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.....