At least it does to Michael McDonald, who is trying to open a coffee shop near UC Santa Barbara next month but just heard that his funding had evaporated for an equipment leasing deal. McDonald needs the espresso maker and other gear in place in two weeks so he can train the first employees for the Zizzo’s Coffee franchise.

“This story is one that is repeated hundreds if not thousands times a day. If you are waiting for a government hand you may be playing a game of chicken with your small business funding”, said Howard Witkin, CEO of Financing.org. “There is no need to wait, Financing.org has sources that can $25-100k in business credit in your hands in as little as 45 days. If you put off your decision and hope for the best you will miss the boat and sink any chance of making it through the current economic tempest”, he added.

“If I don’t get my funding, those are 15 or 20 people who are not going to have work,” said the Goleta resident, recounting his third brush with the credit crisis.

McDonald was squeezed this year when his bank cut off the home equity credit line he was using to help fund his start-up. He had looked into a conventional business loan but found most banks weren’t interested in new businesses, requiring at least two years of operations. And the cost of the money was too high, he said, despite his good credit.

McDonald is just the kind of borrower the federal government hopes to help by its announcement last week that it would make loans more plentiful for small-business owners.

The program, part of the $800-billion credit-loosening initiative unveiled Tuesday by Treasury Secretary Henry M. Paulson, covers certain loans backed by the Small Business Administration, as well as consumer borrowing such as credit cards, auto loans and student loans.

Paulson said $20 billion would be used as credit protection for as much as $200 billion in federal lending.

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The Fed said Tuesday that the programs, originally slated to last through Jan. 30, will be extended through April 30. The Fed said it was taking the action “in light of continuing strains in financial markets.”
The Federal Reserve has gone to extreme lengths to free up credit markets that have impacted the US economy. One direct result of this action has been that in the past 30 days banks and other lending institutions have increased credit based lending to small businesses.
“It is clear that policy makers are taking steps to help small business get access to credit based funding and are focused on this segment of the economy.” Said CEO of Financing.org, Howard Witkin “We have been dealing with this problem for the past 12 months, but credit based funding is still available for both startups and established business, and the government is dedicated to see that Main Street is not left behind”, he added.
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Unable to get bank loans and credit lines, small business owners are turning to other sources for the cash they need to run their businesses.

Bank financing is harder to come by than ever: The number of small businesses using bank loans is at a 15-year low, according to the National Small Business Association. The SBA’s flagship loan program, which offers banks guarantees on loans they make to qualifying small companies, backed 30% fewer loans in 2008 than it did in 2007.

“With SBA and other banks down dramatically, the past six months have seen both small and medium sized companies turning to credit based lending in record numbers for their business funding needs” said Howard Witkin, CEO of Financing.org. Business funding is still available and credit based is the way to go if a business is looking to expand or just keep their doors open.” he added.

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The Federal Reserve’s new $800 billion effort to combat the financial crisis is designed to make credit more accessible to shaken consumers who aren’t sure they want more debt.

Households and lenders may not respond much because of the wealth destruction from plunging property and stock values, and the deepening economic slump, economists say. That means banks may end up returning the Fed’s new liquidity through deposits at the central bank.

“We are sort of spitting in the wind,” said Michael Darda, chief economist at MKM Partners LP in Greenwich, Connecticut. “Banks won’t be throwing a lot of loans out there when they fear — rationally — those loans may not be paid back.”

Policy makers are hoping that by injecting liquidity into the market in the form of direct equity investments in banks, and easy loans to lenders, that they will open up the business credit market and consumer credit market. There is general agreement that a generally liquid capital market gives businesses and entrepreneurs the mobility and leverage that they need to create wealth. In a constricted market, more and more businesses become paralyzed, transactions never occur and wealth evaporates. Unfortunately, today Fear rides supreme over Greed, and even easy money isn’t enough to convince most banks to put their capital at risk.

Read the rest of the story here at Bloomberg

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Today we are watching the unraveling of much of that employment model. Defined benefit pensions are. almost a thing of the past outside of the government sector. Tens of thousands of workers are facing early retirement and layoffs across the spectrum from auto workers to investment bankers. Over the next few years, those workers will face the challenge of creating their own economic value. While some will recycle into new positions, many will become self employed. There’s a great survey from the SBA to help you decide whether you are ready to start your own business.

Check out the SBA survey here.

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Our Small Business Financing Program is really quite simple:

1. You Apply Online or call us.
2. We’ll provide you with our Loan Analysis Data Sheets, so that we can better understand your unique business circumstances. You complete and fax back to us the completed Loan Analysis Data Sheets
3. We’ll do a preliminary case review, and provide you with a complete review of your options, along with a Letter of Engagement. You return our Letter of Engagement.
4. We pull your Business and Personal Credit Reports, and determine any submission conditions that need to be resololution before submission of final Loan Applications.
5. We will work with you to resolve as many of these Submission Conditions as possible. During this time we will work with you to structure the kind of credit behavior and credit file that banks require to provide you with funding. The scope of the submission conditions that need to be resolved, together with your level of cooperation, will determine how your case funds.
6. We will work with you to establish the types of trade credit and business financial profile that provide lenders with security and comfort.
7. We will build a Business Financing Plan tailored to your circumstances and requirements. This plan will identify the Banks and other Small Business Lenders in our system to whom we will submit your applications.
8. We will work with you to create and submit proper lender applications and documentation.
9. Acting as your agent we will supervise all information requests and work with you to resolve all funding requirements presented by our lenders.
10. As each round of financing funds, we will work with you to integrate those credit facilities into your business, and prepare your for the subsequent round of business financing.

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Financing provides funds for business activities, making purchases or investing. Financial institutions and banks are in the business of financing as they provide capital to businesses, consumers and investors to help them achieve their goals.

Money or property used to produce more wealth: backing, capital, capitalization, funding, grubstake, stake, subsidization.

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