July 2010 Archives

Call it the comeback kid.

The Senate has voted to end debate on a small business jobs bill, 60 to 37. The bill would restore the lending fund to the jobs bill. Under the bill, the Treasury Department would provide as much as $30 billion to banks with under $10 billion in assets in order to spark loans for small businesses. The bill includes provisions designed to lower small business loan rates. Many have called for a small business bailout since the big banks and other large corporations received funds under TARP. However, proponents contend this is not a TARP for small business. The bill has already passed the House.

The vote, which came Thursday night, is a procedural move that will allow the bill to be brought before the Senate for a vote. A spokeswoman for Nevada Senator Harry Reid, a Democrat, said the Senate will likely vote on the amendment to the bill early next week. The amendment also added efforts to promote exports and to lower Medicare payment fraud.

Once the bill comes before the Senate, it will only require a simple majority to pass. Because the bill already received 60 votes in order to end debate, it stands a very good chance of passing next week and being quickly signed into law by President Obama, who has been a strong proponent of the bill. The Obama administration first proposed the lending fund.

Tornados, earthquakes, hurricanes, floods...the ways in which homes and businesses can be destroyed are nearly endless.

Right now there are a lot of businesses and homeowners in Tennessee, Connecticut and Kentucky dealing with the aftermath of natural disasters. It's hard to find any good news in the middle of a disaster, but fortunately there is help available. SBA Disaster loans from the Small Business Administration can help homeowners, renters, profit and non-profit organizations to fund rebuilding. SBA loans can be an excellent way to help get things turned around.

The SBA disaster loans available offer up to $2 million to repair damaged or destroyed real estate. Homeowners and renters can receive loans up to $40,000 to repair or replace their personal property. The interest rates are very favorable, coming in at 2.75% for homeowners and renters, 3% for non-profit organizations and 4% for businesses. They can be paid back over as many as 30 years. 

New rules from the U.S. Department of Labor were announced on Thursday, July 15. These long anticipated regulations will affect the way advisors and brokers communicate to the sponsors of 401(k)s. Specifically, the new DOL rules, called 408(b)(2) rules, due to take effect in July 2011, require detailed statements about fees, services and some new requirements regarding possible conflict of interests. This is good news for sponsors of employee 401(k) plans.

Those that are running a smaller business, but still provide their employees with a 401(k), must always watch the company's expenses. The new regulations may help them do just that. InvestmentNews writes that the new fee disclosure rules will allow plan sponsors to make a more accurate assessment when comparing the fees of competing plan providers.

There is a battle going on at Playboy, and no, it does not involve bunnies wielding swords. This battle is for control of the company, leaving founder and guiding force Hugh Hefner trying to take the company private to avoid losing control in a sale. That is a real possibility, as FriendFinder Networks, parent company of Playboy competitor Penthouse, has made an offer for the company. FriendFinder has offered a total of $210 million, or $7.43 per share, besting Hef's offer of $185 million or $5.50 a share.

According to Forbes, Playboy's bunny ears have had the droops and the company has consistently lost value since 2006. Playboy's problems are due in no small part to the availability of free online porn. However, Hef's offer perked up company value a bit, allowing it to hit pre-financial crisis 2008 levels. But if Playboy were sold to FriendFinder or any other buyer, friendly or not, Hef could lose his still important editorial control of the magazine. Not to mention the Mansion.

Legislation aimed at assisting small businesses has been stalled in the Senate. The Small Business Jobs Act would renew now-expired breaks on Small Business Administration loans, provide $30 billion in cheap capital that community banks could use for small-business loans and give small businesses $12 billion in tax breaks.

According to Portfolio.com, the Small Business Jobs Act has something that could assist nearly every small business. The Jobs Act would make it easier to for small business owners to get a loan and enable small businesses to write off more of the cost of capital investments immediately, instead of depreciating them over time. The Act also would allow those who are self-employed to deduct their health insurance premiums from income.

Recently, there have been many examples of class action discrimination suits against major companies in the news. The suit filed at the end of June, 2010, against 24 Hour Fitness for race and gender discrimination is but one example. If you own a small business, how do you protect it from a potential discrimination suit? Here are a few basic ideas and resources to help you consider the problem of employment discrimination.

First, what is discrimination? Federal law prohibits discrimination on the basis of race, gender, pregnancy, national origin, religion, disability, citizenship status, and age (if the person is at least 40 years old). Many state and local laws prohibit additional types of discrimination, including discrimination on the basis of marriage, sexual orientation, and weight. Discrimination includes sexual harassment, which is considered to be a form of gender discrimination.

Another friend has come out of the woodwork for Mr. Mark Zuckerberg; a friend claiming he owns 84% of Zuckerberg's company, Facebook. You may have heard of it. The lawsuit, filed in a New York State court, claims a contract exists that gives plaintiff Paul Ceglia, a majority share of the company. The court has issued a restraining order preventing Facebook from selling off or transferring assets.

According to the Wall Street Journal, Ceglia's suit claims he signed a contract with Zuckerberg in April, 2003, to develop and design a website. For Zuckerberg's services, Ceglia would pay $1,000 and get a 50% stake in the product. The contract also stipulated that Ceglia would get an additional 1% interest in the business for every day after Jan. 1, 2004, until it was completed. The site, was to be called something akin to "TheFacebook."

The traditional summer season of hiring teenages is already upon us. Younger workers can be a great addition to a business - just imagine harnessing all that youthful energy. If small business owners have not finished their summer hiring or are looking to hire for after-school during the fall, there are special hiring considerations that can apply to minors.

Federal law does not require employers to have minor work permits for employees under 18 years of age. However, the Fair Labor Standards Act provides some general rules that must be followed by employers hiring minors. With few exceptions (such as newspaper delivery), children under 14 years of age may not be employed. Children under the age of 16 may only work in nonhazardous jobs, and their hours of work are limited. There are additional hour limitations that apply during the school term. Outside the school term, children under 16 may work up to eight hours a day and forty hours a week. Older minor employees, those who are 16 and 17, are not limited in the number of hours they may work. Minors may not work in hazardous jobs.

"Your father's lightsaber. This is the weapon of a Jedi Knight. Not as clumsy or random as a blaster; an elegant weapon for a more civilized age. For over a thousand generations, the Jedi Knights were the guardians of peace and justice in the Old Republic. Before the dark times... before the Empire. -Obi-Wan to Luke, Star Wars: Episode IV - A New Hope

The Lightsaber has been an iconic weapon of the future for a generation. But if the future is now, can LucasFilm stop a similar device from being sold? The Spyder III Pro Arctic series laser from Wicked Lasers, is a Lightsaber-Like laser device which comes with the warning that "At close range, this Class 4 beam will cause immediate and irreversible retinal damage." While the device does not say lightsaber, the resemblance is strong.

Needless to say, George Lucas and notoriously trademark / copyright sensitive Lucasfilm Ltd. were not happy about the device. Lucasfilm Ltd. sent a cease-and-desist letter to Wicked Lasers. The letter, provided to CNN by Wicked Lasers, states, "It is apparent from the design of the Pro Arctic Laser that it was intended to resemble the hilts of our Lightsaber swords, which are protected by copyright ..." The letter goes on to claim that the device is not only a violation of copyright, it is dangerous. This seems supported by the manufactures website.

Since the recession is in a very long, slow recovery, we are all still facing circumstances that can be difficult. Many small business owners are dealing with the fallout from a shaky economy and its effects on everything from production to hiring (or lack thereof). One thing small businesses may now have to deal with, even if they never have before, is business debt collection. Since money is still tight for so many people, business owners may have to push for payments from clients or customers they never thought they would. Here are some basic ideas and resources to help with the questions around how to collect debt.

A first step in dealing with debts is to be careful and methodical with credit in general. It is a good idea for your business to extend credit only after a standard form has been completed. Next, collection should be consistent. A company procedure manual outlining steps for collection can be very helpful to employees. It is a good idea to approach debt collection in a measured manner before turning to collection agencies or the courts. Take a look at these samples of collection letters that can be sent to debtors.

A new tax goes into effect this week that will have an effect on one sector of small businesses: the tanning salon. Those businesses that offer both spray-on tanning as well may be less affected, but those that only offer indoor tanning beds may see a drop in profits. The tanning tax, implemented as a way to help off-set costs of the health care reform bill begins July 1, in all 50 states.

The 10 percent excise tax on indoor tanning beds takes effect July 1, 2010. The IRS instructs business owners to collect the tax at the time the purchaser pays for the tanning services. The provider then pays over these amounts to the government quarterly, along with IRS Form 720, Quarterly Federal Excise Tax Return. This tax is expected to net the federal government about $2.7 billion over the next 10 years, according to CBS News.

Potential or current business owners often ask: what is debt financing? In order to illustrate the importance of that question, let us offer another one:

Besides poor management, what is the top reason why a business fails? 

• Poor concepts?
• Lack of advertising?
• Down economy?

Actually, none of the above.  Inadequate or ill-timed financing, known as cash flow problems, are the second most cited reasons for business failure. If you are considering starting a business, or if your business is already up and running, debt management and cash flow demand your attention. Without sufficient capital, your business is in jeopardy. Beyond having access to financing, you need knowledge and a well executed plan to manage cash flow.  

When it comes to accessing funds, it is important to consider equity vs. debt financing as they are two significantly different financial strategies: Taking on debt means borrowing money on credit, and equity means injecting your own or other shareholders money into your company.