Prediction according to an SBA Report says economic growth the rest of this year and early next year will be weak — less than 3 percent. For the April-to-June quarter, economists pegged growth at 2.8 percent. That’s far below the 3.7 percent pace predicted just three months ago. The unemployment rate will be no lower at the end of the year than it is now — 9.5 percent. The mainstream think it will be 2015 or later before the rate falls to a historically normal 5 percent. State budget shortfalls pose a “major” or “stern” risk to the US economy. The loss of tax revenue has forced state and local governments to cut services and lay off workers.
The weak economy leaves Democrats and Republicans on Capitol Hill vulnerable to debate on how to tackle these crisis’s. The economists have turned more gloomy since the recovery hit commotion last May. Europe’s debt crisis sent tremors through Wall Street, causing stocks to tumble and raising doubts about the durability of the rebound. Since then, businesses have been slow to step up hiring. Americans’ confidence in the economy has declined, leading shoppers to reduce spending. And the housing market has weakened further with the end of a home buyer tax credit that had buoyed sales earlier this year.
Customers aren’t leading this rebound, as they usually do, despite ultra-low borrowing costs. Their spending growth will weaken in the second half of this year and strengthen only slightly next year, a majority of economists said. They think shoppers’ reluctance to spend more money poses a “significant” or “severe” risk to the recovery. A designer in Chicago, said the recession taught her to rein in her spending. The key moment came early last year, when her employer cut her pay 15 percent to avoid layoffs.
The inflation, scant pay raises and drooping home values are forcing others, too, to spend less and save more. Americans saved 4.2 percent of their disposable income last year. That was the highest level since 1998. Economists expect roughly the same level of saving this year and next. That’s why growth of less than 3 percent is forecast into 2011. And weak growth helps explain why unemployment is likely to stay high. It takes about 3 percent growth just to create enough jobs to keep pace with the population increase. The Fed’s outlook has turned bleaker, too. It’s why Chairman Ben Bernanke and his colleagues are weighing new steps to invigorate the economy if the recovery shows signs of backsliding. They are also expected to hold interest rates at record lows longer than economists thought three months ago. A survey the Fed released Wednesday showed the economy facing a bumpy path back to health. The pace of economic activity remained modest in most of the country. Most economists surveyed said the Fed would being raising short-term rates no sooner than next spring. In the last survey, most had thought it could happen as soon as late this year. At the same time, state budget shortfalls have emerged as a major threat in the economists’ view. State and local governments cut their spending in the first three months of this year at a 3.8 percent pace. That was the biggest cutback since the second quarter of 1981, just before the economy entered a severe recession.
Nodoubt there are small businesses out there that are considering growth opportunities even as the current recession that keeps a tight hold on the economy. According to an SBA report a recession often changes consumer demand, spending habits and attitudes. It is thus extremely important that small business owners take the time to ensure that their businesses are operating in line with this shifting environment. The primary source for funding a new business is personal finances. However, many experts say this method is the riskiest financing option. The reason: you’re putting up your own collateral to finance your business. If you take out a second mortgage on your home or use a line of credit, you can wipe out your assets if your business falters. Other options such as credit card loans or tapping into personal savings are equally risky. No matter where you turn for capital, you’ll need to provide solid documentation that your business concept is sound. Be prepared with a convincing business plan, cash flow projections and personal financial statements and tax returns. With the right materials, you can convince lenders and investors that you’ll be able to repay the loan.
Money that’s raised privately can be a boon, because it may be interest free or low interest. However, you should be aware that interest-free loans by the traditional lenders may have tax implications. Loan requests should be professionally presented and include detailed financial projections. Avoid the temptation to forego formalities with loved ones. Draft a promissory note when getting a loan from friends or family so that interest payments are clearly detailed. Be prepared that if the business fails, it could damage personal relationships with investors. If you can show that your business proposal is strong, you may be able to land a loan from your bank. These loans are issued in many types, with varying interest rates and maturity dates. Most are secured against hard assets, such as real estate or equipment.
I’m thinking about the notion of strategic resilience . In the face of growing unpredictability, how would one provide with appropriate option for future business success? How do we leverage the increasing interconnectedness of our markets without becoming victims of those collateral risky bank loans? . Take a deep breath! From a biological perspective, resilience means having multiple options for survival. You can survive small business woes and worries as every specie can emerge to address their needs. Small business loans are a gate way to the optimal business success with tax free business funding without collateral hindrances and the tiresome wait. I guess the power of your brain can sort out that small business loan is the best business funding apt to change the rules of collateral loans. And Small busines loanss is our route to a long prosperous business journey.