Blackwell Capital & Advisory

blackwellca — Wed, 12 Aug 2009 15:59:55 +0000

Blackwell Capital & Advisory offers first-of-its kind, loan facility financing solution for small businesses

blackwellca — Fri, 31 Jul 2009 12:58:05 +0000

Blackwell Capital & Advisory offers first-of-its kind, loan facility financing solution for small businesses, announced today that it is open for business and accepting loan applications. The company has entered into an agreement with a lender to offer business loans up to $100,000 to small businesses.

Atlanta, GA (PRWEB) July 31, 2009 — Blackwell Capital & Advisory offers first-of-its kind, loan facility financing solution for small businesses, announced today that it is open for business and accepting loan applications. The company has entered into an agreement with a lender to offer business loans up to $100,000 to small businesses. The loans are based on business performance, rather than the personal credit history of the business owner. Businesses are not required to pledge assets like traditional types of loans to receive financing. Blackwell Capital & Advisory is working to help business keep their doors open, by bringing capital to main street, for businesses that may not have access traditional bank financing. To see full story please click here - http://www.prweb.com/releases/2009/07/prweb2698324.htm

Blackwell Capital & Advisory offers first-of-its kind, loan facility financing solution for small businesses.

blackwellca — Fri, 31 Jul 2009 12:54:39 +0000

Main Street’s soaring sour loans

blackwellca — Mon, 27 Jul 2009 13:08:45 +0000

AP INVESTIGATION: Main Street’s soaring sour loans

By FRANK BASS and RITA BEAMISH (AP) – 9 hours ago

REDWOOD CITY, Calif. — As the effects of the economic collapse began pouring down Main Street, the government last year was left holding a record $2.1 billion in write-offs of small business loans it had guaranteed. Officials expect the number of defaults to rise as the nation continues to climb out of the recession.

Records obtained under the federal Freedom of Information Act show the public is paying to offset bank losses on small business loans across the country, from a convenience story in the tiny Canadian border town of Houlton, Maine, to a graphic arts design company on the island of Hawaii, more than 5,000 miles away.

Despite having loans written off, little companies such as Caffe Sportivo, an espresso shop and small gym in Redwood City, Calif., are barely scraping by.

“I just couldn’t make any payments. I was barely making rent or payroll,” owner Chris Sakelarios said on a recent afternoon when her cafe stood empty except for two patrons who read as they sipped coffee. “The same as everyone else. We’re in a hovering pattern.”

It’s a sign that even as record profits re-emerge on Wall Street, thanks to massive government loans and guarantees for banks deemed too big to fail, the pain on Main Street is as profound as it’s been in half a century. The companies that were not too big to fail are failing.

Their plight is a shift from previous recessions when small business bounced back ahead of big employers, said Todd McCracken, president of the lobby group National Small Business Association.

“This could be the first economic recovery we’ve seen in a long time that hits small business the hardest the longest,” he said.

The Small Business Administration purchased $2.1 billion in bad loans from lenders last year. Agency officials say it’s likely that this year will see another high as the recession nears the two-year mark.

“It’s frustrating when (banks) are getting bailed out for bad decisions they made, that there isn’t more assistance for the small business,” said Eric Geedey, who manages Caffe Sportivo for Sakelarios.

Sakelarios obtained a $20,000 SBA loan from Union Bank in late 2007 to start her business when the economic outlook was brighter on the affluent San Franciso Peninsula. Within a year, however, she was scraping by with the help of a landlord and vendors who let her adjust payments. She has reduced the hours of her seven employees and relies on her brother and a friend to help keep the doors open on weekends. The balance of the loan was written off in early January.

In addition to being dogged by bad credit, the cafe will have to report the loan charge-off as taxable income, Geedey said.

Sakelarios isn’t the only recession victim and she won’t be the last.

SBA loan defaults generally occur in two stages. The first is when the bank decides it won’t get its money back and asks the government for the guaranteed portion of the loan. In the second, the government decides it won’t get any more collateral or money from the borrower.

Years can elapse between the time that the borrower stops paying and the government writes off the loan.

In 2008, for example, the government concluded it wouldn’t be able to recover $1.3 billion in defaulted bank loans it had guaranteed. Many loans were part of a backlog, according to SBA officials.

But an AP analysis found that the time between loan approvals and loan defaults is narrowing. According to the analysis:

_More than $235 million in restaurant loans have been charged off since 2007. The 2,586 restaurant charge-offs make up the largest number of defaulted loans, according to the SBA. More than 150 loans made to Quizno’s franchises — worth nearly $15.5 million — have been written off since 2007.

_The Gulf Coast fishing industry, battered by two major hurricanes in 2005, has been hit especially hard. Half of the 10 cities with the highest industry-specific write-offs are in Biloxi, Miss.; New Orleans; Ocean Springs, Miss.; Lafayette, La.; and Abbeville, La. All told, the shellfish fishing industry had 45 loans charged off, at a total cost of $19.5 million.

_The banks making the loans have also been hit hard by the recession. Bank of America Corp., which has received $52.5 billion in government aid, has had nearly 7,000 loans worth $238 million charged off since 2007. More than 660 loans worth $174 million have been charged off by CIT Group Inc., a major commercial lender forced to turn to bondholders in an effort to try to avoid bankruptcy protection after the government refused to save the company.

JPMorgan Chase & Co., which repaid $25 billion in taxpayer loans last month, has written off nearly 2,300 loans worth $117 million.

“I have never seen it as rough as it is right now,” said Scott Hauge, president of Small Business California, a business advocacy group.

Small businesses account for half of all private-sector workers and have created roughly half of the nation’s jobs over the past decade. They received some help from the $787 billion federal stimulus package in February, including higher microlending amounts and federal loan guarantees. Congress also authorized the U.S. Treasury to purchase $15 billion in pooled loans to encourage lenders to provide money to small companies. The SBA recently announced it will guarantee short-term bank loans to help small businesses pay off existing bills.

The White House has floated a proposal to take money from a $700 billion bailout of the financial system and provide small companies with working capital, allowing them to add inventory and employees. If it happens, the White House said, help might arrive by fall.

That’s too late for thousands of defunct companies with shuttered windows, disconnected phones and broken dreams.

Diego Garcia’s soccer supply store in the modest Northern California city of Richmond has shrunk to one small location after Garcia was forced to close his two larger stores last year. Garcia started the business after launching a youth program and soccer league in gang-ridden Richmond. He had turned away from his own gang lifestyle after being shot in the chest at age 18.

Garcia expanded fast, never imagining how quickly his booming business would decline. When he couldn’t pay up, his bank wrote off nearly all of his $45,000 loan. He lost rental property to foreclosure at the same time.

“It’s too much of a loss,” he said. “We had to get loans to get bigger. Then everything went the opposite way.”

Eric Zarnikow, SBA’s associate administrator for capital access, said the bad numbers probably will continue to rise as the agency receives charged-off loans in the future from defaults occurring now.

Sakelarios, a breast cancer survivor without health insurance, tries to stay optimistic.

“Anytime anyone asks me how it’s going, I say the same thing. It’s going really good.”

On the Net:

Small Business Administration,: http://www.sba.gov

National Small Business Association,: http://www.nsba.biz/

Blackell Capital & Advisory

www.blackwellca.com

Bank of America Drastically Cut Small Business Loans after Bailout

blackwellca — Mon, 27 Jul 2009 13:04:01 +0000

According to data compiled by the Service Employees International Union (SEIU), Bank of America isn’t quite the friend of small business it claims to be. The overwhelming majority of loans made through the Small Business Administration are called SBA 7(a) loans, and they are used to finance operating expenses. During FY 2007 (October 2006-September 2007), BofA gave out 10,878 SBA 7(a) loans worth $336 million. But during the 12-month period between May 2008 and April 2009, those numbers plummeted to just 484 loans worth $20 million. During this same period, Bank of America received $52.5 billion in taxpayer bailout funds.

Despite being named the top lender by the Small Business Administration 10 years in a row, BofA wasn’t all that generous during that time. The ranking was based on total loans issued, which belied the fact BofA lent considerably less money to small businesses than many other banks. In FY 2008, the average SBA 7(a) loan was $182,492, but BofA’s average loan was only $31,032. The real #1 lender for each of the last nine years was CIT Small Business Lending Corporation.

The SEIU also notes in its report that the bank has shifted its lending opportunities for small businesses by giving out more “Express loans,” which are smaller and have a higher rate of default, and credit card loans. According to the report, BofA has even hampered the ability of smaller banks to resume lending by demanding that banks that received TARP money pay off the credit lines they had with Bank of America.

-David Wallechinsky, Noel Brinkerhoff

Small Business Lending at Bank of America (Service Employees International Union) (PDF)

SBA’s Stimulus Lending is Tainted by Political Meddling

blackwellca — Thu, 23 Jul 2009 13:52:32 +0000

Jerry Chautin

Business journalist

I tried to make my tweets coherent and meaningful. So I watched the more experienced Twitter practitioners tweet information about small-business lending, the U.S. Small Business Administration and the importance of forming relationships with bankers.

Small-business owners, bankers and journalists attended the virtual gathering called, “Intuit Money Matters Town Hall Series.” Our objective was to help each other understand what it takes for small businesses to snag the funding they need to survive the downturn and thrive as the economy improves.

The group agreed that forming a relationship with your banker is imperative.

“Even if a loan/line of credit isn’t needed right now, who knows what may happen down the road? Form the relationship now,” Stacy Kildal tweeted in 120 characters, staying within the 140-character limitation allowed by Twitter. She is the owner of Advanced QB ProAdvisor.

Phil Bryan, with Massachusetts-based Metro Credit Union responded in 118 characters, “Relationships still play a big role. If you always pay your CU 1st they are more likely to stand by you in tough times.”

The pace picked up and I bumbled in with, “Start banking relationship with a depost and daily schoozing — no mail in deposting.”

How embarrassing!

I entered the thread with a bunch of hurried and misspelled gibberish. What I meant to write is you should open a small checking or savings account as a way to start your banking relationship. Furthermore, instead of making deposits into the drive-through window, go inside to schmooze with banking officers.

In most cases you should seek out banks that make lots of SBA’s basic 7(a) loans. Community Banks are the best small-business lenders and their presidents are accessible. He or she is visible behind a glass partition or on the banking floor helping the tellers and customers.

So introduce yourself and form a relationship. Get an introduction to the chief loan-officer and find out how the loan committee makes its decisions. Ask how business loans are underwritten, what collateral is required and learn about the credit qualifications you need to pass muster.

Back at the Twitter meeting, Gordon Gerwig, a California-based SBA lender said, “Cash flow to service debt is a must, great collateral won’t make up for lack of cash flow in the SBA world.”

He was referring to the business’s net income available to make debt service payments.

Lenders want to see adequate cash flow to make the loan payments with a cushion left over in case your sales are lower or expenses higher than projected. A minimum cushion of 25 percent is typical.

The Twitter participants discussed SBA’s “America’s Recovery Capital Loan Program,” known as “ARC.” It is a temporary rescue loan for struggling businesses with cash flow problems.

Viable businesses can borrow up to $35,000 to make their existing loan payments and reduce their debt, including for credit cards and capital leases. What is more, SBA pays all the interest and loans fees. Borrowers’ principal payments begin 12 months later.

But most banks refuse to participate. Some lenders reserve ARC for their existing borrowers.

A venture capitalist from Miami Beach, Fla. tweeted, “Not seeing ARC for non-clients; not seeing ARC for deposit-only clients; only for existing clients with same-bank debt”.

On my promise of anonymity, a regional SBA official told me that the agency had not been adequately prepared to launch ARC. He says, “No time was allowed to work out any kinks before it was launched agency wide.”

In other words, the few banks that make ARC loans are trying to save their own defaulting borrowers. One exception is Wachovia Bank. It is accepting applications from everyone through its ARC loan center in California. Call 1-800-877-1722 to get your application.

Responding to their constituents, politicians with half-baked ideas pressured SBA to launch small-business rescue loans. The result is a flawed ARC program. On my promise of anonymity, an official with SBA told me that the agency had not been adequately prepared to launch ARC. He said, “No time was allowed to work out any kinks before it was launched agency wide.”

On the other hand, SBA’s stalwart program, basic 7(a), by 50 percent from last quarter. In part it is because the agency temporarily increased its loan guarantee to 90 percent from 75 percent and eliminated most of the borrower’s fees. As a result community-banks are beginning to lend again. The maximum 7(a) loan is $2 million.

Additionally, the credit markets are improving and the banks can sell the guaranteed portion of their SBA loans at premiums closer to what they got before the financial meltdown.

Better still, the higher guaranty provides them with additional leverage. As a result, they book more immediate-income than they did in good times.

For more information about SBA’s stimulus initiatives, go to sba.gov/recovery/index.html.

Jerry Chautin is a volunteer SCORE business counselor, business columnist and SBA’s 2006 national “Journalist of the Year” award winner, tenonline.org/sref/jc1bio.html. He is a former entrepreneur, commercial mortgage banker and business lender.

www.blackwellca.com

New jobless claims rise to 554K, total rolls fall

blackwellca — Thu, 23 Jul 2009 13:07:47 +0000

WASHINGTON -The number of newly laid-off workers seeking jobless benefits rose last week, though the government said its report again was distorted by the timing of auto plant shutdowns.

Unemployment insurance claims have declined steadily since the spring, but most private economists and the Federal Reserve expect jobs to remain scarce and the unemployment rate to top 10 percent by year-end.

The Labor Department said Thursday that its tally of initial claims for unemployment insurance rose by 30,000 to a seasonally adjusted 554,000. That was above analysts’ estimates of 550,000.

The increase follows two straight weeks of sharp drops largely because automakers didn’t lay off as many workers as expected in early July. General Motors and Chrysler temporarily shut down many of their plants earlier than usual this year, in May and June, after filing for bankruptcy protection and restructuring their companies.

A department analyst said the government’s seasonal adjustment process expected claims to drop sharply last week, after the normal pattern of auto layoffs was complete. But that didn’t happen, causing seasonally-adjusted claims to rise.

Weekly claims remain far above the 300,000 to 350,000 that analysts say is consistent with a healthy economy. New claims last fell below 300,000 in early 2007. The lowest level this year was 488,000 for the week ended Jan. 3.

The total jobless benefit rolls, meanwhile, fell by a more-than-expected 88,000 to 6.2 million, the lowest level since mid-April. And the four-week moving average of claims, which normally smooths out some volatility, fell by 19,000 to 566,000.

But the number of people on emergency extended state and federal programs continued to rise. Unemployment insurance recipients can receive up to 53 weeks of additional benefits from the emergency programs, on top of the 26 weeks typically provided by the states.

When the extended benefit rolls are included, more than 9.1 million people received jobless benefits for the week of July 4, the latest data available.

The recession, which started in December 2007 and is the longest since World War II, has eliminated a net total of 6.5 million jobs. The unemployment rate in June rose to 9.5 percent, a 26-year high.

More job cuts were announced this week, many by major airlines.

Houston-based Continental Airlines Inc. reported a quarterly loss of $213 million and said it would slash 1,700 more jobs on top of 1,200 already announced. Southwest Airlines Co., which has never laid off workers, announced that 1,400 employees — about 4 percent of its work force — took offers of cash and travel benefits to leave the Dallas-based company.

Among the states, New York reported the largest increase in initial claims, with 12,504, which it attributed to higher layoffs in the construction and transportation industries. The next largest increases were reported by North Carolina, Florida, Missouri and Tennessee. The state data lags initial claims by one week.

Michigan reported the largest decrease, with 6,648, which it attributed to fewer layoffs in most industries. Massachusetts, New Jersey, Indiana and California reported the next largest drops.

2009-07-23 09:02:45

NSBA Report Shows Small Businesses Struggling

blackwellca — Wed, 22 Jul 2009 21:49:14 +0000

NSBA today released the 2009 Mid-Year Economic Report which illustrates a small-business community barely hanging on in the midst of the worst economic downturn since the Great Depression. According to the report, 94 percent of small businesses surveyed said the national economy today is worse off than five years ago, and those who think the economy is doing much worse jumped from 64 percent in December 2008 to 75 percent in July 2009.

Although there was a slight increase in the number of small businesses who are anticipating economic growth, and a decrease in those anticipating a recession in the coming 12 months, these changes are more likely a reflection of the dismal position in which many entrepreneurs find themselves today, and the feeling that they’ve hit the bottom with no place to go but up.

“Nearly half of small businesses, up from a third six months ago, are not confident about the future of their own business,” stated NSBA President Todd O. McCracken. “The ongoing erosion of confidence from traditionally up-beat entrepreneurs is a wakeup call to lawmakers that small business may not be able to tread water much longer.”

The report details the ongoing difficulty small businesses are facing as three key indicators—revenues, profits and employee size—all declined between December 2008 and July 2009. The number of small businesses hiring new employees in the past 12 months dropped from 18 percent in December to just nine percent in July. Revenues and profits took an even bigger hit with the majority (62 percent) experiencing a decrease in revenues, and even more (66 percent) reporting a decrease in profits. The one positive: small businesses projected less drastic decreases in job growth for the coming 12 months.

Access to capital continues to be a major issue, with 80 percent of small-business owners negatively impacted by the credit crunch—up from 67 percent one year ago. Sixty-eight percent reported worsening terms on their credit cards and 38 percent were subject to a decrease on their lines of credit or credit cards. There was, however, an increase in the number of small-business owners who used a traditional bank loan in the last 12 months. While a positive indicator that bank loans are an option for some small businesses, this increase also reflects the fact that more businesses are turning to outside sources of financing as the difficult economy has forced them to use up business savings and earnings—making access to affordable capital all the more important.

“We’re struggling. Despite several economic stimulus packages and lots of talk, only three percent of small businesses reported a positive impact of the stimulus bills on their business,” stated Keith Ashmus, NSBA Chair and co-founding partner at Frantz Ward LLP, Cleveland, Ohio. “America’s small businesses need and deserve better.”

Please click here to view the full report.

Source National Small Business Association

www.blackwellca.com

Blackwell Capital & Advisory

CIT Pursuing Financing Alternatives– Through Investors Amid Tight Credit Markets

blackwellca — Fri, 17 Jul 2009 11:28:54 +0000

CIT management announced that its Board of Directors and management, in consultation with their advisors, are continuing to evaluate alternatives to improve the Company’s liquidity. CIT is in discussions with potential lenders to secure financing. The Company is continuing to serve customers. CIT appreciates the strong support it has received from many of its 1 million small business and middle market customers, industry associations and dedicated employees. NEW YORK–(BUSINESS WIRE)–CIT Group Inc. (NYSE: CIT).

According to Allibaba.com -Many of CIT Group Inc’s largest bondholders are holding an emergency conference call on Thursday afternoon to discuss their options, as the large lender to small and mid-sized businesses teeters on the brink of collapse, a person familiar with the matter said. About 10 to 15 bondholders, each with at least $500 million of exposure, are participating in the call. Among the participants is Pacific Investment Management Co, the unit of German insurer Allianz SE led by prominent bond fund manager Bill Gross, the person said. The person requested anonymity because the conference call is not open to the public.

According to Pierre Paulden, Linda Shen and Caroline Salas at Bloomberg News ,CIT Group Inc. bondholders were holding calls yesterday to discuss whether to swap some of their fixed-rate securities for stock in the company to help reduce its debt, according to a person familiar with the situation.

CIT late Wednesday said talks with the government to bail out the New York-based company have ended. Its shares fell 75 percent on Thursday and its bond prices also plummeted.

CIT stock fell 75 percent yesterday amid a possible bankruptcy filing, which likely would wipe out the bond holders.

CIT is “continuing to evaluate alternatives,” the company said in a statement.

Pacific Investment Management Co., CIT’s largest bondholder based on regulatory filings, hosted a conference telephone call, and debt owners are considering hiring financial and legal advisers, said the person, who declined to be identified because the discussions are private. CIT, a troubled lender to small- and medium-sized business across a broad swath of the U.S. economy, has not yet proposed an exchange offer.

CIT is running short of cash and may need as much as $6 billion to avoid filing for bankruptcy protection, after the federal government on Wednesday declined to give the firm a second bailout, CreditSights Inc. analysts said.

CIT, which has reported $3 billion of losses in the last eight quarters, received $2.33 billion in funds from the U.S. Treasury in December and hasn’t been given access to the Federal Deposit Insurance Corp.’s debt-guarantee program.

“CIT indicated that it needs at least $2 billion of rescue financing in the next 24 hours or it would likely file” for bankruptcy, CreditSights analysts Adam Steer, David Hendler and Pri De Silva wrote in a report. “We believe the figure is in the range of $4 to $6 billion-plus, making outside capital sources shy away.”

The company’s shares fell $1.23 yesterday to close at 41 cents on the New York Stock Exchange.

CIT’s $1 billion in floating-rate bonds that mature next month fell 22.5 cents to 61.5 cents on the dollar, according to data from Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

Credit Rating Cut Fitch Ratings slashed CIT’s credit rating seven grades to C yesterday, saying in a report that “default of some kind appears imminent or inevitable.”

If CIT fails, the effect would be felt almost immediately by retailers that are about to stock up on inventory for back-to-school shopping, Al Ferrara, head of the retail practice at accounting and consulting firm BDO Seidman L.L.P. said yesterday. CIT lends to many retailers so they can buy their goods.

David Adams, Blackwell Capital & Advisory

www.blackwellca.com

CIT’s Reach

A select list of the industries to which CIT Group provides loans and other financial services.

Aerospace

Brodacasting

Energy

Entertainment

Gaming

Healthcare

Information services

Publishing

Retailing

Security

Sports

Transportation

SOURCE: CIT Group Inc.

CIT’s Future Fades to the dark as its Peril Grows –Government talk’s end – Bankruptcy looms

blackwellca — Wed, 15 Jul 2009 23:56:29 +0000

The struggling commercial lender said its discussions with government agencies have ended and that its board is evaluating alternatives for the company, which is facing a worsening liquidity crisis after its customers drew down hundreds of millions of dollars from their credit lines.

With CIT hanging in the balance, faced with limited alternatives, amid possible bankruptcy – will its customers, mainly small businesses, would continue to have access to credit via CIT or be forced to find other sources of liquidity in a tight market.

The commercial lender said in a statement that its “directors and management, in consultation with its advisers, are evaluating alternatives” — which presumably include a possible bankruptcy filing. CIT said over the weekend that it had retained the law firm Skadden Arps, a bankruptcy specialist, as an adviser.

If it were to go bankrupt, it would join Lehman Brothers Holdings Inc and Washington Mutual Inc among large U.S. financial services companies to collapse since the credit crisis accelerated last September

Earlier Wednesday afternoon, trading in CIT’s shares was halted on the New York Stock Exchange because news was pending. The trading halt spurred speculation that the New York-based company was close to an agreement with the government on an assistance package.

But CIT later announced that “it has been advised that there is no appreciable likelihood of additional government support being provided over the near term.”

Representatives from the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corporation had been discussing whether to provide additional federal aid to bail out CIT, whose failure could affect hundreds of thousands of small businesses that depend on it for loans.

CIT had sought to gain access to a government program that would have backed its debt, after a previous $2.33 billion infusion of taxpayer money failed to shore up its financial health.

CIT’s shares rose 26 cents on Tuesday, or 19.3 percent, to $1.61 on investor hopes that the government would bail out the company. The stock was last traded at $1.64 on Wednesday before it was halted.

President Obama was briefed on CIT’s difficulties, the White House spokesman, Robert Gibbs, said earlier Wednesday, according to The Associated Press. But Mr. Gibbs declined to discuss Mr. Obama’s briefing and referred questions to the Treasury Department.

David Adams, Blackwell Capital & Advisory

www.blackwellca.com

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