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Bank CEOs Face Congressional Music On Business Loans
If you thought that the CEOs of the major domestic automakers had it bad, hold on tight because the bank CEOs whose firms received a slice of last year’s TARP bailout will be testifying in front of the House Financial Services Committee today. Lawmakers are expected to demand an accounting of what exactly happened to the bailout funds lavished on banks last year, and an explanation for why more of the Fed’s capital isn’t being plowed into
bank loans for businesses and consumers.
Congress has gotten more than an earful from ordinary people who wonder why the banks were not questioned as closely about the estimated $800 billion in TARP grants as automotive CEOs were grilled about their request for $25 billion in federal loans. Lawmakers will be looking for an accounting of how the TARP funds have been spent to date, and want answers about the excessively high bonuses that have been paid to bank executives since the TARP funds were released.
One burning question on the minds of lawmakers is how much of the funding has been offered to businesses and consumers in the form of loans. Among the nearly 400 recipients of the federal funds, only Citigroup has provided any information about how it has spent its TARP funding. Citi’s accounting shows that only about one-third of the money has been made available for loans.
Small businesses have been hit hard by the lack of capital available for operations and expansions in the last year. Nearly five percent of small businesses are now saying that loan availability is the single most important issue facing small businesses today. There is another source of funding for small businesses: a merchant cash advance.
Merchant cash advances are available to any US business that accepts Visa and MasterCard and has at least $2,500 per month in credit card transactions. Merchant cash advances have a limit of $250,000, so you can get the cash you need when you need it.
A merchant cash advance isn’t a loan. It’s a cash advance based on future sales. As your transactions are processed, your advance is repaid, with a small fee. There’s no monthly bill to pay, and 95% of all eligible merchants who request a cash advance get one. There’s no requirement that you have good credit, either.
If you’ve been the bank route and you’re still waiting for your cash, or you’ve been turned down by banks who won’t lend out their cash, don’t face the worst alone. Contact Rapid Capital Funding today!
Photo Credit: Chrisinphilly5448, via Flickr
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Suppliers Ask Washington For $25B Auto Bailout
As the nation reels from the staggering $800 billion bailout received by Wall Street, another group is seeking assistance. The
auto bailout saga continues this week as auto suppliers are in Washington, DC for discussions with Treasury officials to ask for more than $25 billion in aid. Many of the suppliers say they are on the brink of bankruptcy now and fear that the will be unable to continue manufacturing operations without federal assistance.
The Motor And Equipment Manufacturers Association submitted an 11-page request to the Treasury Department this week. The group represents more than 400 automotive suppliers in the US. According to the document, massive layoffs and supplier closures are imminent without the aid.
Unlike automotive manufacturers, an auto supplier is often a small business financing its operations with orders from one or two large manufacturers. In recent months, the major automakers have increased the length of their payment cycle, causing cash flow problems at many of their suppliers. The delayed payments have forced auto suppliers to cut back on operations and scale back their workforces. Supplier bankruptcies would affect not only domestic automakers, but would also have a negative impact on foreign automakers with manufacturing operations in the United States.
In December, the Bush Administration extended $13.4 billion in aid to General Motors and Chrysler to shore up those companies. Ford Motor Company did not accept any bailout funds from the Federal government, but did acknowledge earlier this week that it had tapped a $10 billion line of credit that the automaker had previously secured. According to papers filed with the Securities and Exchange Commission, the money will not be used to fund operations but will be used to enhance the company’s cash reserves.
For small businesses with short-term cash needs, Rapid Capital Funding can help. Rapid Capital Funding can provide a merchant cash advance for US-based businesses that accept Visa or MasterCard and have credit card sales of more than $2,500 per month. A business cash advance is unsecured credit that can put up to $250,000 into your business operations in seven business days. Most advances are completed in even less time. There are no restrictions on how the cash can be used, and repayment is made when credit card sales transactions are processed. Whether you want to increase your cash reserves, use the funds for operations, payroll or any other expense, Rapid Capital Funding can help.
Photo Credit: Dani Simmonds
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Need Access To Cash For Your Small Business?
While the final details of President Obama’s economic stimulus plan have yet to be worked out, some analysts are questioning whether there is anything of value in the plan for small business. Additional loan provisions and increased lending guarantees from the Small Business Administration are in the current package, but some fear that the plan will do little more than create additional governance without addressing the issue of
small business financing.
The potentially expanded powers of the Small Business Administration allow the government to be a buyer in the secondary loan market. While that may seem to stimulate the loan business, many analysts are skeptical about plans to saddle the government with extra debts, likening the new SBA to troubled mortgage guarantors Fannie Mae and Freddie Mac.
Instead, advocates favor extending small business tax relief, a move that is currently absent from the stimulus plan. In the short term, small businesses need cash for operations and longer-term growth. As credit markets tighten, the access to cash has become a major issue for small businesses.
One approach that more business owners are taking is a business cash advance. Based on future credit card sales, a business cash advance supplies access to readily available cash immediately.
Business cash advances aren’t like loans. There is no monthly payment. Instead, businesses can use future credit card sales to fund their current activities. Repayment of the advance occurs as normal credit card transactions for the business are processed. Depending upon average monthly credit card receipts, a business can take up to $250,000 in cash advances.
A business cash advance is a short-term unsecured debt, so there’s no collateral. About 95% of applicants are approved for an advance. To apply for a business cash advance, a business must be registered to operate in the United States, accept Visa or MasterCard, and have total credit sales of $2,500 or more per month.
If you are interested in learning more about how a business cash advance can help your small business, contact Rapid Capital Funding today.
Photo Credit: Kamil Dratwa
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The us auto industry has been on its back for several years now. The situation has accelerated with the most recent credit meltdown and all three are running to capital hill seeking a bailout. It seems like under the current circumstances this request should be met with a resounding YES. If any of you paid attention last week to the latest jobless claims, over 500k for the month!
Well what are we missing? The worst financial crisis since the great depression, staggering unemployment, ECT. ECT. ECT…… Then why do the big three have to get down on their hands and knees and beg? Did AIG have to beg? Did Citigroup? The list goes on and on. The largest manufacturing industry in our nation that represents over 4 million US jobs and our government might let them go bankrupt.
There must be a better way. If I where in charge here is what I would do;
I would give them a small short term bridge loan so that they could survive over the next couple months and meet obligations. During this period I would require them to hire bankruptcy consultants and put together a plan for a packaged bankruptcy. The government would provide the financing to pull them out of bankruptcy. This would do a couple things.
Flickr Image by: Congressman Markey
It would allow the automakers to restructure with their creditors, unions, employees, and most importantly get rid of all the legacy liabilities that have been haunting them for years.
Give consumer the peace of mind that the big three will survive and come back stronger. This way we still buy cars from them because we know the government supports the industry and its survival. All warranties will be honored.
Once this is accomplished the entire industry will be poised for restructuring and will continue to thrive for many years.
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