In the second part of Investor’s Business Daily’s series “Small Business and Regulation,” which explores how federal regulations burden small businesses, Doug Hogberg examines how rules of the recent banking regulations have had unintended consequences for small companies.
Jessica Halder Baines, owner of American Business Group in Orlando, FL, knows firsthand that overregulation has cast a cloud on the Sunshine State. With reduced capital available for small business loans, fewer and fewer hopeful entrepreneurs and existing business owners are able to access much needed financing. Here is the full
article:
The second business in Capital Hill’s series on small businesses that struggle with regulation is American Business Group. It is owned by Jessica Hadler Baines and is located in Orlando, Fla.
American Business Group focuses on matching small business buyers and sellers. Thanks to Dodd-Frank, this has become increasingly difficult.
“I work with buyers who want to grow by buying a ‘sister’ business,” said Baines. “I also work with those who want to ‘buy themselves a job’ or go independent. For example, an engineer is ready to go out on his own and decides to buy an existing firm with a reputation and customer base already in place.”
The sellers may include people who think it is a good time to sell or retire. “Sometimes, though, sales are forced by human nature, like cancer or divorce,” said Baines.
Dodd-Frank, which was supposed to reform the banking system, has had the unintended effect of reducing capital for small business loans. Specifically, it has forced community banks to increase the capital they have on hand to cover losses. That, naturally, leaves less money for lending.
“Every small business owner will someday have to make a decision as to whether to sell the business or close it down,” said Baines. If buyers can’t access a loan, “then the other option is to close the business down and putting more workers into unemployment.”
She noted that half of the businesses she was working with in 2009-2010 closed down. Undoubtedly some of that is due to the recession. But even businesses that are in good shape can be hard to sell.
“I’m working with a commercial landscape business where the owner has gross revenue of $4 million,” she said. “We’ve had over a dozen offers from qualified buyers but the financing has been very difficult to get.”
The post “Small Business and Regulation” Part II: American Business Group appeared first on Small Businesses for Sensible Regulations.