Big Stimulus Spending Not Much Help To Small Businesses

If small business owners were hoping for some direct assistance from the stimulus package passed yesterday by the Senate, they’re likely to be disappointed. According to the National Federation of Independent Businesses, there’s little in the bill in the way of direct assistance to small business owners and prospective entrepreneurs.

Small business is responsible for about 70 percent of the new job creation in the US, and in recent surveys, only nine percent of small business owners in the survey said that they plan to add workers to their payrolls in the second quarter of 2009. In fact, small business employment shows a net loss of about one million jobs between February 2008 and today, and some analysts expect small business to shed another one million jobs during 2009.

What the stimulus plan lacks, according to the NFIB, is features that will translate into new sales for small business. The stimulus plan does include a few changes to the tax code that will increase Section 179 deduction limits and extends bonus depreciation. Despite these moves, small businesses are reluctant to make capital improvements, which renders the increased tax incentives helpless.

Capital improvements take capital, and many businesses don’t have access to capital right now. Banks are reluctant to lend and borrowers are reluctant to borrow. There is a way to get the cash you need into your business right now. If your US-based business accepts Visa or MasterCard and generates more than $2,500 per month in credit card transactions, you may be eligible for a merchant cash advance of up to $250,000, depending upon your monthly credit card sales volume.

A merchant cash advance isn’t like a loan. It’s an advance on the cash your business would normally earn. The difference is that you get the cash right away, instead of having to wait for your credit card payments to arrive. Most merchant cash advances can be arranged in seven business days or less. They’re paid back as you take the credit card transactions in, so there’s no monthly loan payment to make and no bills to pay. You’re likely to be eligible even if you have bad credit.

If you need cash for your small business, contact Rapid Capital Funding today and let us show you how we can get you the cash you need when you need it.

Photo Credit: Steve Woods

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Should the US government Bail out the auto industry?

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.

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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