Show me the money!

You wouldn’t think it would be too hard to sort out whether this is no small business lending because there is no capital … or because small businesses aren’t asking. There’s a lot here so keep reading if you want to gain a better understanding of what’s REALLY going on.

The Wall Street Journal recently carried an article, Big Bank’s Lending Programs Yielding Few Results So Far, which summarizes efforts by big banks like Goldman Sachs Group, Citigroup and Bank of America, under pressure from the Obama Administration, to launch programs to increase lending to entrepreneurs. Most of these programs are Community Development Financial Institutions (CDFI’s) – oh, great, another financial algorithm – which primarily lend to small businesses in low income areas – a worthy program but hardly a program targeted at the broad small business community.

Three days earlier in, A Credit Crunch That Lingers, the WSJ pointed out that only half of small businesses that tried to borrow last year got what they needed according to (more…)

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Is anyone really independent?

I wish had the time to write about all that’s on my mind about the SEC charges vs. Goldman. The crux of my most recent post was that institutional investors – not individual investors – have few excuses for making unsuccessful investment decisions except their own lack of due diligence or the fact that what they thought was a good decision … wasn’t.

I’m happy to see that Warren Buffett agrees as he told his rapt audience in his comments at Berkshire Hathaway’s recent annual shareholder’s meeting. Of one firm, ABN Amro, Mr. Buffett said: “It’s hard for me to get terribly sympathetic when a bank makes a dumb credit bet.” (more…)

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Business Finance | Does EBITDA Bury Its Own Dead?

Does EBITDA really tell you what you need to know?

I have enough money to last me the rest of my life … unless I buy something.–         Jackie Mason


Does this sound like you?

Someone recently told me that they’re bored by finance. “Don’t distract me with strategic finance stuff, just let me run my business the way I know how.”

“No problem,” I said, “if you’ll just answer one question. What if the way you’re running it is causing increasing strain on your financial resources, cash flow is dwindling and you’re destroying market value every year. Do you care about any of that?”

“Of course, I do, but when sales start picking up again, all of that will go away and my EBITDA will return to normal levels.”

“Really?” I said. “How do you know that?”

“That’s the way it’s always worked.”

“Have you had any problems with your banking relationship?” (more…)

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