Banks Looking to make loans


Sara Ross makes deep-fried vanilla cupcakes filled with whipped cream, among others, but the popularity of her bakery’s unconventional creations wasn’t enough for her old bank, which last year elected not to offer her a line of credit.

No worries, as Ms. Ross, of Somerville, Mass., was able to find another lender that extended her a $75,000 credit line—and in May she moved into a plant that handles all of her baking needs. “I’ve seen more and more signs of business improving,” she says.

Banks Target Booming Businesses

Kelvin Ma for The Wall Street Journal
When the lease on one of Sara Ross’s bakeries expired in May, she tapped into a $75,000 credit line and rented a plant that handles all the baking for her retail store.

Loans like Ms. Ross’s, from Banco Santander SA’s SAN +1.80%Sovereign Bank unit, are one of the few bright spots for the U.S. banking industry. Commercial and industrial loans outstanding jumped 14% to $1.45 trillion in July, the latest month for which figures are available, from a year earlier on a seasonally adjusted basis, according to the Federal Reserve.

The growth rate is twice as fast as gains in overall bank credit. Fed data show that nonreal-estate loans to businesses are up by double-digit percentages compared with a year earlier for four quarters in a row.

The recent growth in loans to companies largely reflects pent-up demand at larger businesses, the improved U.S. economy and looser loan terms at some banks, says James Chessen, chief economist at the American Bankers Association, a trade group.

If the economy remains stable or improves, growing loan volume and the resulting payments that will flow into banks will buoy those weighed down by low interest rates. In recent years, rock-bottom rates have hurt banks’ net interest margins, or the difference between what banks collect on loans and pay on deposits.

Many businesses took time to restructure during the recession and are now in a better position to borrow and plow ahead with deferred capital plans, Mr. Chessen says.

Yet few bankers or economists are willing to predict that the spree will last. Questions about its staying power include the November elections and possible double whammy of tax increases and spending cuts dubbed the “fiscal cliff.” The Federal Reserve said on Thursday it expects to keep interest rates near zero until 2015.

Growing eagerness to lend, including by wooing business away from rival banks, is evident at many firms but appears particularly prevalent at some of the large regional lenders. In the second quarter, loans outstanding at BB&T Corp., BBT -0.15%a regional bank based in Winston-Salem, N.C., rose 8% from a year earlier to $113.81 billion. SunTrust Banks Inc., STI -0.59%Atlanta, reported an 8.4% rise to $124.56 billion. At the TD Bank TD.T +0.16%unit of Canada’s Toronto-Dominion Bank, loans surged 15% to $86.3 billion.

The expansion reflects “basically a shift in the growth to the larger players,” says John Pancari, a managing director and senior regional-banks analyst at Evercore Partners EVR +3.35%.

TD Bank has seen broad loan growth, with especially strong increases in commercial and industrial lending, says Greg Braca, head of corporate and specialty banking. “Our mantra has been taking [market] share,” he says.

The industry gains come as more bankers report easier terms on business loans, according to the latest Fed survey of senior loan officers. The survey, released last month, said that “relatively large fractions of respondents” were charging lower rates relative to their costs of funds, in a trend that will help them win business but could add to pressure on profits if the economy fails to gain traction.

Ms. Ross, the cupcake-maker, previously banked with Winter Hill Bank, of Somerville, Mass. But she left because she couldn’t secure a line of credit for her company, Kickass Cupcakes.

Small-business lending “is not an area that I would say we do record business in,” Winter Hill Bank President and Chief Executive Sandra McGoldrick says.

Sovereign charges Ms. Ross an annual interest rate of 7.25% on whatever she borrows through her credit line. Sovereign, based in Boston, declined to comment.

BB&T says it is gaining clout as lenders outside the traditional banking system, which were active several years ago, pull back. Those companies “are being much more conservative and not leveraging up as much as they did before the crisis,” says Daryl Bible, chief financial officer at BB&T, the 12th-largest U.S. bank by assets.

In Huntington, N.Y., Joseph Willen recently received a five-year, $500,000 equipment loan from TD Bank with an interest rate of 4%. The loan is being used to buy new furniture and computers for his title-insurance company, Advantage Title.

Coming out of the recession, Mr. Willen refocused his company’s business model to take advantage of the rebounding commercial-real-estate market, and now is able to expand the business. The equipment loan will help pay for Advantage Title’s move to larger office space in Melville, N.Y.

Still, shopping around for a loan reminded Mr. Willen that this is hardly a return to the boom years. He says he talked to three or four banks but had trouble getting favorable terms. “They seemed to be gun-shy about lending,” he says.


Sanjay Dhole Superstar

The attached picture is from the Association of Small Business Development Centers Annual Meeting held recently in New Orleans, Louisiana. Sanjay, Technology Programs Coordinator from Maricopa Community College SBDC was honored as the Arizona State Star at the event, held amoung nearly 1,200 peers from accross the United States. Sanjay was also a presenter at the conference, sharing his expertise in working with technology businesses and tools to help these businesses succeed.

Congratulations, Sanjay!

Baldrige Process Can Help Small Businesses Succeed

Baldrige Small Business Research Summer 2012 Summary:
July 26th, 2012

Dr. Kevin McCormack
DRK Research and Consulting LLC
Phone: 919-762-9322
kmccormack (at) drkresearch (dot) org

The Breakthrough Survey is the cornerstone of the Small Business Breakthrough Project. It has been designed to identify the specific steps that a startup can take to accelerate their company’s growth.

Our hypothesis is that small business success can become more predictable if startups apply appropriate best management practices (as defined by U.S. Baldrige Performance Excellence Program) earlier in their life cycle.

In a survey during 2011/2012, we ask over 220 survey participants to rate themselves on business maturity Levels 0 to Level 5 as presented in the Breakthrough Growth Chart, (see graphic below), and then asked them about their attitudes, behaviors, business structure and performance. Over 45% of the participants had less than 3 employees and of that, one half had 1 employee. 92% had less than 50 employees.

What we found is:
At level 0 the “desires” of small business are great. They are enthusiastic and are shooting high. Their performance is also rated high.
As business mature they seem to lose site of strategy, process and people and their performance degrades. At Level 2 they start to lose the importance of process and do not recover much as they mature to Levels 3-5.
Business success seems almost random (and a small difference from level 0 to 5). Although organizations report that they are “focusing on business basics” they do not seem to be engaging in process or strategic improvement. In other words, there seems to be a disconnect between their intentions and appropriate action.
The data shows that many small businesses are struggling with the basics. They require more direction in practical implementation of Baldrige best practices. Many are struggling with a lack of guidance.
We found a slight ROI for those companies who (randomly discovered and) implemented best practices. With a better focus on Baldrige practices, it could be better.

Ideas to improve your businesses cash flow

Whether you’re growing a small business or managing your household budget, having cash ready when you need it is an essential precondition for financial well being. For small business financing, it’s what lets you keep the engines of your operation humming, gets you through difficult times and allows you to take advantage of any opportunities that may come your way.
Consequently, maintaining healthy small business cash flow is vital. Here are some small business finance tips to help keep your company running smoothly:
Start with your expenses

Knowing what you spend is an obvious place to begin. Evaluate the services you pay for at least once a year to see if you can find better-priced options. Often you’ll discover there are new plans or deals available. At the same time, look into offerings from other service providers to save. Finally, talk with friends and fellow small business owners about the services they use and any deals they receive.
Look at your collections

Invoice as soon as you can to keep cash coming in. Using electronic invoices can speed up the process. Offer various payment options, such as checks, credit cards or electronic funds transfer. Instead of putting “Due on receipt” on your invoices, include specific dates. Consider offering a discount for early payment.
Reexamine your pricing

Are you accurately accounting for all your expenses? Consider the cost of goods, utilities, rent, payroll and any other costs. If some products attract more customers than others you may want to price them competitively to draw customers to your business. At the same time, see if you can sell other items for higher profit margins.
Do you know your credit rating?

If you’re applying for small business financing, you can be sure your bank does. Part of ensuring a healthy small business cash flow means easy access to financing if you require it. Keeping up your credit score can help improve your chances of accessing additional funds if you need them and give you lower rates on those funds. To improve your score, pay bills on time, update your information and keep up with your score as reported by lenders.
Expand cash reserves

Unfortunately, unexpected expenses are part of running a small business. Dealing with them quickly and on your own terms can mean the difference between a highly successful bottom line and a disappointing financial outlook. Develop a plan to have money set aside to deal with the unexpected. Ensuring a strong small business cash flow is a vital part of a thriving business.

A Guide to What Entrepreneurs Can Patent

Got a great idea for a business? Wondering if you can patent it before someone else comes up with something similar?

Technically, you can’t patent an idea for a business – for example, if you have a unique idea for an online store or a new chain of themed restaurants. However, you may be able to protect and patent a method of doing business – if it meets very specific criteria and requirements.

Here’s what you need to know about what patent protection can do for your business, and about other intellectual property issues that should also come into play.

What You Can Patent

There are three types of patents you can apply for based on the nature of your invention: utility patents, design patents, or plant (of the green variety) patents.

If you have a business idea that is somewhat abstract, then you may be eligible to apply for a utility patent. A utility patent may be granted to anyone who invents or discovers any new and useful:

Article of manufacture
Composition of matter
Any new and useful improvement of these.
That’s a pretty broad bucket of innovation. But the U.S Patent and Trademark Office (USPTO) is also very specific about the requirements for these patents. Your idea or invention must be:

Non-obvious – meaning anyone else with the same skills in this area could not have come up with the same idea
Clearly explained and documented so that someone equally skilled could make and use the invention
The Patenting Process

If you are confident your idea falls within the definitions and requirements above, check out the next steps, which will include checking for previously filed patents, and are described here by the USPTO. If you’re not clear whether your idea falls within these boundaries, read USPTO’s “How do I Know whether my Invention is Patentable?”.

Either way, it’s worth taking time to consult with a patent lawyer. If you choose to proceed, be prepared. This can take time and using the services of a patent attorney to help you meet the precise documentation and filing requirements is going to cost you. If you are seeking outside investment and have established that your business idea or invention is patentable, it may be worth rolling the cost of getting legal help into your business plan and seeing if your investors will cover the costs.

Other Ways of Protecting Your Business Idea

Even if your idea isn’t patentable, there are still important assets of your business you can protect. For example, web content can be copyrighted. You can also trademark, and should do so if you want to claim and protect your product or business name. Here’s a quick overview of these two forms of protection and how to register for them:

Copyright – If your business involves creating original written works, music, or videos, these can be covered by copyright laws. Copyright can be claimed through the U.S. Copyright Office for a small fee. Note that copyright does not protect ideas, concepts, systems, or methods of doing something. While you can express your ideas in writing or drawings and claim copyright in your description, copyright will not protect the idea itself.

Trademark – A trademark is different from a patent because it only protects words, names, symbols, sounds, or colors that distinguish goods and services. Trademarks, unlike patents, can be renewed forever as long as they are being used in commerce. Trademark infringement can carry a high cost for your business. Before you pick a name, use the U.S. Patent and Trademark Office’s trademark search tool to see if a similar name, or variations of it, is trademarked. If your chosen name is unclaimed you can then register for the trademark online (for a fee).