Posts Tagged ‘Tarp’

I have been working through our friendly neighborhood SBA loan program.  It could be the most degrading process ever invented.  Every step of the process is designed to be as painful as possible..quite like doing dentistry in the 18th century.  Not only do you have to provide about 7 inches of paperwork, you must endure idiotic questions from an underwriter that would have trouble running a 2 person convenience store.  Why this is so troubling is that our Federal Gov’t didn’t ask any of these questions of Goldman Sachs, Bank of America, or AIG  that were given billions.  Heck, their financials were prepared by the same person that bills out $700 toilet seats at the Pentagon.  Not only does the financial institution get a75% loan guarantee by the Feds (meaning you an me) they want additional collateral for the 25% that is not covered.  SO…they only want to make risk free loans.  Any business that needs a 100%  backing  should not be in business at all. This leads me to 2 conclusions:

1- 75% of new business growth comes from small business.

2- Small business can only apply for risk free loans.

Pity we don’t realize under these conditions the employment and economic picture will continue to be murky because we appreciate the 25% of the job market that eventually lead to the greatest economic boondoggle in 200 years.


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With the new year brings the opportunity to improve your staff or make some timely additions.  Before you run out thinking that Mr./Mrs. Fantastic is just sitting around waiting for your call…we better get a few things straight:

1- You will not find too many “gems” in the vast amount of unemployed people.  When you do..you better act fast.  I spoke to one prospect that sat on resumes for 3 weeks..guess what?  The good ones were gonzo!

2- Speaking of resumes.  Is that all you are using to screen applicants?  Most of these are just a poorly written commercial complete with BS, incomplete dates of employment and phony schooling.  You must actually talk to people to hire the good ones.  Yes…that means good old-fashioned in person interviews.

3- You cannot hire a person that is great at everything!  You must focus on the 3 areas you need to accomplish and hire for those first.  You will have to train the person on other tasks.

4- Training? Yes, you will actually need to spend time developing your team.  Don’t have the time.  Be prepared for a 20% increase in your salary target for that position.

5- Plan ahead.  Good candidates are cheaper now but as the economy improves, they will be harder to locate and you will be left bidding up your salary’s for the Bronze Medal Winner.  You can quote me on that!

How are businesses doing?  We work with over 85 different companies and it has been better so far.  The problem is lack of funding.  You know how I hate the banks, and they are still not helping with capital to small business.  Unless you have a ton of collateral for a loan, you are not going to get any help from them.  When they loosen up…business will get a lot better!

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Many economic talking heads are calling for a “double dip” recession.  The problem this causes is that it may become a self-fulfilling prophecy.  As more and more of these folks utter these words, individuals and businesses will begin to believe it, even if it would not naturally happen.  The main problem for small business is the lack of bank lending…which will definitely cause the double dip.

Small business accounts for 75% of the job growth and if we are cut off from capital, we are less likely to take risks, only to run out of money.  Most businesses I talk to say that this is the number one reason holding them back from: expansion, purchasing equipment and adding employees.  Add to that,  the uncertainly of: health care reform, the elections, expiring Bush tax cuts and you have all the makings of…exactly what you don’t want…the dreaded “double dip”.

SOLUTION:  You have to make access to capital the main cog in any plan.  Banks are hoarding capital because their balance sheets are full of non-performing assets (real estate). The bailout cash only prolonged the pain and allowed banks to invest in Government securities while paying you zero on your savings.  If you understand this, then you would not loan money either.  Make banks deal on these assets quicker and give incentives to lend…like lower tax rates on legitimate loan income, and see what happens.

Unfortunately our leaders are purely in the game to get reelected.  Sound financial policies come from people who “have to make payroll” not pretenders that like to talk about all day on inane TV ads.

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 What will it take to reach a bottom in the real estate market and the stock market? It is pretty simple: when the scared money is done selling the market will improve. When investors for foreclosure properties have a lot of competition to purchase…you will reach a bottom in the housing market. Going forward the rules for investing and buying a home will change. It will be also harder to get credit, but banks have a ton of money and sooner or later they will not be able to pay their bills by NOT  loaning money. I know some of the big bank are in trouble but let them go with the likes of Chrysler and General Motors. That is money down a hole we will never get a return on.

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Since the small company culture is so different than a large company you need to be careful when hiring these employees.  Many big companies have spoiled their workers with perks that are not available at smaller businesses.  Health care, travel, retirement benefits, technology, time off can and are limited in the small business world.   Some other items to be aware of:


1-      Large company employees are interested in 401k match, severance packages and the desire for an equity stake (stock options)

2-      They may expect to travel first class, use all the airline miles, eat at expensive restaurants and have administrative support

3-      Lots of meetings are the norm

4-      Small offices require different skills to communicate. (less e-mails, more face-to-face time)

5-      Small companies require you to do more jobs…not exactly what you were hired for.


I am not saying do not look at these candidates, but be careful to examine how they will fit in your small company culture.  If your are moving from a big to small company, keep these differences in mind when you interview.

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 If you watch TV like me, I am sure you have seen the ads about selling your gold, pitched by two has-been performers.  Do you think this is a really good idea?  I can positively say if you see this stuff on TV they could care less about helping you but just want to take advantage of gullible consumers.  A couple other ideas that are getting time on TV are:


1-people trying to fix your credit or help on a foreclosure

2- stock market trading strategies to get rich (always a loser)

3-buying foreclosed property


If you investigate these ‘investment opportunities’ just ask a simple question.


How do you get paid?


Generally if you get a lot of double speak…it’s a scam.  With all the problems in the economy the last year don’t let your desperation turn into a profit for someone else!

see my youtube site for my comments in the media  www.youtube.com/user/MichaelHayesSpeaks

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 Did you see that Wells cancelled a lavish company outing in Las Vegas after the Feds starting complaining that it was a bad use of the taxpayers money?  They said that the bailout cash would not be used on this event. That is the same as my wife and I owning a bucket of water and when I take a cup out…I say it’s not from her half!! I know some of you will say that ‘sponsors’ will pick up the tab, meaning Mutual Fund Companies etc. By the way, those are the folks that helped get us in the mess we are already in. Do us a favor Wells or any other company taking Govy handouts…ask the janitor in your building if these ideas sound good in today’s economy and fire your PR staff today!

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