Accounting & Finance

Business Owner's Guide to Profit Planning

Owner's Guide to Profit Planning

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Steven Strauss Column: Maximum returns from microfinance

Q: Steve, I would like to expand but the recession was tough on me and my business. As a result, my business’ credit stinks, as does my own personal credit. I don’t have a fancy idea that can be crowdfunded or some such thing, so where does someone like me turn?

A: Gabriel, I have some good news for you. Have you ever heard of microfinance? You might have, especially insofar as the developing world goes. Traditionally, microfinance has occurred in third-world countries where, say, a farmer gets a $100 loan to buy some cows so as to become self sufficient. That’s microfinance.

Microfinance has now come to the west, but with a twist.

There are few good things to be said about the no so Great Recession, but one is that a whole slew of new and creative methods for funding a business came out of it, including western-style microfinance. It turns out that we need microloans too, but the twist is, we tack on a zero or two.

Because microlending in the United States is a fairly new phenomenon, the number of loans has been fairly low to date, but that too is changing. Recent changes in law have made more money available for microloans as well as for technical assistance to microlenders and as a result the number of microloans has doubled in recent years.
One reason you should be excited about microfinance is that lending decisions are made based on reasons beyond your FICO score, bank balance, and collateralization ability. Fortunately, microlenders look at a bigger picture, including:
  • Your experience
  • Your passion
  • The opportunity
It should not be surprising that microfinance is emerging as a viable option right now. Credit has been tight, unemployment has been high, and people’s credit ratings have taken a hit. And many unemployed people have become accidental entrepreneurs, starting their own self-employment enterprise. The upshot is that there is a need for capital. Enter microfinance. No, microloan interest rates are not usually great, but that is the price you might have to pay.

That microfinance is finally here is the important thing.

Microloans are typically available on the local level through groups called CDFIs, for Community Development Financial Institutions. To find a microlender in your area then, begin with a Google search of the name of your city or region and “microloan” or “CDFI.”

Beyond that, here are some other good options to check out:

ACCION USA: ACCION is a great group and a significant microlender. Their own website puts it best: “ACCION USA is different from a bank or credit union. ACCION USA is a microfinance organization that lends with the mission of empowering business owners with access to working capital and financial education. ACCION USA offers business loans up to $50,000 and financial education throughout the United States. Since 1991, we have specialized in working with small business owners who cannot borrow from the bank due to business type, a short length of time in business, or an insufficient credit history.”

The SBA: The SBA has been guaranteeing microloans for years. The SBA does not make the actual loan, but it does make the money available to third-party nonprofit lenders. These lenders then make loans to qualified borrowers. Although the maximum loan amount was recently raised to $50,000, the average SBA microloan is around $13,000.
Grameen Bank: The original microlender, the Grameen Bank of Bangladesh opened up shop here in the U.S. a year or two ago. Operating under the name Grameen America, the granddaddy microlender has or will open branches in New York, Omaha, San Francisco, Boston, D.C., and Charlotte. Loans are adjusted appropriately, but still are pretty micro, $1,500 or so.

Kiva: Kiva made its name by offering people the chance to loan money to poor third-world entrepreneurs through Kiv

Steven Strauss Column: Maximum returns from microfinance

Q: Steve, I would like to expand but the recession was tough on me and my business. As a result, my business’ credit stinks, as does my own personal credit. I don’t have a fancy idea that can be crowdfunded or some such thing, so where does someone like me turn?

A: Gabriel, I have some good news for you. Have you ever heard of microfinance? You might have, especially insofar as the developing world goes. Traditionally, microfinance has occurred in third-world countries where, say, a farmer gets a $100 loan to buy some cows so as to become self sufficient. That’s microfinance.

Microfinance has now come to the west, but with a twist.

There are few good things to be said about the no so Great Recession, but one is that a whole slew of new and creative methods for funding a business came out of it, including western-style microfinance. It turns out that we need microloans too, but the twist is, we tack on a zero or two.

Because microlending in the United States is a fairly new phenomenon, the number of loans has been fairly low to date, but that too is changing. Recent changes in law have made more money available for microloans as well as for technical assistance to microlenders and as a result the number of microloans has doubled in recent years.
One reason you should be excited about microfinance is that lending decisions are made based on reasons beyond your FICO score, bank balance, and collateralization ability. Fortunately, microlenders look at a bigger picture, including:
  • Your experience
  • Your passion
  • The opportunity
It should not be surprising that microfinance is emerging as a viable option right now. Credit has been tight, unemployment has been high, and people’s credit ratings have taken a hit. And many unemployed people have become accidental entrepreneurs, starting their own self-employment enterprise. The upshot is that there is a need for capital. Enter microfinance. No, microloan interest rates are not usually great, but that is the price you might have to pay.

That microfinance is finally here is the important thing.

Microloans are typically available on the local level through groups called CDFIs, for Community Development Financial Institutions. To find a microlender in your area then, begin with a Google search of the name of your city or region and “microloan” or “CDFI.”

Beyond that, here are some other good options to check out:

ACCION USA: ACCION is a great group and a significant microlender. Their own website puts it best: “ACCION USA is different from a bank or credit union. ACCION USA is a microfinance organization that lends with the mission of empowering business owners with access to working capital and financial education. ACCION USA offers business loans up to $50,000 and financial education throughout the United States. Since 1991, we have specialized in working with small business owners who cannot borrow from the bank due to business type, a short length of time in business, or an insufficient credit history.”

The SBA: The SBA has been guaranteeing microloans for years. The SBA does not make the actual loan, but it does make the money available to third-party nonprofit lenders. These lenders then make loans to qualified borrowers. Although the maximum loan amount was recently raised to $50,000, the average SBA microloan is around $13,000.
Grameen Bank: The original microlender, the Grameen Bank of Bangladesh opened up shop here in the U.S. a year or two ago. Operating under the name Grameen America, the granddaddy microlender has or will open branches in New York, Omaha, San Francisco, Boston, D.C., and Charlotte. Loans are adjusted appropriately, but still are pretty micro, $1,500 or so.

Kiva: Kiva made its name by offering people the chance to loan money to poor third-world entrepreneurs through Kiva.org

Steven Strauss Column: Maximum returns from microfinance

Q: Steve, I would like to expand but the recession was tough on me and my business. As a result, my business’ credit stinks, as does my own personal credit. I don’t have a fancy idea that can be crowdfunded or some such thing, so where does someone like me turn? Gabriel
A: Gabriel, I have some good news for you. Have you ever heard of microfinance? You might have, especially insofar as the developing world goes. Traditionally, microfinance has occurred in third-world countries where, say, a farmer gets a $100 loan to buy some cows so as to become self sufficient. That’s microfinance.
Microfinance has now come to the west, but with a twist.
There are few good things to be said about the no so Great Recession, but one is that a whole slew of new and creative methods for funding a business came out of it, including western-style microfinance. It turns out that we need microloans too, but the twist is, we tack on a zero or two.
Because microlending in the United States is a fairly new phenomenon, the number of loans has been fairly low to date, but that too is changing. Recent changes in law have made more money available for microloans as well as for technical assistance to microlenders and as a result the number of microloans has doubled in recent years. 
One reason you should be excited about microfinance is that lending decisions are made based on reasons beyond your FICO score, bank balance, and collateralization ability. Fortunately, microlenders look at a bigger picture, including:
• Your experience
• Your passion
• The opportunity
It should not be surprising that microfinance is emerging as a viable option right now. Credit has been tight, unemployment has been high, and people’s credit ratings have taken a hit. And many unemployed people have become accidental entrepreneurs, starting their own self-employment enterprise. The upshot is that there is a need for capital. Enter microfinance. No, microloan interest rates are not usually great, but that is the price you might have to pay. 
That microfinance is finally here is the important thing.
Microloans are typically available on the local level through groups called CDFIs, for Community Development Financial Institutions. To find a microlender in your area then, begin with a Google search of the name of your city or region and “microloan” or “CDFI.”
Beyond that, here are some other good options to check out:
ACCION USA: ACCION is a great group and a significant microlender. Their own website puts it best: “ACCION USA is different from a bank or credit union.  ACCION USA is a microfinance organization that lends with the mission of empowering business owners with access to working capital and financial education. ACCION USA offers business loans up to $50,000 and financial education throughout the United States. Since 1991, we have specialized in working with small business owners who cannot borrow from the bank due to business type, a short length of time in business, or an insufficient credit history.”
The SBA: The SBA has been guaranteeing microloans for years. The SBA does not make the actual loan, but it does make the money available to third-party nonprofit lenders. These lenders then make loans to qualified borrowers. Although the maximum loan amount was recently raised to $50,000, the average SBA microloan is around $13,000.
Grameen Bank: The original microlender, the Grameen Bank of Bangladesh opened up shop here in the U.S. a year or two ago. Operating under the name Grameen America, the granddaddy microlender has or will open branches in New York, Omaha, San Francisco, Boston, D.C., and Charlotte. Loans are adjusted appropriately, but still are pretty micro, $1,500 or so.
Kiva: Kiva made its name by offering people the chance to loan money to poor third-world entrepreneurs through Kiva.org. Seeing a need here, Kiva came to the United States in 2010, and Kiva loans in th

IRS releases income tax withholding tables reflecting 2013 changes

Article courtesy of SBAM Approved Partner ASE

As employers begin issuing 2013 paychecks, here is a summary of new withholding rates and changes affecting Social Security and Medicare rates, directly from the IRS.

Updated tables, which were issued by the IRS after President Obama signed the American Taxpayer Relief Act of 2012, show the new rates in effect for 2013. They supersede tables issued on December 31, 2012. The newly revised version of IRS Notice 1036 contains the percentage method income-tax withholding tables and related information that employers need to implement changes for 2013.

Employers should also begin withholding Social Security tax at the rate of 6.2 percent of wages paid following the expiration of the temporary two-percentage-point payroll tax cut that was in effect for 2011 and 2012. And the tables incorporate the new 0.9 percent Medicare tax (in addition to the 1.45 percent withheld by employers).

Employers should start using the revised withholding tables and correct the amount of Social Security tax withheld as soon as possible in 2013, but not later than February 15, 2013. For any Social Security tax under-withheld before that date, employers should make the appropriate adjustment in workers' pay as soon as possible, but not later than March 31, 2013.

Employers and payroll companies will handle the withholding changes, so workers typically don't need to take any additional action, such as filling out a new W-4 withholding form.

As always, however, the IRS urges workers to review their withholding every year and, if necessary, fill out a new W-4 and give it to their employer. For example, individuals and couples with multiple jobs, people who are having children, getting married, getting divorced or buying a home, and those who typically wind up with a balance due or large refund at the end of the year may want to consider submitting revised W-4 forms.

Benefits Law Update

Michigan Enacts Health Care Claims Tax
Article provided by Clark Hill PLC

On September 20, 2011, Michigan Governor Rick Snyder signed into law the Health Insurance Claims Assessment (HICA) Act, which establishes a 1% tax on certain paid health care claims beginning January 1, 2012.  The HICA Act replaces the current 6% Use Tax on Medicaid managed care organizations.  The Michigan Legislature enacted the HICA Act based on anticipated action by the federal Centers for Medicare and Medicaid offices prohibiting the Use Tax as a means of generating State revenue to be used as a match for federal Medicaid funds.

Who Pays the Tax?

Insurers and third-party claims administrators for self-funded plans will be directly responsible for payment of the tax.  Employers/plan sponsors, however, should be aware that the HICA Act will likely cause an increase in the cost of coverage as it is anticipated that insurers and third party administrators will pass the cost onto the plan sponsor.

What "Paid Claims" Does the Tax Cover?

The HICA Act defines "paid claims" as actual payments made to a health and medical services provider or reimbursed to an individual by a carrier (including an insurer, HMO or group health plan sponsor), third party administrator, or excess loss or stop loss carrier.  Paid claims include the following:

  • Payments under a service contract for administrative services;
  • Cost-plus or noninsured benefit plan arrangements;
  • Payments for health and medical services provided under a group health plan;
  • Claims for services in Michigan by a pharmacy benefits manager;
  • Individual, nongroup, and group insurance coverage for Michigan residents in Michigan that affect the rights of an insured in Michigan and bear a reasonable relation to Michigan, regardless of whether the coverage is delivered, renewed, or issued for delivery in Michigan.

Certain categories of payme

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