Advanced help is usually a good idea when faced with complex problems, and the use of a small business financing expert is a prudent step for commercial borrowers to take in view of continuing business lending difficulties. Small business owners are currently confronting what appears to be the worst commercial banking climate in several decades.

When it comes to running their own business, most small business owners probably have a very independent perspective. It is normal for most small businesses to postpone seeking outside consulting help even when facing a business loan rejection by their banker. Many previous business finance options are no longer available from traditional banks, and this might not yet be obvious to some small business owners. Realizing that they have a commercial finance problem requiring outside advanced consulting help will often be an appropriate starting point for a business borrower to seek a small business finance expert. For most this realization will occur after being turned down for a commercial loan by their current bank and not knowing what to do next. Some business owners might have already had this experience and then unsuccessfully tried to find new financing. In a growing number of situations, the decision by many banks to permanently stop making commercial loans to small businesses will be the last straw that prompts a call for expert assistance.

Some potential pitfalls should be anticipated during efforts to find a qualified and experienced working capital expert. Qualifications to act in the capacity of a small business loan expert are exhibited by very few individuals or companies. For an individual being asked to provide advanced help which can be used to formulate effective business financing options, problem-finding and problem-solving are both essential components. An adequate stock of these skills that are so critical to the success of a business financing expert are generally scarce commodities in any field but commercial financing in particular seems to be suffering from an ongoing shortage of these positive traits.

A large number of former residential mortgage consultants have no meaningful experience involving complicated commercial real estate loans but have still attempted to add small business loans to their line of products. Small business financing is more complicated than realized by many borrowers. It is appropriate to seek a qualified individual who is engaged in it as a full-time occupation and not a part-time venture because it usually takes at least several years to master the field. Finding a suitable full-time expert in an established commercial financing business with extensive experience should be emphasized when building upon this observation. It will also be prudent to avoid a current banking relationship when seeking advice about who to contact as prospective business financing experts. This will eliminate potential conflicts of interest and also properly reflect that a bank which has already been less than helpful in making needed loans will not necessarily have a trustworthy recommendation.

Business owners should not lose sight of their immediate objective when seeking small business loan expert help. Ensuring that all practical and effective commercial finance options are fully reviewed is ultimately the primary purpose in using a small business financing expert. It is essential that commercial borrowers receive thorough and candid advice before finalizing any working capital and commercial loan agreements.

Finance Research & Analysis for July 20, 2008

The following financial analysis excerpts are from research revisions recently completed on investment portfolios:

**Analysis 3: From D8 (Global) Financial Portfolio Research Revision**

Chicago Mercantile Exchange (CME) vs. NYSE Euronext (NYX):

*Observation – Relative Strength: Results in the relative strength analysis of Chicago Mercantile Exchange (CME) versus NYSE Euronext (NYX) indicate that the CME is strongly outperforming NYX on a relative basis. However, like NDAQ vs. NYX, the CME also has a negative price path. Thus, in this analysis, for the relative strength to be positive, the CME must have a less negative price path relative to the path for NYX.

*Observation – Regression: Comparison of the linear regression to the time-series that has a 3-period forward shift finds the following formation: The linear regression is below the time-series. Since the linear regression provides the “best fit” to the price path, this has negative implications for CME.

*Observation – Price Performance: Chicago Mercantile Exchange (CME) shows the continuation of a negative price path (downward slope) on strong indicators.

[Reference Charts - SCR: D8-17 (relative strength); A8-17A (regression); A8-17B (price)]

**Analysis 4: From D8 (Global) Financial Portfolio Research Revision**

PowerShares Intl Listed Private Equity (PFP) vs. SPDR Capital Markets (KCE):

*Observation – Relative Strength: Results in the relative strength analysis of PowerShares Intl Listed Private Equity (PFP) versus SPDR Capital Markets (KCE) indicate that the PFP is strongly outperforming KCE on a relative basis. However, and like the financials in general, PFP has a negative price path.

*Observation – Regression: Comparison of the linear regression to the time-series that has a 3-period forward shift finds the following formation: The linear regression is slightly above the time-series. Since the linear regression provides the “best fit” to the price path, this has slightly positive implications for PFP.

*Observation – Price Performance: PowerShares Intl Listed Private Equity (PFP) shows a continuation of a negative price path (downward slope) but on weak indicators. For right now, and certainly subject to change, investors are placing more faith in private equity than in the overall financial sector.

[Reference Charts - SCR: D8-21 (relative strength); A8-21A (regression); A8-21B (price)]

For most investors, a diversified portfolio approach combining stocks, bonds, money market securities, etc., is optimal. While diversification cannot protect against a loss from a declining market, it can reduce the overall portfolio’s volatility.

Finally, to the above analysis, the usual disclaimers apply. Since all Strategic Capital Research publications provide research that is conducted using historical data, a reminder needs to be made that the analysis of past market reactions cannot predict future market actions. In particular, no amount of historical data can predict the sudden changes that occasionally occur in financial markets.

Any successful business owner is constantly evaluating the performance of his or her company, comparing it with the company’s historical figures, with its industry competitors, and even with successful businesses from other industries. To complete a thorough examination of your company’s effectiveness, however, you need to look at more than just easily attainable numbers like sales, profits, and total assets. You must be able to read between the lines of your financial statements and make the seemingly inconsequential numbers accessible and comprehensible.

     This massive data overload could seem staggering. Luckily, there are many well-tested ratios out there that make the task a bit less daunting. Comparative ratio analysis helps you identify and quantify your company’s strengths and weaknesses, evaluate its financial position, and understand the risks you may be taking.

     As with any other form of analysis, comparative ratio techniques aren’t definitive and their results shouldn’t be viewed as gospel. Many off-the-balance-sheet factors can play a role in the success or failure of a company. But, when used in concert with various other business evaluation processes, comparative ratios are invaluable.

When performing a ratio analysis of financial statements, it is often helpful to adjust the figures to common-size numbers. To do this, change each line item on a statement to a percentage of the total. For example, on a balance sheet, each figure is shown as a percentage of total assets, and on an income statement, each item is expressed as a percentage of sales.

    This technique is quite useful when you are comparing your business to other businesses or to averages from an entire industry, because differences in size are neutralized by reducing all figures to common-size ratios. Industry statistics are frequently published in common-size form.

     When comparing your company with industry figures, make sure that the financial data for each company reflect comparable price levels, and that it was developed using comparable accounting methods, classification procedures, and valuation bases.

     Such comparisons should be limited to companies engaged in similar business activities. When the financial policies of two companies differ, these differences should be recognized in the evaluation of comparative reports. For example, one company leases its properties while the other purchases such items; one company finances its operations using long-term borrowing while the other relies primarily on funds supplied by stockholders and by earnings. Financial statements for two companies under these circumstances are not wholly comparable.

A financial analyst can adopt the following tools for analysis of the financial statements.  These are also termed as methods of financial analysis.

1.      Comparative Financial Statements:-

 Comparative Financial statements are those statements which have been designed in a way so as to provide time perspective to the consideration of various elements of financial position embodied in such statements. In these statements figures for two or more periods are placed side by side to facilitate comparison.  Both the Income statements and Balance Sheet can be prepared in the form of Comparative Financial Statements.

 Comparative Income Statements:-

The Income statement discloses net profit or net loss on  account of operations.  A comparative income statements will show the absolute figures for two or more periods, the absolute change from one period to another and if desired the change in terms of percentages.  Since, the figures for two or more periods are shown side by side; the reader can quickly ascertain whether sales have increased or decreased, whether cost of sales has increased or decreased etc. thus, only a reading of data included in comparative income statements will be helpful in deriving meaningful conclusions.

Comparative Balance Sheet:-

  Comparative Balance Sheet as on two or more different dates can be used for comparing assets and liabilities and finding out any increase or decrease in those items.  Thus, while in a single balance sheet the emphasis is on present position, it is on change in the comparative balance sheet.  Such a balance sheet is very useful in sty dying the trends in an enterprise.

 2.Common-size Financial Statements:-Common-size Financial Statements are those in which figures reported are converted into percentages to some common base.  In the income statements the sale figure is assumed to be 100 and all figures are expressed as a percentage of sales.  Similarly in the balance sheet the total of assets or liabilities is taken us 100 and all the figures are expressed as a percentage of this total.

3.Trend Percentages:-

  Trend Percentage is immensely helpful in making a comparative study of the financial statements for several years.  The methods of calculating trend percentages involve the calculation of percentage relationship that each item bears to the same item in the base year.  Any year may be taken as the base year.  It is usually the earliest year.  Any intervening year may also be taken as the base year.  Each item of base year is taken as 100 and on the basic the percentages for each of the items of     each of the years are calculated.  These percentages can also be taken as index numbers showing relative changes in the financial data resulting with the passage of time.

 4. Ratio Analysis:- This is the most important tool available to financial analysts for their work.  An accounting ratio shows the relationship in mathematical terms between two interrelated accounting figures.  These figures have to be interrelated because no useful purpose will be served if ratios are calculated between two figures which are not at all related to each other.

The above mentioned are selective financial tools which can be employed by the analyst to do homework for the financial statement review and hence appraise the strength of the company.

There are a number of financial options in the market and you need to analyze each in detail to determine which suits you the best. A business can be financed with help from private investors, lenders and financial institutions depending on your needs and priorities.

Varied Commercial Financial Options

Credit Lines: In this the lender is actually a bank. The bank gives c redit lines to ( h ttp://www.hjventures.com/factoring/credit-analysis.html ) fill the temporary shortages of business like inventories, receivables etc. These shortages are mostly due to the time difference between the payouts and the collections. Unlike factoring, financing through credit line requires a good credibility record along with the collateral. Banks also require business owners to maintain the obligatory balance of funds in their accounts.

Short-term Loans: As the name suggests these are the loans that are sought for term of a year or less and are generally secured. They are taken to meet expenses like insurance or to cash over the discounts offered by the supplier and are mostly paid back in lump sum at the maturity.

Asset-Based Loans: Similar to factoring, asset-based loans are raised on current assets like inventory or accounts receivables ( http://www.hjventures.com/factoring/accounts-receivables.html ) . However its ambit goes wider to include varied current assets while in factoring it is limited to account receivables. The lender has a security in the assets of a company and are mostly sought to meet the working capital needs.

Contract Financing: In this kind of financing funds are advanced in accordance with the work performed till date. Criteria on which finance are provided under contract financing is the credibility of business to complete a contract and its ability to perform. Under this contracts are used as collateral to get short-term loans.

When it is difficult to obtain finance through banks factoring is a promising option. The method also relieves small companies of the expenses involved with collection of receivables. It is not a one-time transaction and is generally provided on a contractual basis.

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TREAT ECONOMY AS TERMINAL DISEASE!

You need to treat the current economic climate as you would a terminal disease! If you were told you had a terminal disease what would you do? Unless you are ready to surrender and die, you would seek every possible solution? You would spend your last dollars in order to find a cure? You would travel to every corner of the planet seeking a solution? You would learn everything you could about the disease so you could find a solution to it!
This is exactly how individuals and businesses need to respond to the current economic situation. The economy is sick and it is no longer important that it is sick or how it got sick or who is to blame! The only thing that is important is what are YOU going to to find your cure!

There are only three possible actions to take and only one is correct:
1) Ignore- (that is what got us here- unwilling to confront the problem)
2) Retreat- (cut back, contract and get smaller- ultimately cease to exist)
3) Attack- (do everything possible to expand and live- survival)

Individuals, businesses and entire governments have already been through the stage of ignoring. (See foreclosures as one example of ignoring). This article is for those that are beyond ignoring and who are deciding whether to retreat or attack.

(SHOW THIS TO EXECUTIVES WHERE YOU WORK)
Most will incorrectly elect actions to retreat as a way to survive. Retreating shows up in management electing to cut spending, reduce payroll, stop hiring, eliminate advertising and quit training. While retreating may seem like the logical thing to do, you would never do this if you knew you had a terminal illness.
While it may seem counter intuitive to expand and attack the market at this time this is the only solution that will ensure you are a winner on the other side of the current scene.

Wilma Rudolph was the 20th of 22 children. She was born prematurely and her survival was doubtful. When she was 4 years old, she contacted double pneumonia and scarlet fever, which left her with a paralyzed left leg. At age 9, she removed the metal leg brace she had been dependent on and began to walk without it. By 13 she had developed rhythmic walk, which doctors said was a miracle. That same year she decided to become a runner and for the next few years she came in last in every race she entered. Everyone told her to quit, but she kept on running. One day she actually won a race and from then went on to win every race she entered. Eventually this little girl, who was told she would never walk again, went on to win three Olympic gold medals.

You can’t win the race by not running. You can’t hit the ball without swinging. You can’t win in life by quitting and you will never find a cure by ignoring or retreating. "Approach your business challenges the same way you would a terminal disease- attack with all your resources, never retreat and never ignore!"

About Grant Cardone

Question about economy

*Explain how the economy works as a cycle.

*Describe how both a flourishing and a failing economy follows a cycle.

*What types of events could cause a break in a successful economy, causing an economy to fail?

Response would be greatlly apriciated, thanks!

According to the economics teams at three leading investment banks, the Australian economy is slumping right now and will continue to worsen well into 2009 at a rate lower than the forecasts from Treasury and The Reserve Bank.

The economics teams at Goldman Sachs JBWere and Merrill Lynch have slashed their estimates of 2008 and 2009 economic growth for Australia and are now predicting recession.

And ABN Amro reckons the economy is stalling right now and growth is close to zero.

They all agree that as a result the Federal budget will go into deficit, unemployment will rise to 7.5%, and the Reserve Bank will cut interest rates to a low of 3.5%, a point suggested late last week as well by Macquarie Bank interest rate strategist, Rory Robertson.

He and the two teams now say we will get a 1% cut in interest rates from the Reserve Bank at its meeting next Tuesday, which will take the cuts since September to 3%, a measure of how seriously the RBA views what is happening in the economy.

But debt futures market are tipping the RBA to cut the cash rate by a massive 1.25% next Tuesday, which if it happens, would be the largest official rate cut since the 1990 recession.

ABN Amro’s chief economist Kieran Davies said a shrinking Australian economy, falling asset prices and recession-like levels of business confidence will make the RBA more inclined to cut rates aggressively.

“The wealth effect of falling asset prices is snowballing and the Chinese economy is slowing very sharply. Also, we think the economy is contracting now. We are close to zero.”

A 1.25% rate cut in December would take the cash rate to 4%.

The cash rate was at 4.25% in late 2001 and has not been below that level since the RBA began publishing its cash rate target in 1990.

Economists point out that the debt futures market is signalling a cash rate low of around 3%, which would be the lowest level for rates since 1960, when the credit squeeze hit that year and

Federal Treasurer Wayne Swan still claims the budget won’t go into deficit: the forecasts reckon it will, and they were supported by the latest update from the well-connected Access Economics team in Canberra.(Source).

Goldman Sachs JBWere’s downgrade follows one in the US from their economics group there for the US on Friday:

Goldman Sachs said US GDP was shrinking at a 5 % annual rate in the current quarter and will drop 3% and 1% in the next two quarters.

It said in a note US unemployment will reach 9% by this time next year. In contrast the US Fed reckons unemployment will get to 7.6% next year (it’s 6.5% at the moment).

This morning in a note to clients sent out over the weekend, Goldman Sachs JBWere said:

“We have revised down our economic growth forecasts from 2.0% in 2008 and 1.7% in 2009, to 1.8% in 2008 and 1.0% in 2009.

The new forecasts incorporate a deeper recession through 2H08 than we first forecast in early October and a shallower recovery path through 2H09.

“We have also revised our interest rate forecasts, with the RBA now expected to cut the cash rate to 3.5% by March 2009 (75bp lower than our previous forecast).

“The combination of dramatic financial wealth destruction, debilitating tightness in money markets, rapidly slowing credit growth, sharp falls in commodity prices and evidence that Australian house prices are declining led us to formally adopt a recession in Australia as our base line view on 12th October.

“Since that time our conviction that Australia is poised for its first recession in 17 years has strengthened.

“The reduction in commodity prices by our resource strategy team suggests that Australia’s terms of trade will decline ~20% year on year by end- 2009, sufficient to strip around 3.0% from domestic demand growth.

“We now expect business investment to decline 7.0% in 2009 (was -1.7%) and domestic demand growth of just 0.6% in 2009 (was 1.8%). As such, we have also raised our estimate of the unemployment rate from 6.5% by end-2009 to 7.5%.

“We believe economic growth will contract -0.5% in the September quarter, -0.3% in the December quarter and -0.1% in the March quarter.

“This would be sufficient to see GDP decline -0.6%yoy in the March quarter 2009 and -0.3%yoy in the June quarter 2009 before an acceleration to +3.25%yoy by December 2009 as the combined effects of the interest rate cuts, A$ weakness and fiscal stimulus coagulate in 2H09 and drive a rebound in demand.

“We remain convinced that the Australian economy faces a debt-deflation cycle. The risk of deflation was brought home to all policymakers by the sharp fall in US inflation in October.

“In essence, we believe the threat of deflation (no matter how small) will accelerate plans of interest rate cuts and we now expect the RBA to cut interest rates 100bp in December, 50bp at its next meeting in February and a further 25bp in March.
“This will take the RBA cash rate to 3.5% by March 2009, a 375bp cutting cycle since September 2008.

“We believe the government should worry less about protecting an underlying surplus and more about providing the conditions to promote aggregate demand growth.

“We have downgraded our Market Forecasts reflecting a reality check due to the current market turmoil as well as incorporating the recent revisions to our commodity forecasts and domestic economic growth forecasts.

“Reduced our Industrial top-down FY09 EPS forecast from -5.0% to -15.0% (bottom-up forecast is +3.3%). – Reduced our resources FY09 EPS growth forecast from 0.0% to -15.0% (bottom-up +4.4%) and our FY10 from +15% to -5.0% (bottom-up +20%).

“Our revised forecasts for the ASX200 are: Dec’08: 3400 (previously 4525; -25%) – Jun’09: 3780 (4975; -24%) – Dec’09: 4100 (5350; -23%). The ASX closed at 3374 yesterday , so it’s already under the 2008 forecast of GSJBW.”

Merrill Lynch wrote yesterday:
The Australian economy is being overwhelmed by the global financial crisis and external growth shock, impaired credit markets, collapsing asset prices, and imbalances on the household sector balance sheet.

We are downgrading our 2009 GDP forecast to 0.2% (down from 1.7% previously).

We expect the economy to contract on a through the year basis over FY09.

In our view, the very substantial monetary and fiscal policy response and adjustment in the exchange rate will not be sufficient to avoid a recession over 1H2009.

Our business cycle analysis and leading indicator frameworks are pointing to a rapid deceleration in domestic demand growth over the next 3-4 quarters.

Lead indicators of employment (and income growth) have deteriorated significantly over the past quarter.

Our downgrade to GDP growth covers all components of private demand (household spending, housing and business investment) and export volumes.

Business investment in particular will be negatively impacted by the global recession, the fall in the terms of trade and the tightening in the supply of credit.

Global lead indictors have fallen deep into hard landing territory. ML is forecasting global growth of just 1.5% in 2009, down from 3.4% in 2008.

The commodity price and terms of trade decline in 2009 will sharply reduce gross domestic incomes (both directly and indirectly).

The steep decline in asset prices over the past 12 months and need for households to lift savings and de-lever reinforces a very weak outlook for household spending through 2009, despite the cash-flow relief coming from lower interest rates and petrol prices.

We expect the labour market to weaken significantly over the next 12-18 months with employment growth falling to -2.0% by late 2009 and the unemployment rate rising to 7.5%.

The household savings rate is assumed to rise to 3.75% (from 0.9% currently) as de-leveraging intensifies.

We are more optimistic about 2010, with substantial global and domestic policy stimulus expected to support a recovery in growth. We expect GDP growth of 2.2% in 2010, led initially by a cyclical recovery in housing activity and strengthening global growth.

We expect the RBA to lower the cash rate to 3.5% by Q1 2009 in response to the global downturn, the deep slump in domestic demand growth and reduced inflation pressures.

The main focus of policy over the next 6-9 months will be addressing falling corporate and household income growth, which run the risk of exacerbating the de-leveraging underway in the economy.

And on Friday:

Citigroup’s global economic team issued its weekly update with these gloomy forecasts:
Financial conditions in the United States continue to deteriorate, increasing downside risks.

Collapsing US bond yields reveal considerable scope and need for fiscal action. Fed officials seem poised for further aggressive steps.

With a deepening recession in the euro area, and inflation likely to undershoot the ECB’s target, we expect the ECB to lower rates to 1% by mid-2009.

The Japan economy is likely to contract further, and we expect the BoJ to lower rates again.

The UK economy faces a long, deep contraction. But substantial policy action should eventually generate a recovery.

Question about economy

When Obama was pushing the spending program he said the economy was in bad shape and would fail if we didn't pass the bill. Now he says the economy isn't as bad as some people say and the fundamentals of the economy are strong.

Is he saying that the fundamentals of the economy have improved because he passed the bill or is there something else I'm missing?