate.org.
• Credit cards – 46% of all small businesses use this as base financing. The good news is this resource is available for most start-ups. The bad news is that they carry a high interest cost, which can severely impact a new or struggling small business and can negatively affect your credit score. This can be a borrowing detriment when the lending environment improves.
• Retirement funds – Many recently laid-off individuals are starting their own small business, and often using their retirement fund to finance the operation. If they are using a 401(k), they should make sure that it is configured to allow them to borrow from the fund rather than cash out. If they cash out, they will have accrued taxes to pay and a hefty penalty that can equal as much as 1/3 of the fund – both of which are avoided through the borrowing option.
• Friends and family have long been a source of financing for new small businesses – there is essential professional help to support and properly document such activity. (http://www.buzgate.org/8.0/mn/ch_virginmoney.html)
• Public sector funding – Look to state-based and other public financing programs that may have specialized financing programs driven by more social outcomes such as job creation or HUB Zone deployment.
• Finally – minimize the investment; keep your breakeven at rock-bottom; don’t spend a dime that isn’t absolutely essential; don’t buy expensive equipment; look for used bargains; minimize cash outflow commitments; watch labor costs; outsource where possible rather than maintaining employees.

Good luck from Dr. Bill

Good news!  More and more lenders are finding ways to get you the money that you need to keep your doors open! Smart! Here is some great information from our friends at ORC Guideline on a variety of ways that you can get your hands on the funding you need!

As StormDawg would say, Don’t work too hard
Christina Kudym – StormDawg S.W.A.T.

Are you among the 74% of small businesses using a credit card to pay for your small business expenses? Or have you recently turned to credit cards because it’s so difficult to get a loan for your small business? If so, you’ve seen the dramatic increase in interest rates and dramatic decrease in your credit limit in the last year. How has this affected your business?

Because of these dramatic shifts, more and more businesses are turning to alternative finance companies for cash. Apparently, at some point, all of us have to stop borrowing money from relatives and take the plunge. Some of the people still willing to loan you money are asset-based lenders, factors, and merchant cash advance companies. But do you want their money?

Have you even heard of them? If not…I’ll bet they’ll be knocking on your door in one way or another shortly. Here is some great research from our friends at ORC Guideline that I think you will find interesting if you are wondering about credit cards, credit lines or loans for your small business.

Don’t Work Too Hard!

Christina Kudym – StormDawg S.W.A.T. Team

Good morning, StormDawg fans!

You’ve probably noticed… (and if you haven’t, scroll down to the byline)… that there’s a guest writer on StormDawg.com this morning.  Introductions are always a good place to start.  Here’s mine… I’m Bryan Jennewein, and I currently work with StormDawg (a.k.a. Stormy Dean) as the Director of Social Media for infoGROUP.  In short, I help us figure out how best to use social media to communicate who we are, what we do, and who we do it for. I’m also a member of the StormDawg S.W.A.T. team (more on that later) and the geek who got StormDawg up and blogging (and what an adventure it has been!).  When StormDawg mentioned he was taking some vacation time (he deserves it) to move his daughter into an off-campus house and needed a few guest bloggers, I was only too happy to help.  And this morning, I’ll be bringing you a bit of small-business news that caught my eye and tugged at my heart.

Fox News featured a segment entitled, “Death of Small Business in America.”  Really?? Struggling, yes. And some are having to close their doors, but let’s hope it’s not the “death” of small business, or we’re all done for.  As I’ve been reading from the Stimulus entries, times are tougher than any of us thought. But must the media sensationalize these events? Personally, I’d like to see a message of hope (or heck, how about a message of “here’s how to survive”).  Perhaps I’m a bit biased, but that’s what I’ve enjoyed most about helping StormDawg get his message out… he’s actually helping small businesses with advice, tips, resources… and now he’s even picking one every month to sponsor with free marketing. Death of Small Business? Not if we can help it!!

There were two other articles about small business lending that caught my eye this morning: one from the Pacific Coast Business Times, “Big Cuts for Small Business,” and another from the Baltimore Sun, “Federal Small-Business Lending Plan Off To a Slow Start.”  It seems a new piece of legislation in California has suspended the state loan guarantee program. What’s worse, the Baltimore Sun article describes that even in states where funds are available and guaranteed, banks are slow to participate if they even participate at all.

What’s left for small businesses to do? Whip out the credit card? Think twice. In fact, think a third time… please. Economic researcher Robert H. Scott said in a report released earlier this month that for every $1,000 in unpaid credit card debt, a small business increases its likelihood it will close by 2.2%. So $10,000 equals a 20% probability of closure? Talk about rolling the dice.

StormDawg often advises us to stop and think. When it comes to making decisions about financing your business, his advice is paramount. Before you whip out the credit card or take out a high-interest loan, think about a few things…

What is your plan for utilizing every penny of this money? Will you pay down higher-interest debt? Buy new equipment? Increase production? How about market your business to existing and prospective customers? Make sure this plan accounts for a calculated return. If the spend won’t directly impact your business, bring you new customers, or increase revenue… ask yourself, “Do I really need the loan?”

It also occurs to me that many of you already know exactly what to do with some extra financing, and that you could easily strengthen your business or marketing more… but you’re wondering…

“HOW DO I GET THE HELP I NEED?!?”

Here are a few tips…

For Lending -
Check with your banks. Larger banks may not be participating, but what about smaller local banks and credit unions? They seem a bit more stable to me, and some of them here in the Midwest are even *thriving*.

Local Options -
Check with your local chamber of commerce. They’re here to help you, especially during troubling times. For example, the Detroit Regional Chamber put together their own Small Business Stimulus Package that bundles access to local healthcare options with steep discounts from Office Depot and local networking opportunities.

Retail Discounts -
Companies serving small business know that if small businesses don’t make it, they won’t either. That’s why many of them are offering big discounts right now. Check around and don’t be afraid to ask your suppliers and vendors if they can work with you on cost and pricing. Don’t be afraid to reach out to other business owners in the area and ask them for alternative vendors. You never know where you will find savings.

Finally, StormDawg S.W.A.T. is getting ready to bring you a phenomenal offering. StormDawg has been so moved by your stories, he’s pulling together every resource he can to help. Stay tuned for more on that, and for more from some great guest bloggers this week.

As StormDawg would say… “Don’t work too hard!”

Bryan D. Jennewein – StormDawg S.W.A.T.

Hey all,

Here is a link to a great small business article that talks about some of the loans that are being made available by the SBA for small businesses. Your business can qualify for up to $35,000 for loans that are not to be used for working capital but to pay off those nagging debts and give you some room to get going again. The terms are pretty reasonable, so check it out… it might come in handy.

Remember the recession actually represents an opportunity to gain market share and pick up new customers for those that find a way to invest in their business. The money could also help get the entire economy moving again as, according to some economists, each dollar spent can turn over in the economy as many as 7 times.  (Although other economists are still unsure.)

I’d love to hear your thoughts.  Here are a few more articles about our current economic state… I hope they help.

“Growing number of economists see recovery on the horizon” – CNN Money

“Chapman economists predict economy to start turning around by year end” – 89.3 KPCC

“NABE Outlook: Recession end in sight…” – NABE

Don’t work too hard.

StormDawg