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Dear subscriber, Welcome to this edition of ENLIGN eNews. Whether you are interested in buying a business, selling a business or are a fellow transaction professional the below articles certainly offer some unique opportunities for structuring and funding for business transactions. If you are considering the purchase or sale of a business NOW is the time to act. The range of positive deal forces and government incentives simply won't last forever. This is our first sNews in a long time. If you are no longer interested in business transaction topics please simply click on the unsubscribe button to the left and we will instantly remove you. 
$15 Billion SBA Infusion
Obama looks to give $15B boost to small businesses Monday, March 16, 2009, 3:08pm EDT Triangle Business Journal - by Kent Hoover Washington Bureau Chief The Treasury Department will purchase up to $15 billion in securities backed by Small Business Administration loans in an effort to unfreeze the secondary market for SBA loans. This should increase SBA lending to small businesses by enabling lenders to sell their existing loans on the secondary market, according to the White House. This will free up capital to make new loans. The new SBA secondary market initiative was announced Monday by President Barack Obama as part of a larger effort to boost SBA lending. Lending through SBA’s flagship 7(a) business loan program is down 58 percent this fiscal year compared with the same period last year. Lending through the 504 program, which primarily finances real estate, is down 47 percent. Small businesses are “not only job generators, but the heart of the American dream,” Obama said. Today, however, “too many entrepreneurs can’t access the capital” they need to start or grow their businesses. “Less lending leads to fewer jobs and lower spending, which leads to less lending, a vicious cycle that delays recovery,” Obama said. Besides the new secondary market purchases, Obama also announced plans for implementing the SBA-related provisions included in the economic stimulus bill. Beginning Monday, the SBA will guarantee up to 90 percent of each 7(a) loan made by private-sector lenders, an increase from the normal 75 percent to 85 percent guarantee. This higher guarantee will encourage lenders to make more SBA loans, because they will have more protection against possible loan losses, according to the Obama administration. Upfront fees on 7(a) loans that lenders pass along to borrowers also will be temporarily eliminated, as will fees on 504 loans. Borrowers or lenders who were charged any of these fees since Feb. 17 -- the day the economic stimulus bill was signed -- will receive a refund. The new initiatives will help community banks make more SBA loans, said Cynthia Blankenship, vice chairman of Bank of the West in Grapevine, Texas. “This is an incredible tool for community banks nationwide to help jump start the economy and the credit markets,” Blankenship said. Because of the frozen secondary market for SBA loans, her bank has been holding $11 million of these loans on its books. These loans now can be sold, freeing up money to make new loans. Marco Lentini, who used an SBA loan to start his Gia’Pronto organic food restaurant six years ago, said the elimination of SBA loan fees and other measures in the stimulus bill, will help him keep expanding. Treasury Secretary Timothy Geithner called on all banks, not just SBA lenders, to increase their lending to small businesses. The administration will require the 21 largest banks who have received government funds through the economic rescue package to report how much small business lending they do every month. All banks will have to report their total lending to small businesses every quarter, instead of just once a year. “We need every bank in the country to do everything in their power to provide the credit that small businesses need to operate, expand and add jobs,” Geithner said. “You need to make the extra effort to make sure that good loans are getting to creditworthy small businesses in order to serve the larger public good of moving this nation towards recovery. And given the role many banks played in causing this crisis, you bear a special responsibility for helping America get out of it.” The chair of the House Small Business Committee praised Obama for acting quickly to implement the SBA loan changes included in the economic stimulus legislation. “His efforts send a clear message to entrepreneurs around the country: You are central to our economic recovery strategy,” said Rep. Nydia Velazquez, D-N.Y. “The ability to secure a loan at affordable terms often makes the difference between whether a small firm stays afloat, grows and create jobs, or shuts it doors,” Velazquez said. “The policies put forth today will go a long way toward addressing the credit shortage that small firms face.” Acting SBA Administrator Daryl Hairston said the agency agrees with Obama that “we owe it to America’s small businesses to be the partner they need in the midst of this crisis.” “We hope small businesses will take the opportunity to ask their banks about the SBA loans that might be available to them,” Hairston said. “And we encourage community banks and other lenders to work with us to reach as many qualified borrowers as we can during these difficult times.” Given the weak state of the economy, however, it is not clear how many small businesses want to borrow money at this time. A survey of small business owners conducted last month for Discover Financial Services found that 23 percent said they would be very likely to apply for an SBA loan if they became easier to get. Another 17 percent said it was somewhat likely they would apply for an SBA loan. The survey found, however, that 90 percent of small businesses had never applied for an SBA loan.
Want to Buy a Business?
Your Timing is Right A large-scale baby boomer exit will make for a buyer's market for businesses over the next several years. Expect a glut of firms to go up for sale as thousands of baby boomers retire. With about 8,000 Americans turning 60 every day, more and more business owners are thinking about retiring. By 2009, an estimated 750,000 companies owned by boomers -- one in every six -- will be looking for buyers, up fifteen-fold from 2001. Most firms will sell to strangers. Children today feel less pressure to run the family business, and even those that want to often find it tough to come up with the cash to pay off parents or other relatives who hold shares in the firm. Family in-fighting and prolonged legal spats also make family handoffs that much harder. Studies show that less than 15% of family businesses successfully make it down the third generation. Owners without an exit strategy will likely sell at a discount, warns John Brown, founder of Business Enterprise Institute. With roughly 20 million more people in the boomer generation than the X Generation, there will be fewer potential buyers, so a good price will be harder to find. That's what makes advance thinking so important. "Gigantic amounts of wealth are not going to be realized because of a lack of planning," says John Hrastar, president of InterSource, a consulting firm. Expert advice is a must. Owners need to consult a battery of advisers, from attorneys to accountants to appraisers, at least a year or so ahead of any expected sale. Potential buyers, including rival businesses, private equity firms and venture capitalists, all have sophisticated experts on their side and owners will need to be able to keep up. An exit planning team will do everything from entertaining bids from potential suitors to making sure the sale is tax-advantageous to spotting and correcting hidden liabilities that could torpedo a sale.
Featured Listing
Listed Price: $492,000 Seller will not sell business apart from commercial real-estate. This business provides daycare services for children and posseses an enrollment license for up to 138 children. The purpose built facility located in central North Carolina has enjoyed steadily increasing enrollment since inception in 2007. Owner must have the ability to work well with adults, children, employees and staff as well as posses basic business, accounting as well as sales/marketing experience. Closest competitor is 2-3 miles away which is significantly smaller and older. This businesses competitive advantage is location and quality of facilities. Center continues to grow and has reached break even. As enrollment approaches capacity profitability is predictable and recurring. Contact Jeff Snell, CBI, ABI for additional information.
Featured Broker
Michael Fekkes represents ENLIGN Business Brokers in the Sandhills region comprised of Southern Pines, Pinehurst, and Fayetteville markets. Michael is a member of the International Business Brokers Association and has completed substantially all of the Certified Business Intermediary Continuing Education requirements. He can be reached via email at Michael Fekkes, or by phone at (910) 691-2202. Back to top^ |
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