Posted on 12/08/2018 12:49:35 PM PST by Kaslin
Dodd-Frank overregulation caused increased concentration in banking, squeezing out smaller banks in favor of bigger banks that could more easily absorb increasing regulatory costs. That naturally restricted credit to smaller businesses that were more regularly served by smaller, more regional banks, more likely to have developed relations with small local businesses.
But in typical abundance of centralized bureaucrat overcaution, Dodd Frank over regulation also clamped down more harshly on small business lending as inherently more risky. More risky it is. But small business is also the lifeblood of the economy, as small business has long generated most new jobs in the economy.
Small business accounts for 99% of all employers, hiring nearly 60% of all private sector employees, 58.9 million workers as recently as 2015. Small business finance overregulation was one reason why Obama’s recovery from the 2008-09 recession was so weak and slow, with high unemployment persisting for years and years, well behind the pace of recovery of other post war recessions going back to World War II.
So naturally markets developed a way around that foolish overregulation, with the rise of merchant cash advance financing. These innovative finance companies usually offer small businesses smaller, more immediate cash advances to cover operational or emergency costs, until small businesses can be paid on their invoices.
They operate much like venture capitalists, but for small business. Bigger and more promising companies can attract the attention of such financial angels, giving them some ownership stake and a seat on the board in return for their longer term, up front financing.
Small businesses may similarly offer merchant cash advance financiers an opportunity to finance a fixed percentage of future invoices. Wholesomely, this gives the merchant cash advance financiers an interest in the longer term survival of their small businesses, so they can finance the invoices over the longer term. In business, that is called win win.
But crabbed advocates of Big Government overregulation, like the know it all Elizabeth Warren, don’t like such innovative private sector escape valves. They are sure they know how to run the small businesses better than their owner entrepreneurs do. They are sure the merchant cash advance financiers are overcharging their small business clients for their overpriced services.
But the small businesses think their new financial angels are worth the costs. Those costs include covering for the costs of the small businesses that fail at a higher rate, and never pay back their cash advances as a result
Small businesses may similarly offer merchant cash advance financiers an opportunity to finance a fixed percentage of future invoices. Wholesomely, this gives the merchant cash advance financiers an interest in the longer term survival of their small businesses, so they can finance the invoices over the longer term. In business, that is called win win.
But crabbed advocates of Big Government overregulation, like the know it all Elizabeth Warren, don’t like such innovative private sector escape valves. They are sure they know how to run the small businesses better than their owner entrepreneurs do. They are sure the merchant cash advance financiers are overcharging their small business clients for their overpriced services.
But the small businesses think their new financial angels are worth the costs. Those costs include covering for the costs of the small businesses that fail at a higher rate, and never pay back their cash advances as a result.
Just down a cities old neighborhood street or a small towns main street and count the store fronts now closed up since this took effect.
That along with funding the wall us what the outgoing House Republicans should be wotking on.
“funding the wall”
Fund the wall, but also fund Border Patrol staffing increases.
Officers take a month to field.
The wall will take a few years to build.
Government regulation, ipso facto, hurts small business and encourages big business and cronyism
I’m involved in a regulatory case now. FDA issued a new rule, which is not clear and contradictory. I learned 2 large firms paid $$ tens of thousands to some K-street lawyers for a meeting with FDA administrators to get opinions from them and promote their side of this issue.
We smaller guys can’t afford that.
That’s how the empire and deep state grow. That’s how the Washington DC area’s 7 counties have become the wealthiest in the country.
No one could reasonably consider these new businesses loansharks, is that correct?
About how much is the interest rate on the cash advances, on average?
And could you tell me about some typical fees that first come to mind?
Government IS the problem.
Sometimes this works the other way around. As a smalll business owner I am the envy of many people I know at larger firms because I am so much more flexible and less expensive than they are.
We sell our invoices to a merchant factor (as they are known). They are similar to banks - some are affiliated with or owned by big banks. The factor gets 1.5% of the total and they handle the collection - the merchant gets 80% of the money for approved customers and 50% for non-approved up front, without having to wait 30 - 60 days and hoping a check doesn't get lost in the mail.
It may look like a ripoff to a Socialist dunce who thinks "Everything should be FREEEEEE!", but merchant factoring is essential to many small businesses, and the fee is a pittance compared to what it costs to track and collect invoices yourself.
If Fauxcahontas screws this up it could force manye small businesses in America go under, and their owners to get jobs with big companies, and join unions, and pay dues, and have no more time or money to support Republican candidates, and...saaaaay, do you think maybe she's doing this on purpose? /s
Consider the following regarding unconstitutional federal interference in INTRAstate banking imo.
First, note that Thomas Jefferson had written that the delegates to the Constitutional Convention had decided not to expressly constitutionally give the feds the power to regulate intrastate banking, something that has been completely forgotten, no help to FDR’s state sovereignty-ignoring activist justices.
“A proposition was made to them to authorize Congress to open canals, and an amendatory one to empower them to incorporate. But the whole was rejected, and one of the reasons for rejection urged in debate was, that then they would have a power to erect a bank, which would render the great cities, where there were prejudices and jealousies on the subject, adverse to the reception of the Constitution [emphasis added].” —Jefferson’s Opinion on the Constitutionality of a National Bank : 1791.
”From the accepted doctrine that the United States is a government of delegated powers, it follows that those not expressly granted, or reasonably to be implied from such as are conferred, are reserved to the states, or to the people. To forestall any suggestion to the contrary, the Tenth Amendment was adopted. The same proposition, otherwise stated, is that powers not granted are prohibited [emphasis added].” —United States v. Butler, 1936.
In fact, the smoke-and-mirrors of the “private” Federal Reserve aside, Woodrow Wilson and Congress wrongly ignored first successfully winning the approval of the states in the form of a banking amendment to the Constitution before establishing the Fed Reserve.
Next, using totally inappropriate terms like “concept” and “implicit,” consider what was left of the 10th Amendment after FDR’s state sovereignty-ignoring activist justices got finished with it when they scandalously decided Wickard v. Filburn, 1942, in Congress’s favor imo.
"In discussion and decision, the point of reference, instead of being what was "necessary and proper" to the exercise by Congress of its granted power, was often some concept [???] of sovereignty thought to be implicit [??? emphases added] in the status of statehood." —Wickard v. Filburn, 1942
The above excerpt from Wickard arguably repealed the whole Constitution imo, the ill-conceived 17th Amendment no help either.
On a different issue, patriots are encouraged to watch Dan Borgino’s excellent 37 min video (associated book). The video helps to flesh out the alleged Mueller conspiracy against Pres. Trump.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.