The Paycheck Protection Program (PPP) has provided billions of dollars in loans to millions of small businesses. Most of the recipients received relatively small loans (average size of $80,000 for the second tranche of loans), but there are a significant number of recipients who received $1 million or more, and 40,000 businesses received $2 million or more.
However, while the program clearly allows businesses with up to 500 employees to take out loans of up to $10 million, Congress and the Administration are rethinking that, and are promising to examine and audit those companies that have received more than $2 million in PPP loans. In addition to that scrutiny, however, the press is actively pursuing companies that have received loans of $1 million or more, often “naming and shaming” them and pressuring them to return their PPP funds.
According to the Small Business Association, roughly 50 percent of businesses survive to reach their fifth year. What is interesting, however, is that the SBA’s analysis found that these survival rates generally remain consistent regardless of the overall state of the economy. In other words, lasting success is largely dependent on choosing the right business opportunity.
While understanding the basics of running a business is certainly important, your ability to recognize meaningful opportunities will play a major role in whether you author a lasting success story.
Idenitfying these opportunities isn’t an exact science, but there are still telltale signs to look out for, beginning with the following five.
2. Nobody With A Job Can Help You Become An Entrepreneur
If you spend two seconds thinking about that statement, the truth of it becomes evident. Unfortunately, if you want to become an entrepreneur, the most visible sources of help are the least helpful.
It doesn’t matter how much information you have about how businesses are launched, the missing element is the courage to actually take risks. The entrepreneur, while reducing risk, must embrace it to make their goal a reality. If you need a steady paycheck, you are not an entrepreneur. So why would you get direction from someone who does?
Luck that takes the form of finding valuable or pleasant things that are not looked for
Coined by novelist Horace Walpole based on the fairy tale The Three Princes of Serendip. The Princes were supposedly making these happy discoveries they were not looking for.
TIP OF THE WEEK
Serendipity comes with SBA 7(a) loans.
The IRS has issued a new Form 4506-T and all SBA 7(a) and 504 related requests for IRS tax transcripts must be submitted to IRS Service Centers using the new IRS Form 4506-T (Rev. August 2014).
From Old English tidan (happen), from tid (time).
Betide is often shortened to tide or tidings. Such as when Luis Van Pelt declared in a Charlie Brown Christmas: “Fear not: for, behold, I bring you good tidings of great joy!”
TIP OF THE WEEK
Good tidings for the restaurant industry.
Driven by stronger sales and traffic and a more optimistic outlook among restaurant operators, the National Restaurant Association’s Restaurant Performance Index (RPI) posted a solid gain in October. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 102.8 in October, up 1.8 percent from its September level. In addition, the RPI stood above 100 for the 20th consecutive month, which signifies expansion in the index of key industry indicators.
According to the SBA, restaurants obtain more SBA 7(a) loans that any other business type.
If you would like a copy of the National Restaurant Association’s Restaurant Performance Index for October let me know.
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As suggested earlier, there are multiple interpretations of goodwill which extend beyond the SBA’s formulaic definition of “Selling Price Less Book Value of Acquired TangibleAssets”. Although there is some consistency between new GAAP rules on goodwill accounting, the IRS’ “residual method” and this “formula” method, the general shortcoming with the line of thinking put forth by the SBA to restrict or monitor goodwill-based lending is that goodwill should NOT be considered a negative feature or outcome or the reason why businesses default on their loans To the contrary, only successful firms will generate the profits needed to foster the presence of substantial goodwill however defined. In fact, the more profitable successful a firm becomes, the greater the firm’s goodwill value becomes all other things equal. The more profitable an asset-heavy manufacturing firm becomes, the greater the portion of value that is attributed to goodwill – is this a bad thing? In short, “goodwill” is a “good thing”.
The SBA Does Not Loan Money
Q. Should I get a loan from the SBA?
A. You can’t get a loan from the SBA, but you can get a SBA loan guarantee.
Well, first off, the SBA does not loan money, so you can’t get a loan from the SBA. Only banks loan money. The SBA writes guarantees to limit the losses a bank will experience if your loan goes bad. This is important to know, because it means you will have to qualify under the bank’s rules.
These can be very different from the SBA’s. For example, it is not a requirement for you to collateralize the full loan amount to get an SBA guarantee. Under SBA rules if you run out of assets, but have pledged what you have available, you can be approved. Right now, we know of no bank that will make a loan without collateral equal to our greater than the amount you’re borrowing.
Each bank’s rules are slightly different, with the large banks having the most restrictive and the local and regional banks being the most liberal.
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Tagged business, economic crisis, economy, entrepreneurs, ethics, financial crisis, financial institutions, funding, internet, jobs, meltdown, money, Recession, sba, sbdc, small business