Entrepreneurs Unite!

Many small businesses in America today are hanging on by a thread. They are comprised of motivated individuals with great ideas about ways to create jobs and lift the country out of this malaise and economic nightmare. However, there is a severe lack of capital available in the aftermath of one of the worse recessions/depressions this world has experienced. Cash strapped banks having received Bailout Funds are sitting on large deposits and refusing to lend. Small business owners are frustrated because despite their best efforts to maintain or grow their company, they are facing an uphill battle.

1. They are locked out from Bank Loans. Reasons given by the banks:

A. They do not have a high enough Debt/Equity ratio to warrant much needed capital advances. Money which they need in order to hire adequate staff with the skills that will enable their companies to successfully compete for international, federal and state contracts.

B. While several of them do not have any significant outstanding debts, they also do not have a viable revenue stream. Their customer base has been drastically decimated due to the recent global depression. Operations cost far outstripped their revenue streams and many have been forced to file for Chapter 11/13 bankruptcy. Even with well-laid recovery plans, several of these organizations have not been able to emerge from bankruptcy.

2. While the United States Small Business Administration (SBA - SBIR/STIR) is struggling to create financing alliances for struggling start-ups and other small businesses, many of the cash rich financial institutions who are recipients of Federal Assistance are unwilling to stimulate the economy by lending to seasoned entrepreneurs with established backgrounds / experience. Based on the much more stringent (unrealistic) financing policies put in place following the economic downturn, several companies are no longer eligible for Letters of Credit or Letters of Guarantee.

Several of these companies are investigating new financing options besides traditional banks & Venture Capital. Perhaps a new model of Angel Investing with a commitment to "Evergreen Funding" will be a good start. Meanwhile it is critical that they gain access to capital in order to hire skilled Americans looking for work.

Observation:

This is a good time for innovative thinkers to create new funding structures and financial instruments that will empower risk-takers in our midst. Let us encourage entrepreneurs to deliver new services and develop exciting products that will stimulate the imagination and enhance the human experience.

--
Preston G.M. Williams III
M.Sc. • CPA • CIS
Senior Partner & CIO
GBC® Global Services
Information Technology Solutions
Internet: http://www.gbc-inc.net
Twitter: PrestonW



Date: November 11, 2010