New York SBDC Research Network

From Bloomberg LP Written by Zeke Faux and Zachary Mider New York’s attorney general has opened an investigation into potential abuses by finance firms that offer quick money to small businesses nationwide, according to a person familiar with the probe. Attorney General Barbara Underwood’s office is looking into whether merchant cash-advance companies engaged in fraud or abused the state court system, said the person, who spoke on the condition of anonymity. Last week the office subpoenaed one of the largest cash-advance companies, Yellowstone Capital LLC, the person said. "It’s reprehensible to defraud, deceive and harass small-business owners through predatory debt-collection practices and the abuse of our court system," Underwood said in a statement to Bloomberg News that didn’t provide details. “If a company is engaging in fraudulent and deceptive conduct, we want to know.”

Excerpt from an article by Bob Coleman To read more, visit  ColemanReport "Paypal, Amazon and Alibaba pose more of a threat to traditional lenders than the Fintech industry. As Fintech ebbs and flows, these high tech giants are starting to put up some serious small business lending numbers. Amazon just passed $3 billion. Last year Paypal also topped $3 billion in small business lending in the United States. In the US, PayPal offers two financing programs, including one that is similar to the UK program, which takes a percentage of merchants’ PayPal revenue and is underwritten primarily on PayPal sales without a credit check. The other program available in the US is closer to a conventional business loan, taking into account a variety of credit factors and repaid with weekly payments from a business bank account."

From SBA.gov The SBA is making it easier for small businesses to find lenders through Lender Match, a FREE online referral tool that connects small business borrowers with participating SBA lenders. Whether you live in rural America or a metropolitan area, SBA’s Lender Match can help you access capital for your business. Lender Match is a free online referral tool that connects small businesses with participating SBA-approved lenders.

The Office of Advocacy has released its Quarterly Lending Bulletin, Small Business Lending: First Quarter 2015 . This report shows that small business borrowing conditions continued to improve gradually in the first quarter of 2015. For example, the percent change in small business loans outstanding (in amounts of $1 million or less) remained positive or unchanged for the sixth consecutive quarter. Small business loans outstanding totaled $595 billion and remained relatively flat from the previous quarter, but year-over-year (Q1 2014 to Q1 2015) showed an increase of 1.7 percent. Small Business Lending: First Quarter 2015, can be found on Advocacy's website here.

SBA is acknowledging the outstanding work of Empire State Certified Development Corp. (Empire State CDC), a New-York-based CDC, as the winner of the first-ever National Small Business Week Community Advantage Lender of the Year Award. A subsidiary of the New York Business Development Corporation, Empire State CDC is New York’s largest SBA 504 lender and consistently ranks in the top five among the 242 certified development companies nationwide. In FY 2014, Empire State CDC led the nation in approving $8.6 million of Community Advantage (CA) Loans to 66 different small businesses. Empire State CDC President and CEO Patrick J. MacKrell will accept the award. The award will be presented as part of the National Small Business Week 2015 Celebrations in May. A table showing both the top 10 Microlenders and top 10 Community Advantage lenders with their respective rankings and loan production may be accessed at https://www.sba.gov/sites/default/files/Top10-microloan-ca-lenders-fy14.pdf

By Barbara Weltman From time to time, an employee going through a rough financial patch may turn to an employer for help. As member of your small business family—which is how many owners view their staff—you want to be helpful. But lending money to an employee should only be done after considering all the issues. Practical concerns There’s no right or wrong answer when someone asks you for a loan. Your decision to help out often depends on the particular facts and circumstances. But before you make a loan to someone on your payroll, here are some of the questions you might want to ask: *Do you have serious concerns about being repaid? If you aren't repaid, will the loss materially impact you or your business? What happens if you need to terminate the worker before the loan is repaid (e.g., your business contracts; the employee’s performance becomes unacceptable)? *Will you be setting a dangerous precedent and become an easy mark for other employees? (Don’t think that word

Data for the fourth quarter of 2013 show signs of improvement in small business lending. For the first time in fifteen consecutive quarters, both the value and volume of small business loans increased simultaneously—by 0.4 percent and 1.1 percent respectively. For details, see the Office of Advocacy’s Quarterly Lending Bulletin .

Small Business Lending in the United States is the Office of Advocacy’s annual report on bank lending to small businesses. Financing is critical for small businesses; without it, they would be hard pressed to make important contributions to the nation’s economic health and well-being. In the pages of this report, you will find the most current available information on lending to small businesses by depository institutions of various sizes in the United States. Tables in the report provide a wealth of data on the amount and number of loans made to small businesses year by year. The overall picture looks better than it did a year ago. Although lending to small businesses was still down, the decline was less than in 2010 and 2011, an indication of progress. You will be able to track the year-by-year changes in small business lending as the economy continues to improve. Readers can also learn more about what’s happening with the banks in their own states and localities. Detailed tab

Financial conditions were supportive of economic growth, and borrowing conditions for small firms gradually improved. The declines in small business lending stabilized, and small business borrowing turned up for the first time in 10 quarters. A copy of the bulletin . Should you need further information, please feel free to contact Victoria Williams at (202) 205-6533 or advocacy@sba.gov.

The Office of Advocacy has released two items of lending research. The Small Business Quarterly Lending Bulletin for second quarter 2012 shows that U.S. economic activity increased in the first half of 2012 at a slower pace than at the end of 2011, and total lending to small firms inched downward. The decline was generated primarily by commercial real estate loans; in general, the climate was supportive of economic growth. A new report, How Did the Financial Crisis Affect Small Business Lending in the United States? , by Rebel Cole, uses data from numerous sources for the period 1994-2011 to analyze lending to U.S. firms. It finds that bank lending to businesses declined significantly after the crisis, and small firms were affected more than large ones. The study was written under contract to Advocacy. The author of the study, Rebel Cole, is a professor of finance in the Kellstadt College of Commerce at DePaul University in Chicago, Illinois. Please note that the report examines t

Jeff Boyce, who sits on the New York SBDC Advisory Board, forwarded a link to a new report found on the Kauffman Foundation website. It's called The Capital Structure: Decisions of New Firms . It's 20 pages long, and was generated by using data from Kauffman's Firm Survey. From its Abstract: "This paper investigates the capital structure choices that firms make in their initial year of operations . . . Contrary to many accounts of startup activity, the firms in our data rely heavily on external debt sources as bank financing, and less heavily on friends and family-based funding sources." Later in the report, "external debt sources" is defined to include local bank financing, as well as that of credit cards. There's a lot more to the report, but I invite you to read it. As Jeff mentioned in his accompanying email, "This recent Kauffman Foundation report underscores the importance of microloan funds and small business lending operations like NY

Lending and Borrowing from the General Public YOUR MONEY Person-To-Person Lending Flourishes on Web by Jessica Smith Morning Edition, NPR , November 2, 2007 “Welcome to the era of coffee shop money lending.” I read this story on NPR.org about person-to-person lending on the Internet which just seemed like an amazing idea. It is fascinating that this exists and that it seems to work. The idea is that a person writes a profile of how much they want to borrow and for what and what their top limit on the interest they are willing to pay and then people bid on the loan request. The borrower is vouched for by friends, colleagues or family and the amount raised from various lenders is consolidated by Prosper.com and then the money is distributed. These are not small loans either- they can run from $50 to $25,000. It seems a risky proposition but interesting to see how people will take things into their own hands. Prosper.com "Prosper generates revenue by collecting a one-time 1% or 2% f