Do you have a checking account at the bank you are applying for a loan with? If so, how you have been handling the account in the last year can affect your loan request. Continue reading
“Credit Inquires” has been a topic of much conversation and concern in recent years. The following is current information you should know about “credit inquiries you cannot avoid”. Continue reading
There are many reasons why a business may decide they want to change the company name. Sometimes the reasons are due to expansion, for good reasons, and also for not so good reasons, such as solving an image problem by finding a new name. An example of large Corporate name change for a bad reason could be Valujet. Valujet suffered a major crash in the Florida Everglades in the late 1990′s and primarily for this reason, changed their name to Airtran.
When it comes to financing, a name change is not a good idea and should be avoided. Even if the business can provide evidence it is the same company and only the name was changed, this explanation has always been looked at warily by lenders. To lenders, a name change is looked at as almost a new business, or at least to a large extent, a new business, whether it is or not.
This hurts significantly in a financing request because if a company has been in business for 7 years, and changes the name in the last 2, it will almost look to a lender like the business is 2 years old. Another factor in how the business is looked at is what the business credit report says. If the business credit reports have the old company name, this will hurt. If the business credit reports have the new company name and the business start date shows the full 9 years in business, this scenario will be penalized far less severely.
One answer would be to only somewhat change the business name, if possible. For instance, if the company name is Alley Pizza, it would be better to change to Back Alley Pizza or Alley lane Pizza rather than Jim’s World Pizza. If the name change is wholesale, it looks like owners have changed hands.
In summary, if a business wishes to change it’s name, the owners should consider if financing is in their plans in the following 2 or 3 years, and if so, this should be factored into the decision if the name is changed, and what it is changed to.
UCC blanket liens are not uncommon, especially with traditional financial institutions. However, what are UCC Blanket liens, what do they cover and what restrictions do they cause businesses?
UCC stands for Uniform Commercial Code. A UCC lien means that a lien has been placed at the State on some asset, either tangible or intangible, at a company. A UCC blanket lien means that a lien has been placed on all assets, furniture, fixtures, and equipment. This is how the lien is generally listed at the state. Further details of the lien will vary based on the lender. Often the lender will write in specific details, which may include:
1. A lien on Vehicles or a lien on Accounts receivable.
2. A lien on any future assets, during the term of their loan
Both of the above lien conditions can be very significant to a business and business owners should be very cautious. If a lender puts a lien on a company’s Accounts Receivables, this means that if the company completes a job and is due a payment that far exceeds the remaining balance with the current lender, the current lender is the ultimate legal owner and legally entitled to the Accounts Receivable asset.
What can be considered the more insidious lien is a lien on any future assets during the term of the loan. Under this condition if the company buys 5 commercial vehicles for cash, the lender technically owns those vehicles. If this lien condition is observed to the letter, then a business could technically not take out any future asset based loans because the newest lender will want to take out a lien on that asset and may be unaware that a previous lender has a lien on all future assets of the borrower.
There is a legal grey area even with a regular UCC blanket lien filing. The regular UCC blanket lien says a lien on all assets, furniture fixtures and equipment. If a business goes out and acquires another asset free and clear, then it is still a current asset, which is covered under the UCC. If the business acquires an asset which another lender puts a lien on due to a new loan, then there may legally be an ownership conflict with that collateral. The new lender may not have a clear legal right to that asset based on the previous lien.
In many of these cases, there are significant issues that come with the lien filings and businesses should do due diligence.
Recently, some regular for profit companies have inquired how they can get free loan grants. In general, Grants are not for profit companies, unless they fall into certain limited specific categories which sometimes change.
The general public overwhelmingly seems to believe that there are many grants available, mostly from the Government, which never have to be paid back. Grants are issued primarily to non profit businesses. There are some exceptions, and those exceptions vary over time. In some instances, States may issue grants to certain start up businesses, or to businesses in certain industries. It is not uncommon for States, and sometimes the federal government to issue grants to businesses that are in very specific technology industries in their efforts to provide an incubator for certain new technologies.
Sometimes states will issue Grants to certain businesses in the farming sector as States wish to promote the continued health of farming in their States. There are also instances in which certain minority owned businesses may be provided Grants. In general, For profit businesses do not receive Grants. Federal and State governments do not wish to provide money from revenues to businesses that are engaged in for profit endeavors.
It should also be noted that there are many companies that advertise paid services in which, for payment rendered, they will instruct the buyer how to obtain a grant. Many of these advertisements do not indicate that these Grants are not for profit businesses and that they are only for non profit businesses. There are also many companies that advertise books as well as online books that are sold on how to obtain Grants. These fall into the same category in that these books are being sold on how to get something that in the vast majority of cases, does not exist.
After 2 months of intense fighting and bickering, politicians in Washington have come to an agreement that, in the most minimal way, will avert the fiscal cliff. However, the politicians only agreed to revenue rate issues and delayed the spending issues for only two months. So in only 2 months, there will be another big fight, which means that the fight actually begins now.
If that were not enough, there will be another major political battle over raising the debt ceiling, which will need to be raised in the short term, within possibly 60 to 90 days as well. One would not be faulted for wondering when the politicians will actually Govern and deal with other important issues such as creating jobs, stimulating the economy, skilled jobs training, foreign wars, energy concerns, etc. It seems that the politicians are not gauging the overall anger of the public. It appears that each representative is gauging how the political battles are received relative to their political districts. If it plays well in their district, they have little concern about how their vote plays nationally.
The politicians are already positioning themselves for the upcoming debt ceiling increase request by the president. Just today, House Speaker John Boehner has already stated that he will not meet with President Obama as part of the negotiations. President Obama stated that, unlike last years Debt Ceiling fight, he will not have a fight over the debt ceiling this time. The President stated the Congress should pay for the spending that they Authorized and voted for so there should not be any reason to have a battle over it. Senate minority leader Mitch McConnel stated today that any increase in the debt ceiling would have to be matched dollar for dollar by spending cuts in order for Republicans to back the increase.
Just today, Senators John McCain (R) – Arizona and Lindsay Graham (R) – South Carolina have stated that they plan for a big fight and not allow a debt ceiling increase without large spending cuts to entitlement programs. However, most reputable economists agree that spending cuts in the order of 40% + all of a sudden would cause a decrease to GDP far greater than the decrease in the GDP during the recession of 2008. Senator Graham stated that he wants decreases in entitlement programs by increasing the eligibility age of Social Security from 65 to 68. If this age limit is increased much more, it may end up equaling the average life expectancy.
So the real question becomes, does the Government really want it’s citizens to have a retirement or downsize Social Security dramatically by basically raising the eligibility age so high that people won’t have a retirement?
U.S. Import prices fall .9% in November and export prices decline .7%, per the bureau of labor statistics. The bureau reported that the decline was led by lower fuel prices.
The bureau further reported that fuel import prices were down a full 3% in November after edging down .1% the previous month. The decline for overall exports was driven by lower non agricultural prices which the bureau said more than offset a .1% uptick in agricultural prices. In spite the November decline, the price index for overall exports was up .7% over the year.
The advance was primarily due to an increase in Soybean prices of 30.2%, 14.5% in corn prices, and a 19.8% rise in wheat prices. These fluctuations will continue, most especially in those areas in which fuel prices have the most influence. In this report, lower fuel prices were cited as the major reason that U.S. import prices fell .9% in November. However, fuel prices increased in the short term after that. The reports for import prices in December will likely reflect this increase in fuel prices. Since fuel prices are set by world markets, the government has little control over the resulting price increases and decreases in imports.
Other significant issues which may affect commodity prices are the continuing lingering drought in the next few months. A major danger in the next few months is also the danger that barges will not be able to transport goods down the Mississippi river due almost historically low water levels. If goods cannot be transported via barges, then goods may have to be transported via rail, which is significantly more expensive. The current prediction is that unless there are significant additional rains, barge traffic will have to be reduced or possibly stopped sometime by end of January 2012 or February 2013.
.8% decline in Producer Price Index in November reported per the 8:30 A.M. November 13th report by the Bureau Of Labor Statistics.
The bureau further reported a decrease of .2% in finished goods in October, which followed a 1.1% rise in September. In the initial stages of processing, prices obtained by manufacturers or intermediate goods declined 1.2% in November, while the crude goods index edged up .1%. The bureau reported that on an non adjusted basis, the finished goods index advanced 1.5% for the twelve months ending November 2012.
The bureau stated that the declined in the finished goods index in November was due to a sharp decline of 4.6% in finished energy goods. Prices for the finished foods inventory rose 1.3% in November, the sixth consecutive monthly increase. Low oil and fuel prices were cited again as the primary reason for the .8% decline in the Producer Price Index. Since fuel prices continue to fluctuate dramatically over time, these prices may fluctuate as well. Expect the price index to possibly increase for the November report or December report, or possibly both, due to increasing oil and fuel prices in the period just prior. The (PPI), Producer Price Index is tied closely to commodity prices, not just fuel, but other raw materials. If the prices of other raw materials, such as metals increase, this will further push up prices and the (PPI), producer price index.
The producer price index also included the price of food commodities, which is also affected by the price of crude oil and fuels. When the price of any crude oil increase in any given month is removed from the math, in most of those cases, the Producer Price increase will reflect and increase in most of those cases. The main exception to this is in the prices of food commodities. In many years, if there is a bumper crop, food commodity prices will go down and lower the (PPI), even when lower fuel prices are taken out of the factoring.
10:30 A.M, Friday December 7th report by the Bureau of Labor Statistics, (BLS) reflect that while the unemployment rate has gone down, the Part Time and discouraged workers figures have held steady.
According to the bureau, the number of persons employed part time for economic reasons, which the bureau refers to involuntary part time workers, was 8.2 million in November, which was essentially unchanged from the previous month. These workers reported that they were working part time because their hours had been cut back or they could not find full time work. The number of discouraged workers was 979,000 in November, also little changed from the previous year, per the SBA, Small business administration.
2.9% increase in Productivity, and a 1.9% decrease in unit labor costs says the Bureau of Labor Statistics, per their December 5th, 8:30 A.M. release.
The bureau reported further that the increase in productivity reflects increases of 4.2% in output and 1.3% in hours worked. From the 3rd Quarter 2011 to the third Quarter 2012, productivity increased 1.7% as output and hours worked rose 3.5% and 1.8%.
True productivity, or output per hour, is calculated by dividing and index of real output by an index of all hours worked by all persons, including employees, proprietors and unpaid family workers. The bureau defined unit labor costs as the ratio of hourly compensation to hourly productivity. Manufacturing sector productivity declined .7% in the 3rd Quarter of 2012, as output decreased .7% and hours remained the same.
Productivity increases 2.9% in 3rd Quarter resources
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U.S. Trade and Development Agency – Promotes U.S. Exports to Foreign Countries, please review if your company is interested in exporting goods to foreign countries.
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