SBA Offering Low Interest 504 Loans

504 loans dip below 5%

The Small Business Administration’s (SBA) 504 loan program is providing long-term, fixed financing for the purchase of commercial real estate at one of its lowest interest rates in history.

The SBA’s lending partners, Certified Development Companies (CDCs) are working with small business borrowers who are taking advantage of this current low interest rate to purchase or build new facilities.

NADCO, the trade association for the nation’s Certified Development Companies (CDCs), reports that the interest rate for a 20-year SBA 504 loan continued to fall to a low of 4.93% this month. The August bond sale to investors that funded SBA loans was sold at a rate of 3.52%. This low sale price resulted in an effective interest rate – including fees – of only 4.93% for borrowers this month. This interest rate is one of the lowest since the program began in 1986.

The SBA’s 504 loan program provides long-term, fixed rate financing for commercial real estate, and has funded nearly $60 billion in loans to growing small businesses over the past 24 years.

Not only are the interest rates low right now, but one best aspects of an SBA 504 loan is the low down payment required by a borrower.  The down payment is typically only 10%.   CDCs across the country are helping small business borrowers who are taking advantage of these record low interest rates to purchase, build or expand their own facilities.

” A commercial loan below 5% is an incredible rate for 20-year, fixed-rate money,” said Jean Wojtowicz.

“When you consider the drop in the price of commercial real estate and the inventory currently on the market, small businesses have a real opportunity to expand or buy their first building right now.”

Job Index Makes Modest Gains In July

Job growth slows

The Conference Board Employment Trends Index (ETI) increased in July for the 14 month in a row.

The index now stands at 97, up from June’s figure of 96.7. The index is up 9.8 percent from a year ago.

“The growth rate of the Employment Trends Index slowed sharply in the past three months, suggesting that employment growth will remain too weak to keep up with the increase in the working age population,” said Gad Levanon, Associate Director, Macroeconomic Research at The Conference Board.

“The disappointing employment numbers may indicate that the low levels of household spending and confidence are making businesses more cautious when it comes to hiring.”

The Employment Trends Index aggregates eight labor-market indicators, each of which is accurate in its own area.

The eight labor-market indicators aggregated into the Employment Trends Index include:

*Percentage of Respondents Who Say They Find “Jobs Hard to Get” (The Conference Board Consumer Confidence Survey)

*Initial Claims for Unemployment Insurance (U.S. Department of Labor)

*Percentage of Firms With Positions Not Able to Fill Right Now (National Federation of Independent Business Research Foundation)

*Number of Employees Hired by the Temporary-Help Industry (U.S. Bureau of Labor Statistics)

*Part-Time Workers for Economic Reasons (BLS)

*Job Openings (BLS)

*Industrial Production (Federal Reserve Board)

*Real Manufacturing and Trade Sales (U.S. Bureau of Economic Analysis)

Consumers Plan To Spend More On Back-To-School Shopping

By Mike Sachoff – Wed, 07/28/2010 – 5:15pm.

Social media playing a bigger role in shopping

Consumers are planning to spend more this back-to-school shopping season than in recent years, according to a new survey by Deloitte.

Nearly thirty percent (28%) of consumers said they plan to spend more this year on back-to-school shopping compared to last year, while just 17 percent indicate they plan to spend less.

The survey also indicated a sharp decline in the number of consumers who intend to shop differently due to the economy compared with the results of the previous two years. A total of fifty-eight percent of respondents say they will change how they shop for back-to-school items, for example, buying more items on sale or purchasing only items the family needs, which is down from 90 percent in 2008 and 70 percent in 2009.

“The survey indicates that consumers’ recession-induced behaviors are beginning to wane as households seek to replenish certain items and worry less about the economy,” said Alison Paul, vice chairman and Deloitte’s retail sector leader in the United States.

“Retailers may be encouraged that fewer consumers are planning to pare back this year, although they may find that shoppers continue to be deliberate in their purchases. Retailers should be laser-focused on giving shoppers a reason to put back-to-school dollars into their stores.”

Back-to-school shopping budgets may also be expanding due to a perceived need to increase supplies in certain categories. Among households that expect to spend more, approximately one-third (34 percent) indicate that their children need more expensive items, such as computers, and more than one-quarter (26 percent) say school budget cuts mean parents need to pay more for children’s items.

Mobile phones and social networking platforms will have increased influence in this year’s back-to-school shopping season.

Nearly three out of 10 (29 percent) consumers surveyed indicate they plan to access their mobile phones to assist in their back-to-school shopping. Among this segment of consumers, nearly four out of 10 (38 percent) will do so to obtain price information; one-third (33 percent) to view a retailer’s advertisement; and 30 percent to obtain discounts, coupons and sale information.

Similarly, nearly three out of 10 (29 percent) survey respondents said social networking sites would play a part in facilitating back-to-school shopping. Nearly two-thirds (64 percent) of consumers who plan to integrate social networking into their shopping activities will do so to find out about promotions, more than four out of 10 (42 percent) plan to browse products, and more than one-quarter (26 percent) intend to read reviews/recommendations.

“Consumers are increasingly on the phone, online and on-the-go,” said Paul. “Retailers’ ability to influence purchase decisions beyond in-store interactions is growing significantly. Companies that can directly engage the consumer through mobile applications, text alerts and video content may win an increased share of shoppers’ back-to-school budgets.”

Small Business CEOs Optimistic About Growth

CEOs expect to increase profits

While CEOs of small to medium sized businesses have lowered their expectations for the pace of growth in the overall economy, they remain confident that, over the next twelve months, they will increase revenues and profits as well as hire new employees, according to the Vistage CEO Confidence Index 2nd quarter results.

In the fourth quarter of 2008, CEO confidence indexed at 48.7 – an all-time low since the survey began in 2003. According to University of Michigan’s Dr. Richard Curtin, who has directed the survey since its inception, CEO confidence rose to 94.4 this quarter, marking the sixth consecutive quarterly increase.

According to Vistage International Chairman and CEO Rafael Pastor, the Q2 results are particularly significant, “CEOs of small to medium size companies have adjusted to the lean economy, are doing more with less, and have positioned their companies for success. Their continued confidence sends a strong message that small and medium sized businesses will be among those who will lead our overall economic recovery.”

Planned declines in employment fell to just 9 percent in the 2nd quarter of 2010, the lowest level in three years. Plans to expand their workforce were reported by 44% of all CEO’s in the 2nd quarter survey, unchanged from the prior quarter. Among all firms, however, 47% expected to keep the overall number of employees constant, up from 44% in the prior quarter and the highest percentage in the past decade.

Growth in revenues was expected by two thirds of all firms in the 2nd quarter, unchanged from the previous quarter but well above the half of all firms that expected revenue gains a year ago. Increasing profits were expected by 54 percent of all firms in the 2nd quarter of 2010, a level that has not changed over the past three quarters.

The majority of CEO’s (87%) believe the federal government does not understand the challenges face by small businesses well enough to expand their business opportunities. These CEOs are concerned about increased taxes, regulations and government interference that hinder entrepreneurship.

Small Business Confidence Dips Slightly In June
By Mike Sachoff – Mon, 06/28/2010 – 5:10pm.

Cash flow issues lead to dip

Small business owners’ economic confidence leveled off in June, stopping a two-month rise, according to the Discover Small Business Watch.

The index fell slightly to 86.1 this month from 87.4 in May as rising concerns over temporary cash flow issues offset some improvement in the way small business owners see the climate for their own operations. Small business owners reporting temporary cash flow issues jumped to 51 percent in June, up from 45 percent in May and the highest since January. Forty-five percent of owners reported no cash flow issues, down from 48 percent in May; and 4 percent were unsure.

The Watch recorded a slight increase in confidence about how individual business owners were faring: 30 percent say economic conditions for their businesses are improving, up from 28 percent in May; 43 percent said conditions are getting worse in June, down from 44 percent in May; and 34 percent said things are staying the same, up from 24 percent in May.

“Many small business owners are working harder than ever to make payroll, pay their bills and keep their businesses running,” said Ryan Scully, director of Discover’s business credit card.

“Last month, more owners reported increasing their spending, which is good news. However, if sales are lagging this month, it’s possible that cash flow was more of an issue.”

In June, 29 percent of small business owners said they believe the overall economy is getting better, falling from 35 percent in May; 51 percent say the economy is getting worse, steady from the previous month; and 16 percent see the economy as the same, up from 12 percent in May.