Love a local business? Buy a share

HASTINGS-ON-HUDSON, N.Y. (Fortune Small Business) -- John Halko was halfway through renovating an expanded space for Comfort, his mostly organic eatery in Hastings-on-Hudson, N.Y., when the credit crisis hit. His source of funding -- a home-equity line -- ran out, so he applied for a loan at a local bank. He was turned down.

Halko wasn't ready to throw in the dish towel. His solution? The modern equivalent of an old-fashioned barn raising. Instead of soliciting neighbors to lift timbers, he asked them to open their wallets. For every $500 they purchased in "Comfort Dollars," his patrons received a $600 credit toward meals at the restaurant. As the community rallied around Comfort, Halko says, "it gave us hope." He raised $25,000 in six months, and the new, larger space - now called Comfort Lounge -- opened for business in May.

Plenty of entrepreneurs are turning to their communities for support in these tricky times. As the recession wreaks havoc on America's economy, finding the money to launch, expand or even just sustain a small business is often a struggle. In the second quarter of 2009, venture capital funds raised the smallest amount since the third quarter of 2003, according to the National Venture Capital Association in Arlington, Va. Banks continue to pull credit lines and credit cards from many small businesses. Even proprietors who are willing to extract capital from their homes -- often their biggest personal asset - can't always do so, because the declining housing market has left so many homeowners underwater.

But entrepreneurs are resourceful, and as the economic crisis forces them to seek new sources of capital, a growing number appear to be finding money in their own backyards. After all, local customers have a personal incentive to invest in their favorite businesses. And while no one is officially tracking the trend, anecdotal evidence suggests that the practice is growing.

"There are no secure returns out there right now," says David Lavinsky, co-founder of Growthink, a venture investment firm headquartered in Los Angeles. "People are very willing to invest in their local community, especially if there is the possibility of return."

Is commercial real estate finance a house of cards?

This is a good question for all readers, anyway The credit freeze, falling values, highly structured debt and the unstable economic environment have created a perfect storm for commercial real estate loans. The capital markets are likely to see unprecedented levels of loan defaults, which will test much of the structure underlying these loans. PLI On-Demand examines the problem and solutions with the 68-minute PLI On-Demand presentation (audio only) Overcoming Challenges in Structured Commercial Real Estate Workouts 2009.

Source :Smartbrief

In Pursuit of Small Business Loans !

At a recent meeting with Frank Burke, right foreground, who was representing Senator Frank R. Lautenberg’s office, South Orange business leaders discussed the need for credit. From left, Carole Anzalone-Newman of Main Street South Orange; Brian Boele of Bonte; Terrence Brooks of Vision Barber Salon; and Evelyn Lee, a reporter from NJbiz.com.


Joanna D’Angelo knows that starting a new business is no small accomplishment. Dealing in fine organic tea and jams from France, Ms. D’Angelo set up Tea Together, her storefront in Millburn, last November.

“We felt it was an up-and-coming area, and it was right for us,” Ms. D’Angelo said.

Business has not been bad, but she needed a small loan to keep momentum going until the busy season. While shopping for loans last month, Ms. D’Angelo walked into Chase, a preferred lender of loans backed by the federal Small Business Administration, and walked out a short time later — minus any money.

“We tried a few other banks, but they all had impossible conditions,” she said. “We did not qualify for an S.B.A. loan, something they were very adamant about.”
According to Ms. D’Angelo, Tea Together failed to qualify at Chase because the business was fewer than three years old, though she did not know if that was the Small Business Administration’s or Chase’s rule.

Ms. D’Angelo joins other owners of small local businesses who are finding credit hard to come by, even with the help of federal stimulus money directed to help. The dearth of small business loans nationally described in The Times’s article on Thursday seems to be playing out locally as well. So far in South Orange, only four S.B.A. loans have been approved from Oct. 1, 2008, through the end of June 2009, according to federal statistics. This is down from eight loans in the last financial year, from Oct. 1, 2007, and Sept. 30, 2008.
An S.B.A.-backed loan is intended for small businesses that might not qualify for a commercial loan. After being rejected, a small businesses can apply, often at the same bank, for an S.B.A.-backed loan.

Since the financial crisis began in September, the credit market dried up, hitting small businesses hard. In response, $730 million from the federal stimulus package was funneled to increase the guarantee on S.B.A. loans to 90 percent. However, even with the guarantee, loans can be hard to come by.

But who is responsible for the bottleneck? Is it the S.B.A., where mountains of paperwork are required? Or are the banks not wanting to go the extra mile to assist small businesses? Or perhaps, are small businesses considered a poor investment?

From the eyes of the banking industry, the problem centers around the red tape that entangles all areas of the S.B.A. loan process.

Sheila Spangler, who worked in the banking industry for more than 20 years and is now a business strategy coach, said she believed that banks are not lending because of the excessive paperwork required for an S.B.A. loan. Banks and the S.B.A. have their own qualifications, and both apply when a small business wants a loan.

“Just because the S.B.A. may be willing to guarantee the loan, the bank may not necessarily want to make the loan,” said Ms. Spangler, who calls herself a proponent of the federal agency.

She explained the S.B.A. guarantee is not real money. It is available only if the borrower defaults, so the bank must initially provide its own money for the loan. And when it comes to receiving the guarantee, from her own experience and from being in constant contact with bank managers, Ms. Spangler said it can take one or two years.

“It is a long, drawn-out process,” she said.

Furthermore, if the borrower defaults, there is also a chance that banks will not get their money back from the S.B.A.

“If the bank does make the S.B.A. loan, the package has to be done perfectly, or the bank risks not being able to exercise the government guarantee,” Ms. Spangler said.

Jonathan Swain, a spokesman for the Small Business Administration in Washington, countered that it did not take terribly long for a loan to receive a guarantee.

“We have made a commitment to lenders to turn their application around in 45 days or less,” Mr. Swain said, referring to the amount of time it takes banks to receive the guaranteed amount for a defaulted loan. He said the S.B.A. averages a 30-day turnaround, and that 95 percent of the guarantees on default loans are paid to banks.

Mr. Swain also noted the low default rate on S.B.A. loans in the first place.

“Our default rate is about 5 percent,” he said, “which is more than what it was historically. However, that is what you would expect in this economic time.”

A new initiative of the S.B.A., America’s Recovery Capital Loan Program, is also causing confusion for some would-be lenders. Operating for less than two months, this program provides $35,000 in short-term relief to struggling small businesses. Like in a standard S.B.A. loan, the business must be eligible by the standards of both the S.B.A. and the commercial lender.

“Over 1,000 A.R.C. loans have been offered across the country,” Mr. Swain said. “We feel good about where it is, and we expect to see those numbers go up.”

But so far, only four of those loans have been in New Jersey through the lenders JPMorgan Chase & Company, PNC Bank and Woori Bank. (They tend to head to businesses in Minnesota, Wisconsin and Iowa, according to The Boss blog.)

While there are 190 banks in New Jersey that partner with the S.B.A., some are part of the preferred or certified lenders program, and are able to get an accelerated application process for loans they approve. Here is a list of those banks [pdf].

Ms. Spangler said A.R.C. provides little incentive for commercial lenders to administer the loan.

“The mound of paperwork and knowledge is the same as for a million-dollar loan,” she said of the relatively small A.R.C. loans.

Mr. Swain said this was necessary to prove that the business was viable and still a good investment.

Elizabeth Boele, co-owner with her husband, Brian, of Bonte, a cafe and waffle shop on South Orange Avenue, was not granted an A.R.C. loan because she could not demonstrate financial difficulty on paper, a qualification for the loan. Instead, the business had been cutting back in other areas to avoid defaulting on other loans.

“If we had not been making our repayments, we would have been better off,” Mrs. Boele said she told an S.B.A. representative recently.

Mr. Swain encouraged business owners like this to speak with the New Jersey S.B.A. office, as options still might be available to them.

There are some who argue that market forces, not the government, should determine who stays in business. While the S.B.A. loans may be helpful, are they keeping people afloat who simply should sink?

“Small business that are barely making it should not get a loan,” said Mary Anne Spencer, from the Tenth Muse Gallery in Maplewood, who was able to use her own equity to start her business. “People are going in with no business plan, no demographic study … what are you going to give them a small business loan for?”

Ms. Spencer was concerned for those small businesses that were barely breaking even, operating under false hopes that the economy will suddenly improve, and taking on the added burden of new debt.

“People’s spending has changed, and it is going to stay that way for some time,” she said.

When this thought was posed to Mr. Swain, he said he believed that many of the businesses the S.B.A. supports have been profitable businesses that need an extra hand.

“There are a lot of good, viable small businesses who do not have access to the capital that they would have had in good economic times,” he said. Mr. Swain said S.B.A. loans were useful to businesses that were in the “maybe stack” of getting a commercial loan, and he stressed the loans were not there for businesses that are not viable.

Mr. Swain did have some good news for small business regarding the dollar amount of S.B.A. loans recently. Since February, “we have actually seen our loan volume increase 50 percent,” he said. “July was the highest months in terms of volume since last September.”
Source: NYTimes

Attention eBay Shoppers!

Looking for a bargain? This is a great week to shop on eBay.

You may know that last week eBay had a sale on auction-style listings that included starting prices up to 99 cents. Lots of sellers took advantage of that sale, so this week you'll find an unusually large number of eBay auction listings that start at or below 99 cents.

So if you've been waiting for a good price on just about anything, take a look on eBay this week, through Monday night, for those low opening bids. Chances are, many of the closing bids are going to be pretty low, too.

Click here to start shopping!

Why the Advanced Search is Important to eBay Sellers

Easter's early this year. Have you done your shopping? Have you listed your Easter-related items on eBay?

I've been using eBay's advanced search feature a lot lately and this morning I decided to do one search for items from all categories with "Easter" in the title that are marked down and have Buy It Now available, including store items. I found 399 items that met all of those search options. Very cool search. You can try it here.

So, why am I telling you this? If you're an eBay shopper, remember to use that Advanced Search feature to help narrow down the items you're looking for more quickly. If you're a seller, remember to use words such as "Easter" in your item titles when you believe people will be looking for those items specifically. My search turned up items in 14 main categories from apparel to antiques to cell phones & PDAs. That last category included an Easter Lily charm for a cell phone. I never would have thought to search for that item, but what a great idea for an Easter basket stuffer.

Sellers, think like shoppers as you think about upcoming occasions and events (Mother's Day, graduation, even spring) as eBay shoppers will use those words in their searches. Those same shoppers may turn into buyers when they find your item, even if they did't know they were looking for it.

Feedback Changes on eBay – My Turn to Vent

I blogged about the fee changes eBay announced last week but still have been digesting both sides of the feedback changes issue. I think I’ve finally formulated my opinion. Read on if you’re a seller with thick skin, curious to know what I think.

To review, eBay is changing its policy such that buyers may continue to rate sellers and leave positive, neutral, or negative feedback for them, but sellers will no longer be able to do the same for buyers. Instead, only a comment may be left by the seller regarding the buyer. The way I see it is this, and I've said this many, many times, if you’re a seller who provides excellent customer service, you won't have anything to worry about regarding feedback. Now, many eBay sellers will tell you that isn't true and can give examples of idiot buyers who leave stupid feedback. My friend Pat had a buyer recently who claimed he didn't buy her item and, even though she bent over backwards to take care of his situation (long story, but he was most definitely in the wrong), he ended up leaving negative feedback for her, saying that he didn't buy the item and that she needed to stop contacting him, blah, blah, blah. Well, how could he leave feedback if he didn't buy the item? This buyer was obviously wrong. My friend has documented evidence that he is wrong, and hopefully eBay will rectify the situation and remove the negative. So, it is true that there are unscrupulous (I wanted to say idiot again, but I won’t) buyers. And it’s also true that you can’t please all the people all the time no matter how close to perfect your customer service is. However, whether my friend could leave this buyer negative feedback or just a comment warning others about this man would have made no difference in his behavior.

Is there someplace online, besides eBay, where you can shop and have the business where you made a purchase leave feedback about you as a buyer, feedback for the world to see? If you know of a place, please tell me, but I certainly don’t know of even one. Everywhere I’ve ever shopped other than eBay, if there is an opportunity given to leave feedback it has only been for the buyer to rate the transaction. In fact, most online businesses don’t even offer that option for their customers. Amazon.com does encourage its shoppers to rate their buying experience, though most shoppers do not, but there is no public forum for sellers on Amazon to rate their customers.

I believe that eBay is trying to grow up and provide a good place for buyers to buy while encouraging sellers to provide the excellent customer service that far too many of them do not provide. EBay is trying to become a more professional and reliable marketplace for people to do business. As a buyer on eBay, I welcome that change. I’ve dealt with too many sellers who have been far less than professional and if those sellers drop off the eBay map, that’s fine with me. I believe that the cream of the crop of sellers will, indeed, rise to the top and the changes that eBay is implementing, including getting rid of the sellers’ opportunity to leave negative feedback for buyers, will encourage this positive growth.

Maybe the customer isn’t always right, but I think it’s time for eBay sellers to treat their businesses as businesses and act like professionals. If you’re a seller, I say adjust your attitude if it needs adjustment and move on to bigger and better things with eBay. If you’re a seller who would rather complain and boycott and focus on the past, the next time I go shopping on eBay I probably won’t see you at the top. EBay isn't going anywhere and if sellers leave in droves, so much the better for the professional sellers – and the buyers – who remain.

Buying Wholesale Lots on eBay

Buy it on ebay, re-sell it on ebay. What a great place to get started! If you're already a buyer on ebay, you may have noticed the category called "wholesale lots" when you are searching for an item. While there is a "wholesale lots" sub-category included within most of the main categories, you can access all of them on this page.

A word of caution about lots advertised as "wholesale" on ebay. More often than not these items are not listed by true wholesalers but are repackaged lots from ebay sellers who are cleaning out their own inventories. Sometimes they will be items that the particular seller could not sell individually. Often, though, they are smaller lots that the seller has acquired in bulk and broken down into smaller, more affordable lots for other sellers on a budget or without a place to store a large inventory.

You'll also find that some people don't take seriously the definition of a "lot" and use this category to offer single items at what they consider to be wholesale prices.

So, as should always be the case, buyer beware. Make sure you understand exactly what it is you are bidding on. I have found real treasures from the "wholesale lots" page and you will, too, if you spend some time being a wise shopper.

Rating the New Feedback System on eBay

Have you heard? Ebay has rolled out a new feedback system. I just received an item in the mail that I bought last week on ebay and was able to give my first detailed feedback. Here's what I learned.

First, I rated the transaction as positive overall and filled in the box with my comment, then the drop-down part of the page appeared with the opportunity to rate the details:

• I rated the seller 4 stars for item as described (the colors weren't quite what I expected).
• I rated him 3 for communication because I heard absolutely nothing from him, but it wasn't a big deal because the item arrived quickly.
• I rated him 5 for shipping time - I bought it Friday night, it arrived this Friday morning.
• I rated him 5 for shipping and handling charges - I would have given him a 6 if it was available; he had very low, reasonable shipping.
  

After I completed the form and posted my feedback, I went to check his overall feedback. He does a large volume, so he already has 28 of the detailed ratings (ebay does not show them until a seller receives 10). At first glance it appears he has 5 stars on everything, but if you look closely you see the last ones aren't quite colored in all the way. Hover over them and you see he has 5.0 on “item as described” and 4.8 on everything else. Kind of interesting because I gave him a 4 on “item as described” and a 3 on communication and his ratio is still quite high, and I seriously doubt he communicated with anyone since he did not communicate at all with me.

So, as a seller I feel rather relieved by what I see. Again, at a glance his feedback appears excellent (and it is - 100% positive) but if I were going to purchase from him and had any special concerns about any of those categories, I could examine them further. Which brings up another observation. There is no category for how well the item was packed. Packing is very important and I'm curious why that wasn't included. Perhaps that is an even more subjective category than the others? I don't know.

What can sellers learn from this? Number one, describe your item accurately and thoroughly. Number two, do communicate with the buyer. Drop a quick e-mail to let them know their package is in the mail. Say thank you; that goes a long way. Three, ship quickly. And four, set your shipping and handling at a fair and reasonable rate. In other words, keep doing what you should have been doing all along. Provide five-star service – and you’ll get five-star feedback in return.

Selling Teacher Editions? Not on ebay!

Books are easy to list on ebay. Provide a description of the condition and an ISBN number and ebay helps by providing the rest of the details. But don't try it with the teacher's edition of a textbook!

People often turn to ebay to look for used textbooks, and a large number of those shoppers these days are homeschooling families. Indeed, it doesn't take much time shopping for teaching materials to discover that new textbook sets are very expensive. For homeschoolers, families need more than just the student books, they need the teacher editions as well.

Ebay used to be the place to shop to find bargains on all the books that homeschoolers need. Families were anxious to sell their used textbook sets to other homeschooling families in order to make money to buy their own sets of books for the following year or grade level. About this time last year, though, ebay began a policy of disallowing all teacher editions of textbooks to be listed and sold. While this makes sense when you think of college textbooks, it seems ebay totally missed the point when they expanded the no-teacher-editions policy to include books needed by homeschoolers - as if those first and second graders were going to buy up the books with the answers so they could cheat on their weekly spelling tests!

So, what's a homeschool teacher to do? Enter This Little Piggy Stays Home, the online auction site created specifically for homeschooling families. This Little Piggy Stays Home is a new site, developed as a result of ebay's policy change, offering a comprehensive selection of ABeka, Bob Jones, Christian Liberty, Apologia, Saxon, Sonlight, and so much more! There are no listing fees on TLPSH, photos are free, and the final value fees are reasonable.

So if you're a homeschooler looking to buy or sell textbooks or other educational materials - including teacher editions - take a look at This Little Piggy Stays Home. I recommend it.

99 ebay Tips from the Big Fish

They say an expert is someone who knows more about a subject than you do. So, to some I am an ebay expert. To me, Skip McGrath is THE expert. If I'm just a little fish in the big ebay pond, Skip is the whale.

I've never met him, but I just know I'd like Skip if I did know him; I just like his style. He has so much wonderful information that he has learned first-hand. He's an expert who actually practices what he preaches - and he's happy to share that information with others.

So today, I'm going to share Skip McGrath with you. Skip has a huge website with just tons of excellent information. To get started learning some of what has made Skip a very successful seller on ebay, spend some time reading and studying Skip's FREE 99 Tips for eBay Buyers and Sellers.

Then come back here, leave a comment and let us know which tip you liked best - and we can all continue to grow into bigger ebay fish together.