Bank Failures Infuriate Local Small Business Owners

May 25, 2009 - PRLog -- *Stewart Kendle*, owner of Otiskum Inc*, a small business foot wear distributor,  logs into his Wells Fargo account, only to see his $100,000 credit line stripped away.  Not only that, but months prior, his $50,000 Advanta credit card interest rate jumped from 4% up to 39% for  no reason and through no apparent fault of his own. In the past, he would have used the equity in his house, but that quickly vanished when his mortgage bank took that away as well. What is a small business owner to do when they find their business lines vanished, credit card rates so high that business profits go to the credit card companies, and assets, devalued?

Otiskum has four employees, been in business for 2 years, and is growing exponentially.  Sales more than doubled in 2008 and the company, despite the recession, was anticipating another 50 percent to 60 percent boost in 2009. But on May 18, 2009, Stewart Kendle was stripped of his working capital and he couldn't find a bank that would give his business a loan to buy inventory and send out catalogs.  Looking for an alternative solution, he started searching online for alternative sources of capital and stumbled upon JTB Associates, LLC.

JTB Associates, LLC is a Certified Public Accounting firm based in Chicago, IL, and initially launched the loan servicing arm only for their own tax clients in need of loan advice. When JTB’s bank resources all dried up, they launched their own financial subsidiary last July, reaching out to all business owners nationally.  JTB’s backers are private equity and venture capital firms whose primary target is lending to small businesses with less than $5 million in annual revenue. JTB lends to services, retail, product oriented companies, manufacturers and recently expanded their lending base to include home based businesses and business owners with fico scores below 600. The businesses that are serviced run the gambit.

In June 2009, JTB secured access to a $100 million credit line from a hedge fund.  Unlike many small-business lenders, JTB is aggressively lending and targeting small business owners and has expanded their lending base to include home based businesses, and business owners with fico scores below 600.   In fact, JTB Associates, LLC has the opposite problem of most banks, of being cash heavy seeking prospects in need of capital. If JTB does not lend out the money, then they are forced to eat up the cost of capital themselves. JTB faces the additional challenge of educating the public on this new and alternative business resource at the pinnacle of a time where business owners are the weariest of lending sources. People feel burned and are infuriated by how the banks have treated them. But JTB is NOT a bank.

Unlike the typical bank application process of not sharing underwriting guidelines with business applicants, JTB publishes this information (www.jtbassociates.com). “Often times when a client comes to us for helping in finding working capital they are utterly frustrated by all the red tape, and exhausted, especially if they keep getting declined without a genuine answer as to why. We pride ourselves in giving the power BACK to the business owner by sharing the underwriting guidelines and educating the client, allowing THEM to make an informed decision. This way the business owner can plan for capital needs when they know they will qualify. “Says Sharon Claar, managing partner of JTB Associates, LLC.

JTB Associates, LLC started out as an online accounting firm back in March of 2000, and still incorporates technological solutions as their mode of operation. They evaluate loans by incorporating newly available online reports from banks, credit bureaus, and credit card providers into its lending mode. JTB’s proprietary software reviews the past six months of an applicant's sales history and banking records, and makes a decision in about two days. There are no financials needed.

This is different than what a bank does. Banks typically are looking at a snapshot of a business through tax returns and financials, basing the risk of decision possibly on out dated company information. JTB, however, evaluates the strength of a company where it matters most. Cash flow. It’s a simple calculation of looking at the ending balances, and average daily balances on a bank statement. The business applicant is granted a loan amount that can be up to 5 xs’s their average daily balance on their bank statements.

The cash flow loan does have its drawbacks. For one, the loans are not cheap. The interest rates are typical of a business credit card, (currently starting at 13% according to bankrate.com).  However, unlike other products, the loan is available to most businesses. The cash flow loan is a product designed for all business owners to use and takes the place of unsecured lines of credit that are no longer available. If a business is unbankable, this could be the solution.

The cash flow loan is cheaper than other alternatives for unbankable clients such as merchant cash advances, and factoring. First of all, cash advances are only available to businesses that take credit cards, and factoring is only useful if the company has receivables. Not only that, but the rates for these products START at 27% and go as high as 50%. Many businesses are using these high cost alternatives because they are unaware of other capital resources. Well now, there is a cost effective alternative, the cash flow loan.

JTB Associates, LLC is located at 875 North Michigan Avenue, Ste 3100 in downtown Chicago, IL 60611.  Company hours are 9:00AM to 5:00PM, Monday through Saturdays, or by appointment at 312-794-7829. Industries serviced include but are not limited to:

•   Restaurants/eateries/nightclubs and drinking places
•   Lodging/hotel and motel
•   Retail/family clothing, florists, grocery stores/footwear/other misc retail
•   Services/Beauty shops/spas/hair-nail-skincare-medical spas/Dry Cleaning/Automotive
•   Home based businesses with websites

On May 22, 2009, Otiskum Inc, was awarded a $50,000 unsecured business loan at 14% with JTB Associates, LLC, and can now buy inventory, and send out their catalogs before the new season. Last checked, the company is seeking additional lines, and has the option to renew their current business loan at better rates. The cash flow loan is a business loan that is reported to the business credit bureaus. This creates a good business credit rating and makes obtaining capital more cost effective for the next financing round.

If your business is in need of cost effective working capital, call for a free consultation. It could make the difference between your business’s success or failure.


Sharon Claar, CPA
JTB Associates, LLC
www.jtbassociates.com
875 N. Michigan Avenue, Ste 3100
Chicago, IL 60611
info@jtbassociates.com
312-794-7829

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JTB Associates, LLC is a finance company specializing in small business funding solutions. Sharon Claar, CPA is the managing partner, with over 15 years of accounting and finance experience.