What makes a small business “small”?

We are asked all the time “What defines a small business?” and “Why does it matter?”

Many would answer that small businesses are anchors of a community, creating jobs and opportunity in cities and towns across America.

According to the SBA, “The two most widely used standards to qualify a business as small are 500 employees for most manufacturing and mining industries and $7.5 million in average annual receipts for many non-manufacturing industries.”

And to the second question, only a qualifying small business is able to provide certain services to the SBA, and qualifies for certain financing programs from the SBA. These include SBA 7(a) loans, the most common and popular small business loans which are provided by traditional bank, community bank and non-bank lenders, and up to 85% of which are guaranteed by the SBA.

Learn more about SBA loan programs here.

~Norris Lozano, CEO of BusinessUS

For small business, a lot of lending is moving online

We’ve read multiple stories recently (here are just a few one, two, three, four…) about small business lenders accomplishing astonishing numbers with online lending platforms. In our research we’re finding that this new money appears easy to get (the online applications and due diligence are relatively simple), but the price is steep (annualized interest rates of up to 70%).

Problem is, small businesses have fewer financing options now then in the last decade. Indeed, small businesses have suffered 3 ways when it comes to acquiring capital they need to grow. According to the Harvard Business Review:

1. “A decades-long trend toward consolidation of banking assets into fewer institutions is eliminating a key source of capital for small firms….”
2. “…collateral owned by small businesses lost value during the financial crisis, potentially making small business borrowers less creditworthy today…”
3. “In the recent recession, small-business sales were hit hard and may still be soft, undermining their demand for loan capital…”
4. “…. tightening on loan terms, including the Federal Reserve Senior Loan Officer Survey, for small businesses increased at double-digit rates during the recession and recovery, and have eased at just single-digit rates over the past several quarters. Loosening has been much slower and more tentative for small firms than for large firms…” (italics added)

Despite the low barriers to lending, these expensive online lenders are not a sustainable solution to small business borrowing needs. What’s often overlooked in this discussion of small business loans are SBA loans. SBA loans are available from banks and non-bank lenders to American small businesses that “can not get credit elsewhere” (small businesses that are underserved by traditional lenders) at competitive rates (about 6%) with an SBA guarantee.

~ Norris Lozano

CEO of BusinessUS

SBA Veterans Business Outreach Center of the Year

BusinessUS would like to congratulate Veterans Business Outreach Center at Gulf Coast State College, Panama City, FL for it selection as the SBA Veterans Business Outreach Center of the Year.

Read a little bit about this outstanding organization’s commitment to our Veterans:

Taken from the Small Business Week program:

To get a sense of Brent Peacock’s commitment to helping veteran small business owners, take a look at the numbers. In 2013 Brent and his team at the Gulf Coast State College Veterans Business Outreach Center (VBOC) provided small business counseling, training, finance and contracting assistance to 2,026 veterans. Of those, 174 were women 317 were service disabled veterans, and 112 were National Guard and reservists. Under Brent’s leadership since 2010, the VBOC has established an outstanding reputation for giving veterans the tools to capitalize on their already sharp skills, enabling them to build a foundation for successful entrepreneurship. Serving veterans in the Southern states, the Gulf Coast State College VBOC staff has assisted in securing nearly $6 million in capital investments for their veteran clients. Brent and the team have been instrumental in helping veteran small business owners acquire 31 prime contracts and 14 subcontracts totaling $274 million. Brent also took the lead in implementing the SBA/Syracuse University partnered “Boots to Business” entrepreneurship training program at various military installations for veterans transitioning back to civilian life and small business ownership. He also did numerous training workshops for V-WISE (Veteran Women Igniting the Spirit of Entrepreneurship), a program aimed at helping women veterans start and grow their businesses. Before becoming a business counselor, Brent taught broadcast journalism at Gulf Coast Community College and worked as a news anchor for NPR’s Morning Edition.”

 

Coingratulations, VBOC!

~ Norris Lozano, CEO of BusinessUS, a national non-bank lender specializing in lending to underserved small businesses such as those owned by US Military Veterans.

Coleman weighs in on the downturn in lending to black business owners

Nice clean summary of the Wall Street Journal article here.

If you recall, we wrote about this trend 6 months ago here.

At that time, I stated the following: “Where there are concerns across the industry about particular markets that are underserved by banks, we see a real opportunity. One of our primary goals is to help provide new capital resources to small businesses owned by minorities, women tribal groups and those located in underserved geographical locations.”

BusinessUS is missioned to provide 60% of our loan volume to underserved markets.

~ Norris Lozano, CEO of BusinessUS

BusinessUS Grows Lending Team with Addition of Ivette Hernandez

Business US continues to build its lending team with the addition of experienced SBA lending veteran Ivette Hernandez, who brings 20 years’ experience in small business lending and real estate financing to the California-based nonbank lender.

Ivette reports to Stephanie Bitters, Managing Director of SBA Lending and Chief Credit Officer. She started with BusinessUS on March 6th.

Read the press release.

7 Reasons Alternative Lending to Small Businesses Has Exploded

“When a small business can’t get a loan from a bank, they’ve increasingly been turning to alternative lenders. These lenders … are willing to take on more risk, provide capital faster, and require less documentation than the big banks.” – see the infographic here

Small businesses should be careful of lenders, however, who promise fast cash – and keep an eye on the interest rates!

~Norris Lozano, BusinessUS

Boomers in Business: the 411 on 50+

This brief article reinforces several we’ve read recently about a stealth “target small business owner” – the Boomer Entrepreneur.

“A study by the Ewing Marion Kauffman Foundation reported that the highest rate of entrepreneurial activity over the last few years is not Gen-Y upstarts, but Baby Boomers in the 55-64 year age group.

Here’s a link to the study

~Norris Lozano, CEO of BuisnessUS, a national small business lender missioned to provide Innovative Lending to American Small Business

Lozano and Bitters presenting at NAGGL Lending Leadership Summit

Norris Lozano, CEO of BusinessUS, will be presenting “Delivering Capital to Underserved Communities” with Stephanie Bitters at the Lending Leadership Summit of the National Association of Government Guaranteed Lenders (NAGGL), February 20.

In speaking to the 80+ C-level executives invited to the NAGGL summit, Lozano will reach into a deep well of experience in serving underserved communities with loans and resources. He has been responsible for leading teams in delivering key financing to projects with total costs of over $1 Billion in the last decade.

For more information on Norris Lozano, please visit this link.

For the text of the press release on the NAGGL Lending Leadership Summit, please click here

Stephanie Bitters presenting at NAGGL Lending Leadership Summit

REMINDER: Stephanie Bitters is presenting at the the Lending Leadership Summit of the National Association of Government Guaranteed Lenders (NAGGL), a national organization focused on loans guaranteed by government agencies. The presentation is titled “Delivering Capital to Underserved Communities”.

Ms. Bitters, Managing Director of SBA Lending and Chief Credit Officer of BusinessUS, will be presenting with CEO Norris Lozano during the morning session, February 20th.

Read the whole release here

Norris Lozano to speak at NAGGL Lending Leadership Summit, Atlanta

Norris Lozano (CEO of BusinessUS) is traveling to Atlanta February 19-20 to speak to the Lending Leadership Summit of the National Association of Government Guaranteed Lenders. NAGGL serves the needs and represents the interests of the small business lending community that utilizes SBA business loan programs.

Lozano will be presenting on “Delivering Capital to Underserved Communities” with Stephanie Bitters, Managing Director of SBA Lending & Chief Credit Officer of BusinessUS. Lozano brings over 15 years’ experience working directly with small businesses in underserved communities. He has led teams in financing projects in low-income community with a total cost of more than $1 Billion, including office, retail, manufacturing, schools, medical and arts facilities, creating thousands of FTE jobs, and generating millions in fiscal benefits to target areas.

See the full press release here

11 Reasons 2014 Will Be A Breakout Year For Women Entrepreneurs

Sara Blakely, founder of Spanx

Forbes is reporting optimism for women entrepreneurs in 2014, citing data from “Growing Under the Radar: An Exploration of the Achievements of Million-Dollar Women-Owned Firms”, which was put out by American Express OPEN project.

Here are a few quick factoids from the study:

• Between 2002 and 2012, the number of all women-owned firms has grown by 28.6%, slightly more than the 24.4% increase in all U.S. businesses. (Similarly, the number of $1M+ women-owned firms has grown by 30.7%, just over the 28.9% increase in all million-dollar firms.
• But, at the highest end of sales achievement, the number of $10M+ women-owned firms has grown by 56.6%—fully 47% higher than the 38.4% increase among all $10M+ firms.
• Over the past decade, the growth in the number of women-owned firms with $10 million or more in revenues has increased by 56.6%, a rate 47% faster than the rate of growth of all $10M+ firms and nearly twice (+98%) the rate of growth of all women-owned firms.

The full report is available here

~ Norris Lozano, CEO of BusinessUS, a California-based small business lender with women executives in several top leadership positions.

3 Things Productive People Do, and 1 Surefire Way to Fail

Maybe it’s time for a little editorial dialogue over at Inc. Magazine – – so that readers don’t get whiplash trying to rush TOWARD success and AWAY FROM failure. Here are 3 Things Incredibly Productive People Do and The One Behavior That Guarantees Failure.

~ Norris Lozano, CEO of BusinessUS, a highly productive small business lender located in Southern California

American Banker says: Mobile Banking Increases the Need for Mobile Bankers

A conversation between a banker and his son ended like this: “…It turns out that when your competition stays in the same place, they’re pretty easy to beat.” I grinned and told him that I’ve been saying that to bankers forever.”

Read more here

~ Norris Lozano, CEO of BusinessUS, a California-based small business lender using technology to provide flexibility in the lending experience

Green Businesses are Making Money

Despite the naysayers’ doom and gloom reports about the slim future of “green business”, here are five hot companies that have found niches that deliver both financial and environmental returns, from CNBC.

~Norris Lozano, CEO of BusinessUS, a triple bottom line non-bank lender.

Surprising New Data on SBA Loans

A surprising summary of SBA Lending data was released by Scott Shane on Small Business Trends, and industry publication. By averaging data reported by the Fed for the last four issuances of the “Survey of Terms of Business Lending,” (a quarterly questionnaire administered by Federal Reserve Board of Governors to 398 domestic and foreign banks operating in the United States), Shane compiled results that Norris Lozano, CEO of BusinessUS believes are instructive for small business owners.

Here’s what the numbers show:

• The average SBA-guaranteed loan amount was $276,000.
• The “weighted-average maturity/ repricing interval” was 172 days.
• The average annual interest rate on the loans was 3.91 percent.
• 42.6 percent of the loans were prime-based.
• 43.5 percent of the loans were subject to pre-payment penalties.
• 68.2 percent of the loans were secured by collateral.
• The average loan was slightly more than “moderate risk,” averaging 3.22 on a scale where “3” means “moderate risk” and “4” means “acceptable risk.”

This Small Biz Note was posted by Norris Lozano, CEO of BusinessUS, a California-based small business lender.