CALL TO ACTION!!

To all of our franchising and small business friends...


Senate 1832 is a bill to extend the 90% guarantee and increase SBA limits to $5 Million. It is caught up in the fodder of healthcare reform discussion. We NEED to get this bill moving to keep lending alive. Banks will NOT make loans at 75%, when there is pending legislation to increase future loans to 90%. They will sit on their hands, AS THEY SHOULD. What would you do if it was your money?

Below is a paste of an email that I sent to my legislators this morning. Please use it, or a facsimilie of it and send it to your local legislators. You can go on the IFA Website, http://franchise.org/capitalaccess.aspx and click on the link to email your legislators.

Grass roots efforts and being the "squeaky wheel are what will make things happen!

Thanks for your support!!

Ron



We met at the International Franchise Association fly in last September. I am writing to encourage you and Senator Specter to please get S1832 moving. The stimulus funds for SBA lenders have run out, and the guarantee is now moving backward to 75%! This is being done due to the “Healthcare Bill” monopoly on the congress.



Please let me know what else I can do, other than reaching out to my other legislators? Please respond and let me know your thoughts.



Thanks



Ron



S.1832
Title: A bill to increase loan limits for small business concerns, provide for low interest refinancing for small business concerns, and for other purposes.
Sponsor: Sen Landrieu, Mary L. [LA] (introduced 10/21/2009) Cosponsors (10)

Sen Bayh, Evan [IN] - 10/27/2009
Sen Boxer, Barbara [CA] - 10/22/2009

Sen Cardin, Benjamin L. [MD] - 10/21/2009
Sen Casey, Robert P., Jr. [PA] - 10/21/2009

Sen Dorgan, Byron L. [ND] - 10/29/2009
Sen Harkin, Tom [IA] - 10/21/2009

Sen Kerry, John F. [MA] - 10/21/2009
Sen Levin, Carl [MI] - 10/26/2009

Sen Pryor, Mark L. [AR] - 10/22/2009
Sen Shaheen, Jeanne [NH] - 10/21/2009



Latest Major Action: 10/21/2009 Referred to Senate committee. Status: Read twice and referred to the Committee on Small Business and Entrepreneurship.

Thanksgiving Thoughts

Thanksgiving has come and gone, and so has some of our stimulus for small business. Right now, lenders are working their "transitions" from stimulus loans, those with a 90% guarantee and no borrower fees, to the old loans, with a 75% guarantee and borrowers fees.

Of course, there is pending legislation to extend these programs for another year, and it is widely anticipated that it will pass. However, without passage now, lending will most certainly slow down even more than it has. It seems that the congress cannot multi-task very well, and that the healthcare bill has paralyzed them.

It seems that everyone forgot President Obama's comment supporting the raise to the $5 Million cap, and that capital access is not an issue as long as healthcare can be debated.

Let me say this: Healthcare will be a bigger problem if we don't get the capital markets fixed for small business. The only job engine in this country cannot exist without access to lending, and banks are still NOT LENDING to small business. Business startups, franchise startups and business resales all create and maintain jobs. If we continue to lose these businesses, we will all have to pick up the healthcare tab for these folks. Let's get people back to work, and capital access is the vehicle for job growth, so let's make sure it is workign properly.

Happy Thanksgiving to all, we have much tobe thankful for this year. With all of the trials and tribulations in business this year, my wife and kids have been amazingly supportive, and I am very thankful. We have our health, happiness and freedom. The USA is still the best place in the world to live, and fulfill your dreams.

IFA is working hard for us!

Attached are two letters that IFA had sent on our behalf to our legislators.








If you ever questioned whether your $365 Franpac donation was worth it, these types of letters should resoundingly answer your question.

Confusion & Potential Help/Disaster on Capitol Hill

What a week of information overload! First, President Obama comes out publicly in favor of raising the SBA cap to $5 Million from $2 Million. Remember, the last time President Obama championed small business, he said that TARP would be buying SBA debt and the secondary market would be healed. As of today, I do not believe that ONE loan has been sold on the secondary market with TARP funds. A lot of talk and no follow up. Now, at least 2 Bills are debated, one in the Senate and one in the House. They have some similarities, but are very different. As the "Blogger" here, I would like to enumerate what I believe needs to be done to stimulate SBA Lending. Things that can incent lenders to lend, not watch....

First, a given; Small Business is the engine that will restore the economy because it is where job creation begins. Second, the economy cannot rebound until people are working, and feel good about spending money. We will not get the consumer back until people are not unemployed or underemployed.

1. Increase the limits to $5MM with a guarantee of $4.5 Million for this fiscal year, with a 75% guarantee thereafter.
2. Eliminate borrowers and lenders fees on SBA loans with amortizations under 15 years (these are the loans that actually create jobs, not real estate refinances) or for all loans on business start ups.
3. Restore borrower fees on all loans with amortizations over 15 years and reduce the guarantee back to 75% today on these loans. The SBA is there to provide lending for businesses to stimulate the economy, and to create and maintain jobs. Real Estate loans can be made via the 504 program, or conventionally.
4. Provide a 100% guarantee on loans for business start ups for the first 3 years. Anyone with the guts to start a business in this economy deserves the opportunity to get a loan. With the government printing press going strong printing dollars, let's give some to folks that are entrepreneurial enough to take risk and create jobs.
5. Establish audit standards in concert with SBA lenders so that they have confidence in the guarantee. Eliminate the uncertainty over whether the guarantee will be upheld in the event of a default.
6. Eliminate collateral as a requirement for making SBA loans. The rules from the SBA are such that the guarantee is the collateral. Lenders, because of the lack of faith in the guarantee are requiring collateral to make SBA loans, sometimes wanting them to be FULLY collateralized. That is not the spirit of what the SBA mission is, and should not be a factor. If collateral is available, it should be pledged, but if it is not, the loan should be made if the other underwriting criteria are met.
7. Create incentives for banks to participate in SBA lending. Currently, the cap on SBA loans is about 6% interest. The market for conventional loans is higher. With a guarantee that is in doubt, and an interest rate that is below market, and cumbersome compliance, why should lenders participate? How about some tax credits for SBA lending? Use a carrot instead of a stick, it might actually work!

Now is the time, while we have a clean sheet of paper to make SBA lending the engine that it can be for job creation and real economic stimulus. By the way, all of the above mentioned changes are a drop in the bucket compared to what we are actually spending. All of SBA lending is less that 3% of the stimulus passed earlier this year, yet small business creates 90% of all new jobs. Sounds like a disconnect, doesn't it?

I welcome all comments! Please email me or post.

rfeldman@siegelfg.com

Finally, some good news from the White House

We have been preaching for almost a year now about capital access, arcane SBA rules, and what needs to happen to truly "stimulate" the economy. It seems as if perseverance may have actually begun to prevail, as President Obama will announce tomorrow his support for a raise in the SBA cap from $2 Million to $5 Million. This is one of the points that we have been preaching about for months!
http://boss.blogs.nytimes.com/2009/10/20/obama-to-announce-small-business-stimulus/?hp

Bernie, as the Government relations chair of the IBBA, and the rest of us in concert with the IFA have been fighting the fight, and this is win #2, as the goodwill issue is finally resolved. We are not done yet, as a number of bills are expected, and we need to make sure that the salient points are the ones addressed, not the Pork!

Kudos to the IFA government relations team, especially David French for his tireless efforts on behalf of small business. I am proud that we had a small hand in helping to make some real "CHANGE" happen in Washington!

I am writing this post from my deck at the Tradewinds resort in St. Pete, while attending the Murphy Business Brokerage convention. These folks really know how to make it happen in business brokerage!

Los Angeles IFA Super Sessions

We had a great couple of days in the Super Sessions. The panelists and speakers all covered very relevant, important and creative content. We talked about Social Networking, how to use it in franchise development, and best practices for the franchise development process. Kudos to the IFA staff for creating such great content and panelists (even though they picked me).... :)

Speaking of social networking, David French posted a link via Twitter this morning that I find to be completely on point and worthy of as much distribution as we can get: Meredith Whitney, Wall Street Journal stated:The Credit Crunch Continues
Taxpayer dollars have supported institutions that are 'too big to fail.'
Small business has been left out in the cold.
http://online.wsj.com/article/SB10001424052748704471504574445470989162030.html

On a social side, all of the regular franchise "conventional" social networkers have been hard at work, me included. The Standard Hotel Bar in LA is having a very good week. We enjoyed some excellent food and wine, cigars and conversation so far. It will certainly continue through the weekend as the West Coast Franchise Expo begins. Looking forward to speaking about Multi Unit franchise financing, and continuing the great fall Siegel Road Show.....

Quoted in Wall Street Journal online today!

Here is the link!

http://online.wsj.com/article/SB125348578905126173.html

Capitol Hill

What a week! 4 days in the nation's capital, lobbying with lawmakers, enjoying friendships (old and new), and smoking some great cigars. The IFA staff did a great job with the program, and the speakers. I was drinking George Will's Kool Aid. Logic and pragmatism should prevail!

Here's Where I think they are on our issues:
Card Check - There is something brewing, perhaps a compromise. Whatever it is, it won't address the fact that unions will not help small business.

Health Care Reform - They are over-complicating it. Why can't we all just join their plan? Why can't insurance companies write across state lines? Why can't plans be portable? No legislator could answer those questions for me.

Capital Access - They all want to hear more about our ideas to get lending started. They all acknowledge that banks are NOT lending to small business. Let's keep the pressure on! Full court press!

Then back to home office, and 2 days of Retrotax! Al was in and we made 4 presentations, and got 4 clients! Tax credits RULE!

Happy and Healthy New Year to all of my fellow Jewish friends out there!

Georgia on My Mind

Just spent almost 3 days in Atlanta, and I am amazed at how the folks in this town really get it. The franchise community is tight, and everybody seems to cooperate in sharing best practices. The only thing that makes me wonder about their judgment is that they asked someone like me to speak!

Thanks to all of those who met with me, and I look forward to creating some cutting edge franchise finance programs for all of you!

The Fall Season Begins

This morning, I flew to Atlanta to meet with clients and speak at the FBN meeting tomorrow. This trip is the beginning of a very busy travel season for me and the whole Siegel Team. In the next few months we will be presenting/speaking at many events. Here is a taste of the schedule:

IFA Public Affairs Conference 9/14-15 Wash DC
Franchise Update Leadership & Development 9/23-25 Chicago
IFA Super Session/ West Coast Franchise Expo 9/30-10/4 LA
Murphy Business Brokers Conference 10/20-24 Clearwater, FL
Franchise Times Restaurant Finance Show 11/7-11 Vegas baby!
Driven Brands Joint Convention 11/17-22 Punta Cana
IBBA Fall Conference 11/16-21 Reno

Bernie is busy re-writing the IBBA course on SBA finance with the revised guidance, and I am honing my powerpoint on lending and legislative issues.

Please find us at these conferences should you choose to attend.

Here is a link to a very interesting story on the "recovery" and consumer spending...
http://www.msnbc.msn.com/id/32737999/ns/business-stocks_and_economy

GREAT NEWS FROM WASHINGTON DC!

Twitter: RonaldFeldman

On September 2, 2009, the Small Business Administration announced a major revision to the Standard Operating Procedure ("SOP"), revising their prior guidance relative to the financing of goodwill in re-sale transactions. They effectively removed the previously enacted (March 1, 2009) hard "cap" on goodwill financing that was set at $250,000 or 50% of the loan amount, whichever was lower. This severely hampered the franchise resale market, hamstringing the ability for franchisees to sell their units to other franchisees or for franchisors to sell corporate units to new franchisees.

Highlights of the new guidance, announced yesterday and effective on October 1, 2009 provide for the following:

If the intangible amount is under $500,000, lenders may finance 100% of goodwill without restriction.

If the intangible amount is greater than $500,000, lenders may finance 100% of goodwill, provided that the purchaser injects 25% or more into the transaction as equity. This may include standby seller financing (2 year minimum) as a portion of the equity injection.

Additionally, language forcing lenders to explore seller financing on all transactions was stricken from the document. Lenders now have the flexibility to determine if seller financing is appropriate on a transaction by transaction basis.

If you have plenty of time to read the entire 388 page document, it can be found at: http://cts.vresp.com/c/?SiegelFinancialGroup/15694b8fab/bd75198ec7/3562844d7d

This welcome change demonstrates the important government relations role the International Franchise Association ("IFA") plays in Washington D.C. The Government Relations Team of the IFA acted immediately when we alerted them that the SBA had enacted the goodwill financing restrictions last March, asking that the change immediately be rescinded. The IFA's Government Relations Team (including David French and Jason Straczewski, organized meetings on Capitol Hill and testimony before the House Small Business Committee, together with email and letter writing campaigns to our legislators. The entire Government Relations team acted as leaders for our industry, and should be commended.

However, this issue is only one of many facing us in Washington. Once again, I would like to personally encourage each and every one of you to register and attend the IFA Public Affairs Conference (formerly Franchise Appreciation Day) on September 14-15 in Washington DC.
Click on this link to get more information: http://cts.vresp.com/c/?SiegelFinancialGroup/15694b8fab/bd75198ec7/eaaa982279

This event brings each and every one of us face to face with our lawmakers so we can voice our concerns over issues that affect our livelihood. If we do not act, we will not get help. The record of this administration speaks for itself, as it allocated all of 1/8000th of the stimulus funds to help small business! Our agenda does not end with capital access, the new Health Care Agenda and Card Check can significantly impact all of us, and the future tax implications of all of this spending will reach into our pockets for years to come.

Please make arrangements to make sure that your company is represented. Better yet, come yourself! There is no registration fee for this event, and you will be doing your civic duty as an American! The entire Siegel team will be represented there, and we look forward to seeing you in Washington!

About Siegel Financial Group
Known nationally as an expert on issues of finance in the franchising and intermediary market for transactions up to $10 Million, the Siegel Financial Group of companies continues to provide cutting edge counsel to the industries that it services. Today we serve some of the biggest and most respected brands in franchising, setting the bar for customer service and “getting deals done”.For additional information about Siegel Financial Group or an update on how current economic conditions are affecting franchising, contact Ron Feldman at 610-668-9780.

Could be Christmas today

How much fun life is when you are helping people!

This week I called three business friends whom Siegel Financial Group previously financed to let them know about RetroTax and the power of wage based tax credits.

While each had heard of every conceivable real estate tax abatement, none knew that the federal government had set aside billions of dollars for tax credits for businesses which employed workers from certain demographs or conducted business and employed workers in certain geographic zones.

Each either had worksites in a qualified zone or employed workers regularly who would qualify for the federal work opportunity tax credits.

All three are signing up for RetoTax to assist getting their tax credits off of the table and into their budgets. One was so excited that he said, "if this is really true, it is like Christmas today!"

Minneapolis

Wow, 70 degrees, no humidity and a nice breeze. What a great way for Minneapolis to greet me today. Had a great meeting with a franchisor, discussed our new suite of services and look forward to beginning a long relationship with them. Our SFE report proved its value in the dialogue, as the SBA data is flawed for this particular brand.

Looking forward to a great steak dinner at Manny's with my boys, a nice bottle of wine and cigars for all tonight....

Larry Kane Show

Got up REALLY early today, and finally was able to upload the video from the Larry Kane appearance earlier this month. Thanks to Comcast for their permission to post it.

http://www.youtube.com/watch?v=4bLCn551uaQ

Off to slog through 18 holes of wet golf! Off tomorrow to Minneapolis for the Faegre and Benson Summit. Look forward to connecting with colleagues and friends.

Validation!

The National Federation of Smmall Businesses came out today with data validating the facts that we have been preaching for months! Small business owners are scared, and sales are DOWN. Access to credit, scares over healthcare reform, and higher taxes have small business owners upset.

http://philadelphia.bizjournals.com/philadelphia/stories/2009/08/17/daily39.html?ed=2009-08-21&ana=e_du_pub

Have a great weekend!

Webinar results & Thoughts

Yesterday, Darrell Johnson www.frandata.com and I co-facilitated a webinar with Amit Pamecha from Franconnect for over 40 of Franconnect's clients. We discussed best practices and the current state of the economy and capital markets. It will be posted online in about a week at www.franchiseleadershipnetwork.com .

Nate showed me an interesting article in forbes outlining the new leadership in SBA lending. It seems that Wells Fargo has made it to #1 by REDUCING their SBA volume by 30%. CIT went from #1 to #16. http://www.forbes.com/2009/08/17/wellsfargo-banks-cit-sba-business-markets-loans.html

The government keeps telling us that things are getting better, but I do not see credit opening up to small business at all. That is unless you are borrowing against real estate.

Looking for some commentary out there! Post comments here or on the Siegel Financial Group Facebook group.

New Services Available to Franchisors

Siegel Financial Group Announces New Suite of Services to Aid Franchisors Reach Franchise Development Goals!
Franchise Finance Consulting Practice reacts to market conditions

BALA CYNWYD, PA – The current state of the financial markets have created a demand for services that franchisors can utilize to maximize their franchisees ability to obtain financing. These services, which include Item 19 creation and validation, the “Strategic FDD Expansion”, and franchise finance placement services all dovetail with Siegel’s expertise and experience in the market. Ronald Feldman, CEO stated, “Franchisors have been asking us to provide these services since the beginning of the lending crisis. These tools help to empower them in succeeding in their franchise development goals.” He added “We have purposely priced these services aggressively, with the hope that franchisors will appreciate our commitment to their success, especially during the current state of dysfunction of the financial markets.
Our new services include:

1. Item 19 Collaboration/Presentation
This service provides quantitative analysis of all available franchisor data in order to present an Item 19 in the franchisor FDD in a way that is acceptable and attractive to the lending community. SFG works in concert with franchisor counsel to make sure that all of the regulatory disclosures are within the comfort level of counsel. This outsourcing also provides third party validation to the Item 19.

2. Strategic FDD Expansion (“SFE”)
This report is used in conjunction with a FranData Bank Credit report (“BCR”), (or facsimile) to create a compelling case for lenders to finance the franchisor’s concept. The FDD has limited disclosure ability, and is highly regulated. By having lenders sign a Non-Disclosure Agreement (acceptable to franchisor counsel), better and more persuasive arguments can be made to the lender relative to the normal lender areas of concern.

3. New Franchisee Financing Services
Siegel can become the outsourced finance arm for a franchisor. The franchisor can engage SFG directly on all candidates that need financing, or refer candidates to SFG for services as needed. Siegel is extremely experienced supporting the goals of the franchisor, while making the process of obtaining funding as painless as possible.

4. Lender Relations
This ongoing monthly relationship allows franchisors, once they have obtained a SFE, to engage Siegel in outsourcing the job responsibilities associated with lender relations for franchisee development and expansion. This allows the franchisor to reserve valuable management time for operating the business, and allows this function to be handled by a nationally known finance company.

5. Existing Franchisee Financing
SFG will customize programs for remodels, reimaging, and expansion capital for its core client base. These programs will provide tools for franchisees to solve the finance conundrum that many face.

Nathan Greenberg, President added, “These are the services that we have been providing to our core clients since inception. We have been asked by the market to broaden our distribution, and we are responding. The credit markets have affected everyone in franchising, and we have the knowledge and tools to help navigate these troubled waters”.

About Siegel Financial Group
Founded in 1983, by Bernard Siegel, PhD as a business intermediary practice, Dr. Siegel quickly realized that financing was paramount in getting transactions closed. He formally founded Siegel Capital in 2002, and quickly expanded. In 2004, Ronald Feldman and Nathan Greenberg took over day to day management, and in 2008, acquired the company. Known nationally as an expert on issues of finance in the franchising and intermediary market for transactions up to $10 Million, the Siegel Financial Group of companies continues to provide cutting edge counsel to the industries that it services. Today we serve some of the biggest and most respected brands in franchising, setting the bar for customer service and “getting deals done”.
For additional information about Siegel Financial Group or an update on how current economic conditions are affecting franchising, contact Ron Feldman at 610-668-9780.
###

HELP FROM CAPITOL HILL!

Olympia Snowe introduces the "Next Step for Main Street Credit Availability Act of 2009" (S.1615)

This bill would help bolster credit availability for small business by:

• Increase the SBA 7(a) and 504 loan limits to $5 million. Increase the micro loan program limit to $50,000. Make it easier for those with existing SBA loans to refinance the remaining balance. Create an online clearing house thru which individuals can compare rates from lenders offering loans with an SBA guarantee.

These changes are a great start, but will not incent lenders to actually lend to small business! More change is needed, we must continue to lobby our legislators and make sure that we are the "squeaky wheel"!

To that effect, I would like to personally encourage each and every one of you to register and attend the IFA Public Affairs Conference (formerly Franchise Appreciation Day) on September 14-15 in Washington DC.


Click on this link to get more information: http://www.franchise.org/publicaffairs.aspx


This event brings each and every one of us face to face with our lawmakers so we can voice our concerns over issues that affect our livelihood. If we do not act, we will not get help. The record of this administration speaks for itself, as it allocated all of 1/8000th of the stimulus funds to help small business! Our agenda does not end with capital access, the new Health Care Agenda and Card Check can significantly impact all of us, and the future tax implications of all of this spending will reach into our pockets for years to come.

Please make arrangements to make sure that your company is represented. Better yet, come yourself! There is no registration fee for this event, and you will be doing your civic duty as an American! The entire Siegel team will be represented there, and we look forward to seeing you in Washington!