President Barak Obama has proposed a wholesale reorganization of several
 government agencies that deal with various aspects of business and trade. The plan would merge business functions of the Commerce Department with the Export-Import Bank, the Office of the U.S. Trade Representative, the Overseas Private Investment Corporation, the Small Business Administration and the Trade and Development Agency. The idea has received both approval and disapproval from members of Congress and business representatives.

“Given the president’s record of growing government, we’re interested to learn whether this proposal represents actual relief for American businesses or just the appearance of it.”

Brendan Buck, Spokesman for House Speaker John Boehner

Obama insists that the move would help business by reducing the number of separate agencies they might deal with. This was echoed by House Speaker John Boehner, whose spokesman Brendan Buck said, “Eliminating duplicative programs and making the federal government more simple, streamlined and business-friendly is always an idea worth exploring.” And on the surface reducing the size of the federal government would seem to be a good idea.

On the other hand, many in Congress are skeptical of one or more elements of the plan. Even Buck went on to say, “Given the president’s record of growing government, we’re interested to learn whether this proposal represents actual relief for American businesses or just the appearance of it.” Some Democrats also expressed concern, particularly for Obama’s request for an “up or down” vote within 90 days.

According to a Wall Street Journal report (“President Barak Obama Proposes Merging Agencies”), Obama “requested that Congress guarantee an up-or-down vote within 90 days on any consolidation he proposes that would save money and reduce the size of government.” Many in both parties will be hesitant to give him that kind of power. As a first step, Obama has already indicated that he will make the head of the Small Business Administration a Cabinet post, a move that does not require Congressional approval.

The President insists that this plan will save $3 billion over ten years, in part through cutting 1000-2000 jobs through attrition. But seriously, how big a dent is this going to the multi-trilliion dollar deficit we have? And is this truly in the best interest of business and the country? According to an article in Bloomberg (“Obama’s Plan for Reorganizing Agencies Hits Skepticism from Lawmakers”), there is concern that the consolidation would actually hurt programs that are currently successful, such as the SBA loan guarantee program and the U.S. Trade Representative’s Office.

In a joint statement, Democrat Senate Finance Committee Chairman Max Baucus and Republican House Ways and Means Committee Chairman Dave Camp said, “Taking USTR, one of the most efficient agencies that is a model of how government can and should work, and making it just another corner of a new bureaucratic behemoth would hurt American exports and hinder American job creation.”

I fear that this move would give us the type of preference-based lending that led to the real estate crash.

My personal opinion is that this move is entirely political, with little real savings, and will result in a more intrusive bureaucracy with many of the unintended consequences such moves have. If someone with business savvy were to look into this restructuring plan and propose something that was ostensibly more effective, I might give them a tip of the hat. The problem is, we have these proposals coming from an administration that has shown itself to be the the direct opposite of “business savvy.”

My greatest concern, particularly with the SBA, is a return to the type of policies we had during the Jimmy Carter era. During that time period, the SBA made direct loans based on government guidelines, resulting in a 40 percent loss rate. I fear that this move would give us the type of preference-based lending that led to the real estate crash. Do we really need more lending decisions based on race, gender, zip code, or whatever buys the most votes?

Remember that these are the same people who are in the process of setting up the Obama Care nightmare, the horribly costly job-killing regulations of the EPA and the many equally intrusive attempts by the Federal government to get involved in the private sector. Imagine Solyndra-like debacles, but with the SBA’s $30 billion in guaranty authority. When you have a group of politically-motivated bureaucrats with no business sense or experience trying to “streamline” perfectly good agencies (and we have so few of these as it is), well, I see this as ending badly.

For the last 32 years I have seen attempts to restructure these agencies and nothing came of it. The last time someone did something to help the SBA, Reagan got this agency out of direct loans, with the 40 percent loss rate, and into a bank guaranty program where the losses were as low as 2 percent. From what I can see, the current proposal for rearranging these agencies is going to be about as effective as changing the napkin settings at the tables as the HMS Titanic settled under the waves.

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 2,500 businesses acquire over a billion dollars in loans. He can be contacted through CraigGFrancis.com, SBALoanStore.com, on LinkedIn, or at 888-666-9722.

In a recent interview on Fox Business News’ Willis Report, Citigroup Head of Small Business Banking Raj Seshadri spoke with Gerri Willis on the company’s pledge to lend $24 billion to small businesses through 2013. It was an interesting conversation, with Ms. Seshadri explaining Citi’s commitment to helping small businesses grow in order to stimulate the economy. Unfortunately, the interview was long on generics and short on specifics, especially when Ms. Willis attempted to pin Ms. Seshadri down on exactly what Citibank was going to do to help small businesses.

As we have seen from other large banks, the definition of “small” is about as exact as was Bill Clinton’s definition of “is.”

The interview began with Ms. Willis, whose program focuses on consumer and personal finance issues, explaining that Citigroup had pledged to lend $7 billion in 2011, $8 billion in 2012 and $9 billion in 2013 to small businesses. What was never discussed was Citigroup’s definition of a “small business.” As we have seen from other large banks, the definition of “small” is about as exact as was Bill Clinton’s definition of “is.” The importance here is that businesses at the high end of “small” are often much closer to Mid-size than to what most people consider as a true “small” business. With a larger business comes more relative financial stability, which is much more attractive to large banks who are under strong scrutiny over “risky” loans. However, this does not help the real small businesses that have traditionally been the engine of economic recovery.

One thing that concerned me about the interview was Ms. Seshadri’s seeming reluctance to give any exact details and to instead speak in platitudes. When asked why Citigroup has pledged the $24 billion, she replied, “We are very committed to small businesses. They are the core of the U.S. economy.” Ms Seshadri then went on to talk about serving business owners “holistically” - whatever that might mean. Ms. Willis may have been on the money later when, in response to Ms. Seshadri’s use again of “holistically,” stated, “You probably want every piece of their business, right?”

At another point in the interview, Ms. Willis shared some statistics from a recent National Federation of Independent Businesses survey that indicated that 11% of business owners feel loans are more difficult to get and that 89.3% felt credit standards had become too stringent. When asked for her response to the criticism, Ms. Seshadri said that “might have been true a couple years ago,” and then stated that Citibank was “very actively lending today.” However, once again specifics were lacking. Saying that they “leverage all the programs out there” in order to “get to ‘yes’ to as many business owners as we can,” there was little to her reply. She also seemed to have conveniently ignored the fact that this was from a recent poll.

Near the end of the interview, Ms. Willis asks Ms. Seshadri about the business owners who are coming to Citibank and whether they seem to be in better shape. The response is surprising to me as someone who works with small business owners on a regular basis. Ms. Seshadri says that “eight out of ten business owners say that they are healthy.” I’m not certain where she is getting her numbers, but I can assure you that it is nowhere near that positive. Yes, the business owners who have survived the Recession are in better shape than those who did not, but are they “healthy”? Or are they just telling the banker they are healthy in order to improve the chance of being approved for a loan?

There was one point that Ms. Willis seemed to have hit a sensitive topic, when she asked her guest if Citibank had “relaxed” the terms of loans compared to the height of the Recession. Ms. Seshadri responded that “as a lender the term ‘relaxed’ always makes me nervous.” She then repeats her platitude about trying to get to “yes” with more businesses. I, personally, would like to have seen Ms. Willis follow this up more aggressively, but instead she soft-balled the next question, asking how business owners get to the “yes” and allowing Ms. Seshadri to turn her answer into a pitch to visit a local Citibank branch.

Overall, this interview did not break any new ground or provide business owners with any reassurances about their chance of being approved for a loan. Ms. Seshadri’s comments about trying to get to “yes” for more businesses does not ensure that it will happen. When she says that Citibank has “made if much easier and much simpler for the customer to apply,” that does not necessarily mean that approval will be easier or simpler, just the paperwork. And, as I explained in a previous post, there are requirements banks have to go through on any loan, particularly SBA backed loans. Personally, I have not seen one single Citibank loan approved to any of my clients in the last three years. Not scientific, I know, but not a rousing endorsement, either.

The fact remains that businesses need to be able to put together loan applications that thoroughly detail their strengths and minimize any weaknesses they may have. Banks have not “relaxed” their standards appreciably, and that continues to impact small businesses and their ability to expand and create jobs - the jobs the economy needs to get back on track. We do not need to return to the days of lending to anyone with a pulse, but businesses that have survived the economic meltdown need to be rewarded for that, not punished because their numbers are not good enough.

If you are looking to start 2012 off by expanding your business and would like an evaluation of your loan opportunities, please contact me. I have over 30 years of experience in the industry and have helped over 2000 businesses with more than $1 billion in funding. I can provide an honest evaluation of your situation and help you to move forward in the most efficient manner. If you are a restaurant owner looking to expand, or if you are considering purchasing an existing restaurant, please view the special video report on this site.

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.

The numbers are in, the “winners” have been chosen, and in this case there doesn’t even seem to be much left to shout about. After the usual hype and ballyhoo, President Obama’s much vaunted Small Business Lending Fund has ended with what Thomas K. Brown described in iStockAnalyst.com as “a thud.” Out of a total of $30 billion dedicated to helping community banks make loans to local small businesses, only about $4 billion was actually disbursed to “qualified” institutions.

Many banks that applied said that they had to deal with very confusing guidelines on what the Treasury Department wanted. Then, once they had waded through the paperwork, most of them were still declined

When the program was rolled out, it was touted as a way to get banks to invest in small business - traditionally the engine of economic recovery. The SBLF would provide qualified community banks with funding at rates as low as 1% if certain benchmarks were reached in lending to small businesses. One of the main problems, however, was the very issue of what made a bank “qualified.” Many banks that applied said that they had to deal with very confusing guidelines on what the Treasury Department wanted. Then, once they had waded through the paperwork, most of them were still declined - even banks that had been judged “well-capitalized” according to Lawrence Kaplan of Paul Hastings Janofsky & Walker LLP in an article in Bloomberg.

According to a Fox Business report, there are approximately 7400 lenders that fit the Small Business Jobs Act’s requirement of less than $10 billion in assets. Out of that number, only 933 actually applied for funding through the SBLF - for a total of $11.8 billion of the $30 billion available.By the time federal regulators and Treasury officials had finished, only 332 were actually approved for a total of $4.3 billion, about a 36% rate of approval. As late as three weeks before the program ended on September 27, the Treasury had declined 59% of all applications.

So what did we get for all the effort? On the positive side, some money has gone out to small businesses through the SBLF program. According to Bloomberg and Fox Business, banks such as Seacoast Commerce Bank in Chula Vista, Calif., and Bank of Montana in Missoula, Mont., plan to provide local businesses with needed funding. This is important, as banks that receive SBLF money are required to show increases in their small business lending. An increase in 10% in lending would make the bank eligible for a 1% interest rate on the funds received. A failure to increase loans would result in a higher rate, up to a 9% maximum.

However, it is not clear that the increased money will actually be going to new customers. In the Bloomberg article, John Dalby of Redwood Capital Bancorp of Eureka, Calif., admitted, “We met our 10 percent target and expect to do more, but, frankly, a lot of the customers we get we steal from the others.” In other cases, the new loans banks made “ are probably going to be refinancing the loans that were made by other institutions,” said First Federal Bank of Florida (Lake City) CEO Keith Leibfried in Bloomberg.

Even more distressing is the fact that 89 of the first 191 banks approved used at least a portion of the money to pay back funds received in the TARP bailout. So the government in effect handed out money it had to borrow so banks could pay back money they had borrowed from the government in the first place. This does not seem like a wise use of money, borrowed or otherwise.

Some economists and industry members insist that a large part of the overall problem is that “credit-worthy” businesses are not applying for loans, and this is in part true. Many businesses - the ones that did not fold during the early part of the Recession - are not in a position to qualify under federal regulators’ definition of “credit-worthy.” Because of high unemployment (stubbornly remaining at 9.1%) and the lack of real recovery, these businesses have not posted the income numbers that regulators want banks to accept. Thus, they are deemed “poor risks” even if they have never defaulted on a loan or closed a location. Additionally, many other businesses are refusing to take any chances while the economy is still weak and long-term regulatory issues are unresolved.

Moving forward from here is going to continue to be a slow process. There may be some resolution on coming regulations - for good or ill - when the Supreme Court takes up Obamacare in the near future. But that is only one issue that is holding back businesses. With large elements of the government still in favor of increasing taxes on the “wealthy,” many small businesses will continue to hold back from expanding (read “hiring more workers”) until they know they will be able to afford keeping new hires on the books.

If you are one of the rare businesses looking to expand and are interested in either a conventional or SBA loan, be sure to get some straight answers before you make a move. With over 30 years in the industry, I have the experience to give you the information you need to make a decision on funding and the connections to help you move forward. If you are considering purchasing or expanding a restaurant, please be sure to watch the special video on this site.

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.

Fortworth, TX- 8.9.2011 Bob Coleman, Editor of the Coleman Report recently spoke at the 2011 Mid Conference in Forh Worth TX.

 “The lenders lend to the entrepreneurs on Main Street to fulfill their dreams and to hire employees. When you talk to the politicians, there is the list with GM, Fannie Mae, Freddie Mac, and Wall Street that received trillions of dollars in bailouts. SBA didn’t need a bailout. The money that went to SBA were for future projects.” - Bob Coleman

It's important that we get this message out. SBA continues to be misunderstood as it get thrown into these conversations. While the work that is possible with the SBA continues to be fairly steady. The media, administration and politicians come up with ways to SPIN it into the news often taking away from how important it's core work really  is.

It's a fairly simple formula really...Jobs are created by new and the expansion of small business. Let's support small business.

Just when the federal government thought the economy was turning around (of course they are wont to believe things that are not so) comes news on several fronts that small businesses are again - or still - in trouble. Several articles in the Wall Street Journal point out the sad fact that small businesses continue to be assaulted from multiple angles, particularly in the area of credit and financing. What this tells us is that, in spite of Washington’s assertions, the economy is not getting better and overall we are still in trouble.

Small businesses are still unable to access the funding needed to expand operations and hiring

In a June article (“Study: Capital Still Tight for Small Firms”), Angus Loten reported that a Pepperdine University study showed that 54% of businesses surveyed had failed to receive funding in the previous six months. This in spite of the fact that these businesses reported an overall positive outlook during the past year. The study also showed that banks had denied 60% of loan applications since January, and the news was even worse on angel investors and venture capital sources. Associate Professor John Paglia, who led the survey, told Lofton that the study shows small businesses are still unable to access the funding needed to expand operations and hiring, both of which are needed to help the economy out of this lengthy recession.

In another June article (“Smaller Businesses Seeking Loans Still Come Up Empty”), Emily Maltby reported that total outstanding loans to small businesses dropped 8.6% compared to March 2010. For large banks the numbers were even worse - a 14% drop in loans outstanding to small businesses. These are some of the same banks that received large infusions of cash early on in the recession and that promised to improve lending to small businesses. Pulling from the same Pepperdine University study, Maltby reported that only 17% of businesses with less than $5 million in revenue were able to land bank loans in the previous six months. This contrasts sharply with the 37% of larger ($25 million or more in revenue) businesses that received bank loans over the same period. All this after these banks assured us that they were “relaxing standards” for small business loans. Clearly their idea of “relaxing” does not fit what most business owners would have in mind. The large fly in this ointment? Federal regulators who continue to insist that banks hold large amounts of capital in case of loan defaults, leaving them less to work with, as well as additional proof that loans will be repaid.

In his most recent article (“Bankers: Credit Tightens for Small Firms”), Angus Loten reports that bankers now expect the situation to become worse for small businesses seeking funding. According to the article, 60% of risk managers surveyed said they expected to approve the same amount or fewer small business loans in the coming months. This in comparison to expectations (by over 73% of those surveyed) that demand will increase. Clearly we have a severe problem here. No wonder that the NFIB reported another slip in its small-business optimism index, according to a report by Kathleen Madigan (“Small-Business Sentiment Slips Again”). According to the NFIB, the level is “still firmly rooted in recession territory.” Add this to everything else and you can see that our economy continues to be in serious trouble.

In other reading, I have found that small business hiring is negative by about 3-4% in the last reporting period. Over 65% of all small business owners interviewed made it clear that they are not going to hire due to the uncertain nature of the loan environment, taxation policies, future health care costs, the strength or weakness of the consumer and the debt debacle that is occurring in Washington DC. Politics as usual is hurting the job and business picture for the foreseeable future.

If, after all this news, you are still hoping to expand your business, I strongly recommend that you work with an expert in financing and loans. With the right advice you can improve the likelihood of making it past the gauntlet of risk managers and regulators to the final goal of loan approval. Can anyone guarantee success? Not if they are honest. But with over thirty years of experience, I have been able to help many businesses reach that final document signing. Feel free to contact me through the links below, and watch the special video report available.

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.