There is money in the bank

Avia Collinder, Business Writer

While they are not the cheapest source of funds, local commercial banks do offer a range of solutions for small businesses in need of cash or credit for business support.

It's a good idea to shop around in search of the loan solution which best fits your needs. But, be warned: the banks sell credit at rates of up to 25 per cent or more, but they also have facilities that are way cheaper, at about 8.625 per cent - the lowest quote that surfaced in a Sunday Business survey.

making money

You should know that commercial banks, as other financial entities, are in the business of making money and might not - at first blush - tell you about the product that is cheapest. So ask.

Instead, they will look at what you can afford and might tell you about the product from which they will make the most profit.

It is your responsibility to probe deeply and so secure for yourself the best deal, based not only on what you can afford, but also on what is best for your business at this time.

Make sure to ask, as well, about each bank's commitment fees and equity requirements - that is, the money it takes to 'buy' the loan and which must come from your pocket - and which might be required for the loan to be disbursed. Compare charges across banks. They can be steep, running into tens or hundreds of thousands, depending on the size of the loan.

A $2 million loan, for example, can incur fees of $40,000 to $50,000, which the borrower has to pay upfront before the funds are disbursed by the bank.

You may also be entitled to special interest rates and other concessions based on your credit history with the bank or on the nature of your business operations.

'MSME Alliance'

For example, financing for small- and medium-size enterprises (MSMEs) is available if you are part of the 'MSME Alliance' - a group comprising 22 member associations, including the National Association of Hairdressers and Cosmetologists, Hardware Merchants Association, Jamaica Wood Products and Furniture Association and the National Association of Taxi Operators.

For this network, the Bank of Nova Scotia offers registered and paid-up members a maximum of J$5 million and a minimum of $1 million in credit.

Depending on the risk profile, interest rates will range from 8.625 per cent to 10.875 per annum. The more likely you are to repay the loan without default, as determined by the bank, the lower the interest charges are likely to be.

The loans are for five years.

In association with the Development Bank of Jamaica, National Commercial Bank of Jamaica (NCB) offers to small business operators a special line of credit with maximum loan amount of $15 million.

Interest is fixed at 10 per cent per annum for the duration of the loan for producers of goods and services established and operating in Jamaica. The repayment period is up to seven years, including a maximum of 12 months moratorium on principal payments only.

deal-breaker

Since your business plan - which sets out your target market, location, the costs of inputs, overheads, your cash flow and possible profits - can be a deal-breaker when searching for a loan, it might be a good idea to get this done by an expert or obtain assistance from an agency like the Jamaica Business Development Corporation (JBDC) in its production.

Documents which you might need to get before getting a loan include details of the proposed project or a business plan and your current audited/draft financial statements. Others are cash-flow projections with supporting notes and assumptions; a valid Tax Compliance Certificate; where applicable, evidence of ownership of collateral, for example, title for property or car; and insurance over collateral offered.


Now for the footwork on the best small-business loans



1. First Global Bank

First Global Bank offers between $100,000 and $500,000 to small and medium entities (SMEs), repayable over four years. The interest rate varies; 9.75 per cent variable or 10.75 per cent fixed for three years. Commitment fees will amount of two per cent. After the first year, there is an annual review fee of 1.5 per cent.

In conjunction with the Ex-Im Bank and DBJ, it also offers loans of a maximum US$500,00 over four to 10 years at the following rates of interest:

Manufacturing - 10-12%

Agro Processing - 12%

Agriculture - 7.875%

General Trade - 16%

2. Bank of Nova Scotia

Bank of Nova Scotia offers

$100 million for start-up businesses called Scotia Running Start at a rate of 9.875 per cent; $100 million for the MSME Alliance - the ScotiaMSME Alliance Fund - at a rate of 8.625 per cent to 10.875 per cent; and $200 million for new and existing enterprises - the ScotiaBusiness Builder - at a rate of 8.625 per cent to 12.125 per cent.

ScotiaRunning Start is intended for borrowers who are classified as small to medium-size businesses, operating for less than two years. These are businesses with a maximum of 25 employees and J$105 million in projected annual revenues. Beneficiaries of this fund can use it to acquire new capital equipment, finance working capital, purchase inventory and cover short-term cash needs and accounts receivable, and build business management capacity.

Scotiabank will finance up to 90 per cent of the start-up costs, up to a maximum of J$7.5 million and a minimum of $2 million per business. Interest rate will be fixed at 9.875 per cent for a maximum loan term of seven years. A moratorium on principal will be considered for a period of two years with repayments in 10 semi-annual instalments over five years as an option.

3. National Commercial Bank

For NCB, SME card merchants who have been settling with NCB for at least 12 months, and who have realised total debit and credit card volumes of at least J$500,000 or US$8,000, there are several loans available to support their operations, either for working capital support or capital expenditure.

The minimum loan amount is: J$100,000 or US$2,000. The maximum is nine times your monthly credit card sales, up to a maximum of J$5 million or US$80,000. The repayment period is 36 months.

NCB also offers overdrafts and credit cards which are limited to 100 per cent of your average monthly point of sales or electronic device channel transactions for the last 12 months, up to a maximum of J$2.5 million or US$40,000, at the following rates of interest:

JMD loan - 25.45%

JMD Overdraft - 21.45%

USD loan - 14.45%

Another NCB product is Business Grow, which is intended for business expansion or restructuring and capital expenditure on machinery, equipment, building acquisition or development projects. The minimum you can apply for is J$1 million or US$20,000. The maximum is J$15 million or US$250,000.

The repayment period is up to eight years, inclusive of a moratorium period of six months on principal payments only. Interest charges range from 21 per cent to 21.75 per cent.

NCB's Development Access Facility is a product intended for registered SMEs engaged in manufacturing, hotel/tourism, agriculture/agro-processing, craft, mining, IT and Intellectual Property industries. This is to be used for working capital support, equipment/machinery purchase, fixed asset acquisition/improvement, business expansion projects.

Loan amounts range from minimum J$800,000 or US$10,000 to a maximum of J$40 million or US$500,000.

The interest charged by NCB for JMD facilities is 18.50 per cent, and for USD loans 10.75 per cent. Those rates are available to customers of the bank. Non-customers pay interest of 20.50 per cent on JMD loans, and 12 per cent on USD credit.

avia.ustanny@gleanerjm.com


Some loans on offer from local banks:


'You may also be entitled to special interest rates and other concessions based on your credit history.'

Senior's home saved from foreclosure

By PAMELA YIP / The Dallas Morning News
pyip@dallasnews.com

Forrest Brannon has great faith in God, but it was sorely tested recently when he faced losing his Dallas home to foreclosure.

Brannon, a 79-year-old veteran, said his mortgage payment more than doubled in a year from $379 a month to more than $800 because of late fees and an increase in the adjustable interest rate.

He got behind on his mortgage and then received a notice of impending foreclosure.

Texas' fast-track foreclosure process, which is the quickest in the country, left Brannon with only about a month to save his home.

But that was enough time for John Thurston, a mortgage broker at Acceptance Capital Mortgage Corp. in Dallas, to get involved.

After reading about Brannon in The Dallas Morning News in December, Thurston contacted Brannon and offered to help.

Brannon's home had been set for a foreclosure sale Jan. 6, but Thurston got that extended to Feb. 3. He got another extension to Feb. 10.

In the meantime, Brannon obtained a reverse mortgage from the federal government's Home Equity Conversion Mortgage program and paid off his original mortgage.

The program enables seniors who are homeowners to tap their home's equity through a lump sum, a monthly amount or a line of credit.

Under the program, the borrower doesn't have to repay the reverse mortgage until he moves, sells the home or dies.

When the loan must be paid, the borrower or the heirs will owe no more than the value of the home if they sell it to repay the loan.

The best part about Brannon's situation is that while his new loan totaled about $54,000 – short of the estimated $73,000 he owed on his mortgage – First Franklin Loan Services, which processed Brannon's mortgage payments, agreed to accept a reduced payoff, Thurston said.

So Brannon "will never have to make another payment on his mortgage," he said.

"All he has to do is to make sure he keeps insurance in force on his property and pay any taxes that are due," Thurston said.

First Franklin spokesman Bill Halldin said privacy concerns prevent him from commenting on Brannon's case specifically.

"Generally, we attempt to work in all situations to reach a resolution whenever possible that allows the homeowner to remain in their home," he said.

Brannon said he'll be forever grateful to Thurston.

"John did his Christian, American duty, and I haven't had to give him any money," he said.

"This is the way America was established. We are helpers of one another," he said.

Brannon said he knew God would take care of him.

"If I'm to keep the house, the Lord will make a way," he said.

"If I'm not able to keep it, the Lord will have something else for me."

Lloyd's weathers the storm

Few industries have suffered as much through the economic crisis of the past six months as the insurance industry. But Lord Peter Levene, chairman of Lloyd's of London, the storied insurance market founded in 1688, feels his organization is in good shape to survive and prosper. He is less certain about how long the crisis will last or how individual investors should respond to the market crash. Levene, who has worked in the defense industry, overseen turnarounds in railroads and commercial real estate, and served the British government in various capacities, recently spoke with Globe reporter Jeffrey Krasner.

FEMA gives officials early look at new flood maps

By Julian J. Ramos/Staff Writer

Local officials have gotten a sneak peek at the long-delayed new version of maps outlining areas where Santa Maria Valley property owners would be required to purchase costly special insurance because they are in the potential flood plain for the Santa Maria River.

However, the actual preliminary maps aren’t expected to be released until later this spring for official review by local officials.

Tom Fayram, deputy director of the Santa Barbara County Public Works Department, said Federal Emergency Management Agency officers unveiled proposed new maps that are “not much different” from early versions released a year ago.

Last April, local officials reviewed the maps, which showed that much of Santa Maria, including 20,000 parcels and 17,000 structures, would be designated as in the flood plain. That would trigger a flood-insurance requirement for anyone with a federally backed mortgage.

The maps revealed Friday are likely to be similar “unless something changes significantly,” he said

According to a FEMA timeline, the maps won’t be finalized for at least a year.

After the preliminary maps are issued, a 30-day review period with local officials and the public begins. That will be followed by a 90-day period to meld flood insurance study results into a preliminary draft flood insurance rate map, and then another 90 days for public review and appeals.

The formal six-month period for adoption begins after any appeals have been resolved.

All together, the process will take a year or more before the new maps are effective and the mandatory flood insurance purchase requirements take effect.

Before the new maps become effective, home and business owners who buy flood insurance can purchase it at both a lower cost and risk level, so the timing is important. The cost of flood insurance could vary from $320 to $2,000 per year.

The group of local officials included Rick Sweet, Santa Maria’s utilities director, who couldn’t be reached for comment Friday.

Next month, Sweet and Mayor Larry Lavagnino are scheduled to fly to Washington, D.C., to meet with congressional representatives and other officials about fixing the Santa Maria River Levee.

The levee was built between 1959 and 1963 by the U.S. Army Corps of Engineers as part of its Santa Maria Project, which also included Twitchell Dam and reservoir. Once completed, the levee was handed over to Santa Barbara County, and the Board of Supervisors oversees the flood control district.

The levee is made of river sand formed into a berm and fronted with an 18-inch rock face. However, the rock has been damaged almost every time the river fills with winter rain. If the rock washes away, there's nothing to keep the sand in place or keep the structure from failing.

County officials have said levee deterioration is because of inadequate design by the Corps, not lack of maintenance by the county.

The last total levee breach was in 1998.

January 18, 2009

Lawyer sells 4BD in Palm Beach Gardens

by Sarah Feldman, published Wednesday, December 24 12:31 PM

Jason J. Guari and Nicole M. Guari sold a four-bedroom, three-bath home at 1007 Kara Way in Palm Beach Gardens to Phydalis M. Bohanon for $500,000 on Nov. 25.

The Guaris paid $329,600 for the property in Dec. 2002.

The 2,507-square-foot house, which was built in 2002, was listed for as much as $549,000.

Mr. Guari is a partner at Murray and Guari Trial Attorneys PL. His practice areas are personal injury and insurance disputes.

He began his career as a staff attorney for the Circuit Court of the 15th Judicial Palm Beach County. He then joined the defense firm Kubicki Draper.

Mr. Guari earned his law degree from the Thomas M. Cooley Law School in 1995 and his B.S./B.A. degree from Monmouth University in 1991.

There have been 1,026 sales in Palm Beach Gardens thus far in 2008, with a median sales price of $290,000.

Address: 1007 Kara Way
Buyer(s): Phydalis M Bohanon (Revocable Trust)
Seller(s): Jason J Guari and Nicole M Guari
Sale date: 2008-11-25

2008 in Business

by Martin Webber
Business Editor, BBC World Service

It’s a horrible mess, withincompetence at major companies, incompetence at the regulators.


That’s the ugly picture to emerge from recent events in the United States and Britain.

The result is not only a sharp downturn in the global economy, but a murky entanglement of governments, bailing out failing private companies that many had confidently thought had been consigned to history.

So how did it all happen

In particular, how did the banks that should be in the relatively safe “utility-type” business of savings and loans for ordinary people, come to need taxpayers‘ billions to stay afloat

Well, it seems the companies just gambled that the recent global boom would continue indefinitely and, according to the leading UK economist Roger Bootle, the regulators didn’t care.

“We’d imagined that it was perfectly all right for banks to be a mixture of a utility and a casino and for the casino bit to be dominant without really bothering about it - and that’s an extraordinary position we’ve got ourselves into,” he said.

Wall Street Shaken

It all really began in March with the collapse of the New York investment bank, Bear Stearns - a pillar of Wall Street. It was bought for a pittance by rival JP Morgan Chase.

Outside the Bear Stearns building in midtown Manhattan the mood was grim and chilly as the winter weather. One worker said: “Bear was a terrific place and I think we’re all kind of feeling dazed and confused.”

One man trying not to sound dazed and confused was the US Treasury Secretary Henry Paulson.

“Our financial institutions - our banks and investment banks - are very strong and I’m convinced that they are going to come out of this situation very strong,” he said at the time.

How wrong can you be - easy to say now after nine months of chaos, but one famous financier was saying it clearly at the time.

In May, the Hungarian-born investor George Soros told World Business News:

“This very powerful global financial system is actually built on some false ideas and therefore it is in danger of breaking down.”

“Now you have a bust and you have credit and wealth destruction. I’m trying to keep out of trouble and I personally run a basically negative portfolio, betting on the markets going down.”

What a clever move that was.

Since George Soros uttered those words the main Dow Jones industrial average on the New York stock market has tumbled - at one point it was down by 40%.

Domino effect

The month when everything really fell apart was September.

On Monday 8th, the US government announced it was stepping in to bail out the US mortgage providers Fannie Mae and Freddie Mac.

Many Asian investors had believed debt from these entities to be as safe as US government debt - it just did not seem an option for America to let them fail.

"This is a once-in-a-half century, probably once-in-a-century, type of event"

Alan Greenspan, former Federal Reserve Chairman


The rescue happened, but still it didn’t stop the rot. Just two days later, the markets had another victim in their sights - the Wall Street firm, Lehman Brothers.

Lehman shares fell 40% in one trading session after a potential investor from Korea pulled out of talks.

On that day, Peter Morici of the University of Maryland, said:

“Lehman Brothers is in a lot of trouble. They have bad real estate investments both in the form of mortgage backed securities and properties they have invested in, particularly in Britain.”

“Its balance sheet is too messy for anyone to become involved with. Only a fool would acquire this company right now.”

When asked how close a collapse was, Mr Morici said: “Just a breath away. It is very close to collapse.”

Indeed it was - four days later Lehman Brothers was allowed to go bankrupt.

There was government bail-out and finally it seemed that a Wall Street name had been forced to pay the ultimate price for its mistakes.

For many on Main Street this was justice for Wall Street, but it was a shocking blow to Alan Greenspan, the man who had run US interest rate policy for 20 years.

“This is a once-in-a-half century, probably once-in-a-century, type of event. There’s no question that this is in the process of outstripping anything I’ve seen and it still is not resolved and it still has a way to go,” he said.

Only two days later America’s biggest insurance company, AIG, was given emergency taxpayer cash. The company was deemed to be too big to fail.

Government rescue

Next, the US government came up with a massive $700bn plan to buy up failing securities from banks based on home loans - a so-called “cash for trash” scheme.

The idea was to support banks without ending up owning them.

President George W Bush insisted lawmakers had to pass the package but many economists hated the plan, saying it was throwing good money at a failed financial market.

"Government owning a stake in any private US company is objectionable to most Americans"
US Treasury Secretary Henry Paulson

The House of Representatives shocked everyone by rejecting it and and on one Monday afternoon fear gripped Wall Street and share prices tumbled at a frightening pace.

By the end of the week however, politicians had settled their differences and the government cash was approved.

But shares continues to tumble, unimpressed by a co-ordinated worldwide cut in interest rates.

The British government was forced to pump more taxpayers’ money into UK banks and the US Treasury Secretary Henry Paulson, then swung his rescue vehicle into reverse.

Instead of “cash for trash”, the US government said it would copy Britain and take direct stakes in America’s banks to keep them afloat.

It left Mr Paulson feeling very uncomfortable.

“Government owning a stake in any private US company is objectionable to most Americans - me included. Yet the alternative of leaving businesses and consumers without access to financing is totally unacceptable.”

Many have tried to paint the past year’s events as something unforeseen - a type of financial natural disaster.

But the reality is different.

Over recent decades, financial markets have turned away increasingly from the old-fashioned dull idea of handing cash over to entrepreneurs to innovate and thus grow economies.

Instead, financiers have become obsessed with chasing market trends which, in the short term, can often be a lucrative game.

But when markets turn, disaster can strike for the unlucky hedge funds and for the mainstream banks that have lent vast sums to the speculators.

House prices in both Britain and the US had seen many years of annual gains of 20% but with total national incomes to pay for the homes only rising at 5% per cent a year, it didn’t take a genius to work out that it was all a very fragile bubble.

See how UK house prices and the economy have evolved

Warnings ignored

One expert much derided for his gloomy predictions during recent years was the London based economist, Roger Bootle.

We asked him if in retrospect, he could have done any more to alert the world to the trouble ahead.

“I’ve been writing a newspaper column every week. I’ve written several books and I’ve been pretty explicit.

“But the problem is if you are a fundamentals-based forecaster and you see a distortion happening, you sort of take a pride in seeing it early and speaking out early. You can though be too early and frankly, my problem was I was too early,” he said.

In other words because the property collapse predicted by Mr Bootle and Mr Soros didn’t happen instantly, governments dismissed their fears.

And it seems regulators failed to ensure that banks were set up so they could withstand the quite predictable drop of 20-30% in house prices.

Optimism

But to finally take a more upbeat view - Roger Bootle thinks it could have been a whole lot worse if the bubble had carried on even longer.

“We needed the bubble to be deflated,” he said.

“I suppose that in the best of all possible worlds - this is a sort of policymakers‘ dream - if you can imagine this as a sort of balloon, what we would have somehow liked to have achieved is to somehow pricked the balloon, kept one’s hands over the hole and allowed the balloon to deflateever so slowly - without making a horrible noise.”

“We’d have had a very gentle deflation of this bubble without adverse consequences,” he said.

“But frankly, I don’t know any example in history of that occurring.”

And another silver lining for many of the world’s poorest people is that food and energy prices have fallen sharply from their peaks.

Oil prices neared $150 a barrel but are now back down to just $40.

And for those worried about greenhouse gases, the sudden winding down of China’s manufacturing machine could mean an actual reduction in global annual energy use - something no climate deal has yet achieved.

Overall, though, it’s been a traumatic year for everyone looking at and affected by financial markets or the global economic currents, perhaps the most dramatic year since the 1970s oil shock.

And who’s to say there’s not more drama to come.

Phillipsburg wins big at field goal kicking competition

by Warren Reporter
Thursday December 25, 2008, 7:14 PM

A subsidiary of Allstate Insurance, the Allstate New Jersey Insurance Company announced that it has become a proud sponsor of the New Jersey State Interscholastic Athletic Association.
The carrier has signed on to be the "exclusive" property and casualty Insurance sponsor of all Garden State high school championships for three years.

As part of its sponsorship support, Allstate New Jersey officials and exclusive agents with the Bridgewater-based insurer participated in activities at the NJSIAA state football championship series, held at Rutgers University and Giants Stadium.


Gavin Lewis of Flemington, an exclusive agent with Allstate New Jersey, took part in the recent Allstate/NJSIAA event at the state championship football game held at Rutgers University.
The agent cheered on the teachers, from both schools competing in the game, held during a half-time field goal competition.
Lewis also presented monetary checks to the teachers to help support their respective schools.
Additionally, he also gave away giveaway items to fans attending the game. Drawing thousands of parents and teens, the NJSIAA state football championship series also served as a perfect backdrop heighten awareness of the vital importance of teen safe driving through Allstate's Home For The Holidays campaign.