Archive for August, 2009

(Fortune Small Business) — During her four years as an entrepreneur, Trina Nelson has seen plenty of ups and downs. But nothing prepared her for the crisis last December, when the American economy lay in tatters and her Dallas-based catering business nearly collapsed. “The phones stopped ringing,” says the founder of Par-T-Trayz Catering (motto: “From sushi to soul food”). Unfortunately, Nelson, 38, has had a history of borrowing woes. In 2007 she needed a loan to stay afloat but was turned down by four banks because she didn’t have an established line of credit. (Like many startup founders, Nelson had used personal credit cards to fund her business; now her credit rating is “shot.”) Lenders said the amount she was seeking — 15,000 — was too small. “They told me I wasn’t asking for enough money,” she recalls. “Why would I ask for more money than I needed?” For the past nine months, Nelson has struggled to keep her business alive. Fortunately, her phones have started ringing again. But that’s revealed another problem. “I’m turning down big business because I don’t have the staff to execute the orders,” she says. If Nelson had the capital, she would hire 10 full-time employees and expand to offer mail-order and personal-chef services. “The government is giving billions to companies that make billions, and they’re still going out of business,” she complains. “Why don’t they give some of that money to small businesses?” It’s a fair question. Much of the government’s estimated 1.5 trillion stimulus package is aimed at stabilizing Wall Street and salvaging what’s left of Detroit. President Barack Obama has pledged a scant 15 billion to boost lending to small firms. And the money flow has been painfully slow. Two weeks after the Small Business Administration kicked off an emergency loan program in June, only 139 loans — worth 4.6 million — had been approved. So it should come as no surprise that 75% of entrepreneurs say the government hasn’t supported them enough, and an equal percentage believe Washington is actually “squeezing” them, according to a poll by Intuit Payroll, an online accounting service based in Mountain View, Calif. Small business owners may have better luck if they seek loans from community and regional banks rather than large institutions, suggests Bob Seiwert, senior vice president for commercial lending at the American Bankers Association, based in Washington, D.C. “Small businesses that go to small banks have higher loan-approval ratings,” he says. Seiwert also suggests that entrepreneurs treat their bankers as they would a lawyer or an accountant — as part of their company’s financial team, consulting them on all major financial decisions. Basically, what every entrepreneur needs is a George Bailey, the caring community banker played by James Stewart in It’s a Wonderful Life. At least that’s the way it should be. Down in Immokalee, Fla., David Lightner owns a contracting business and a construction firm whose combined revenues totaled 4.7 million last year. Lightner, 50, has been banking with the Community Bank of Florida since 1991. He’s repaid dozens of loans over the years but was turned down in February after requesting 200,000 to meet payroll and other financial obligations. He even offered heavy equipment worth 2.5 million as collateral. “They said, ‘No, because you showed a loss in 2008,’” says Lightner. “Well, no duh. It doesn’t take a genius to figure that out. The bank took a loss in ‘08 too. Everyone did.” Lightner argues that tightfisted banks are only hurting themselves. “When I have to lay off people, that means they can’t make their home mortgage payments, which are with the bank,” he says. “So now it’s not getting any money from them.” Like many other small business owners, Lightner thinks a federal stimulus package for Main Street would empower entrepreneurs and give a much-needed boost to the economy. “If the government gave me money, I’d go out tomorrow and buy a new car,” he says. “I’d buy a new truck, so the car companies would make some money. And I could keep people working.” And what’s wrong with that?

WASHINGTON (CNN) — The Obama administration is looking hard at pushing through a health-care reform bill without Republican backing, top Democrats close to the White House have told CNN.The Democratic majority in the Senate has been stymied in the health-care debate by Republicans and conservative Democrats, leaving them short of the 60-vote “filibuster-proof” margin needed to pass the bill.Democratic success could depend on an obscure tactic called reconciliation, a type of budget maneuver that requires only a simple majority — 51 votes — to pass.Congressional Democrats authorized the maneuver specifically for health-care reform legislation during the debate over the 2010 budget, which passed in April.One top Senate Republican warned at the time that using reconciliation to pass such a measure would be “like a declaration of war.”Going it alone could be risky for Democrats, not because they couldn’t raise the votes, but because Republicans could cast it as a power play, accusing them of failing to win bipartisan support. A Quinnipiac University survey released two weeks ago showed that 59% of registered voters nationwide oppose passage of health-care legislation if the bill fails to win bipartisan support.White House Press Secretary Robert Gibbs insisted Wednesday that President Barack Obama has not yet given up hope for a bipartisan plan.0:00
/3:16Affordable health care”The president has said countless times he will work with anybody and everybody who wants to work constructively on health-care reform,” Gibbs said.”We continue to be hopeful that we can get bipartisan support and we’ll continue to work with those that are interested in doing that.”But moving ahead on a more partisan basis might ultimately be a strategy Democrats are willing to employ.”If we have to push it through this way, no one is going to remember how messy it was,” a top White House adviser told CNN. “At the end of the day, they’ll remember we got health-care reform done. A win is a win.”White House officials are beginning to lay the groundwork for such a move, telling CNN that they’ll have to take drastic measures if there’s no movement.Sources from the administration and the Democratic side of Capitol Hill have told CNN that they’re becoming increasingly convinced that Republicans — particularly Iowa Sen. Charles Grassley — involved in the negotiating process aren’t serious about striking a deal.Grassley is one of six members of the Senate Finance Committee — three Democrats and three Republicans — negotiating the only bipartisan health-care legislation so far.The six negotiators are not considering a government-funded public health insurance option favored by President Barack Obama and Democratic leaders, but are looking at nonprofit cooperatives that would negotiate collective polices for members.Grassley warned at a weekend town hall meeting that the months of negotiations may fail to produce a bill he can support.Asked for a response to the Democrats’ claims Wednesday, Grassley told CNN, “I’ve said all year that something as big and important as health-care legislation should have broad-based support. So far, no one has developed that kind of support, either in Congress or at the White House. That doesn’t mean we should quit. It means we should keep working until we can put something together that gets that widespread support.”Gibbs appeared to back Grassley, telling reporters that there are “Republicans on the Finance Committee and others that we believe are working in a constructive way to get reform through the Senate and ultimately to (the president’s) desk.”If Democrats choose to go it alone, the public health insurance option is likely to be back on the table, because there would be no need to win the votes of Republicans or conservative Democrats. But it would be a change in tactics after the White House appeared to shift its stance on the issue over the weekend.On Saturday, Obama said the “public option, whether we have it or we don’t have it, is not the entirety of health-care reform.”Then on Sunday, Health and Human Services Secretary Kathleen Sebelius said a public option is “not an essential element” of overhauling the health-care system.Their comments were interpreted in media reports as a softening of the administration’s support for the public insurance option.However, Sebelius denied Tuesday that anything had changed in Obama’s policy.”Here’s the bottom line: Absolutely nothing has changed,” she said at a Medicare conference. “We continue to support the public option. That will help lower costs, give American consumers more choice and keep private insurers honest. If people have other ideas about how to accomplish these goals, we’ll look at those, too. But the public option is a very good way to do this.”Earlier, White House Press Secretary Robert Gibbs said Obama and Sebelius have consistently called for making health insurance affordable to all in a competitive market, and that they think a public option is the best way to do so, but were open to other ideas.– CNN’s Ed Henry and Dana Bash contributed to this report.

Source:CNN

NEW ORLEANS: Brad Pitt ensured that the nation noticed Hurricane Katrina’s utter destruction to hundreds of shotgun houses and Creole cottages in New Orleans’ working-class Lower Ninth Ward. Less known and perhaps more devastating to the African-American business community was the destruction of many black middle-class neighborhoods. Doctors, lawyers, architects, teachers and business owners have yet to return to homes in New Orleans East and Gentilly.Just as these neighborhoods have been the slowest to repopulate, black-owned companies have been slowest to return and restart.Based on phone disconnection rates, nearly one in four black-owned companies in New Orleans and Biloxi had closed in 2008, a rate 52% higher than for white-owned businesses, according to the Political & Economic Research Council, a North Carolina think tank.”In the immediate aftermath, it was devastating, we had no voice, no resources,” said Arnold Baker, chief executive of Baker Ready Mix, whose black-owned company was initially hobbled by six months without revenue and the loss of all five of its cement trucks. “Whole industries disappeared, and the business failure rate on the Gulf Coast was phenomenal.”Now, as cranes, backhoes and steamrollers become more commonplace in the city, New Orleans’ storied African-American business community could be left out of the rebuilding of the city.That worries Mayor Ray Nagin.In a speech to African-American businessmen in late July, Nagin pointed out that the city is entering the major reconstruction phase and has 26 billion to spend.While there’s a new law on the books that encourages the city to spend 35% of all public financing on minority- and women-owned businesses, Nagin said he’s worried the city can’t meet those goals due to the smaller pool of available companies.”I do not see construction companies owned by African-Americans and women. Do y’all see it? Because I don’t see it,” he said during the speech. “We’ve still got a little time but not a lot of time.”Under-representedBlack-owned businesses in New Orleans never reflected the city’s demographics. In 2002, African Americans made up two-thirds of the population in New Orleans. But less than a third of businesses were black owned. Solid post-Katrina recovery numbers are scarce, but the Political & Economic Research Council has focused on small businesses in New Orleans and Biloxi, Miss., and in three surveys they found that African-American owned companies were hardest hit.Another example can be seen through numbers of minority and women owned companies that have become certified to do business at the New Orleans airport. In 2003, 300 New Orleans area “disadvantaged” companies were certified to work at the New Orleans airport. In 2009, such certified “disadvantaged” companies had dwindled to 164.”The African-American community was dealt a pretty heavy blow from an economic perspective,” said Octave Francis III, chief executive of FFC Capital Management, a small, minority-owned wealth management firm that has fared OK. “We lost businesses and business owners, and the future is at stake, because many of our young people left for Atlanta, Houston and Denver.” Many black-owned small businesses were particularly ill-prepared for such devastation, because they tended to start out deeper in debt, with far less access to start-up investment funds.”The minority business community had been historically plagued with lack of operating capital and commonly over leveraged, because we had to borrow money or use credit cards to get into business,” said Baker, 44, a founder of the New Orleans Regional Black Chamber of Commerce.According to the Political & Economic Research Council, those black-owned companies that survived reported lower sales, higher debt and a tougher time getting access to affordable credit than companies owned by whites or Hispanics. Michael Turner, president of the think tank said that most of their reports have concluded that African-American owned companies were “sucking wind” compared to those owned by other ethnicities.Lost customersConsider Cafe Rose Nicaud, which didn’t flood and had brisk foot traffic when they first reopened two months after the storm, back when out-of-state insurance adjustors inundated the city and residents lacking power or kitchens needed their coffee fix.Named for a slave who won her freedom by selling coffee to French Quarter church-goers, Cafe Rose Nicaud has lately been struggling, as the recession has deepened and more coffee shops re-opened. The six-year-old Cafe has grown more dependent on its original customer base, artists and residents who just haven’t quite returned to pre-storm levels.Owner Melba LeBrane Ferdinand, 59, says fellow African-Americans made up 40% of her her latte and cappuccino sales before the storm. Now, they’re about a quarter of her traffic. One regular customer was brother-in-law Dr. Keith Ferdinand, who closed his minority-owned cardiologist practice in New Orleans East, settling in Atlanta.”Sometimes when I get really down about it, I think about Rose Nicaud and wonder what kind of obstacles she had to go through to do,” Ferdinand said. “It inspires me.”The survival story of Rhodes, the city’s largest and oldest African-American funeral home exemplifies some of the recovery problems for companies whose core resources of customer networks, employees and offices were concentrated in the more devastated areas.The 125-year-old, family-owned business employed between 50 and 100 employees at six locations. They were known for their bright, bold jazz funerals, a New Orleans tradition, where a parading brass band and mourners raising black umbrellas dance behind a hearse through city streets. Yet, the storm wiped out their fleet of white limos, damaged every New Orleans location, and ravaged their signature funeral parlor, a grand 1920s theater in the Broadmoor area. Employees were scattered and homeless. The Rhodes family tried to balance renovating damaged buildings with performing funeral services, usually at other churches. They got some insurance help and learned how to apply for public financing and historic tax credits to rebuild. “Post-Katrina was very, very humbling,” said Kathleen Rhodes Astorga, one of the five owners. “We’re private people. We’ve never looked to government for any help. Never.”After four years, on Aug. 26, they’re finally re-opening and dedicating their premiere funeral parlor in the stately theater, which has a new raised floor, new plaster walls and is decorated with African-American artwork. Astorga is a no-nonsense businesswoman who doesn’t believe that minority owners have it any tougher than anyone else in the city. Yet, she does acknowledge that the Katrina destruction dealt them deep blows, so thoroughly damaging so many locations and displacing so many families. They’re back to 60% of pre-storm levels. And they’ve branched out and are now doing funerals for whites and Hispanic residents.”Business is business is business. And business is hard. But that’s true, if you look at it across the country,” she said. “We do the best we can.”

Source:CNN

NEW ORLEANS: For the first time since it was a Spanish colony some 200 years ago, New Orleans is getting revitalized by Spanish speakers.One of the more dramatic and immediate impacts of Hurricane Katrina has been the influx of thousands of new Latinos who have moved to the city to detoxify, renovate and rebuild storm damaged roads, flood walls, businesses and homes.Following a mini-boom in Latinos has been a growing number of Latino-owned businesses, especially in the retail and service sectors.Two Mexican eateries, Taqueria Guerrero and El Rinconcito, now sandwich a longtime New Orleans Italian ice cream shop, Angelo Brocato’s, in MidCity. A few blocks away, a Latino-owned beauty parlor recently opened.Before Hurricane Katrina, New Orleans’ Latino population hovered around 3%. Officially, it’s now around 4.5%, according to a 2008 census survey.That number is sure to grow. Nearly half of all New Orleans area construction workers are Latino, according to a 2006 population study by Tulane University and the University of California at Berkeley. And the number of Hispanic children registered in the Orleans Parish public school system reported nearly doubled, going from 3% up to 5.6%.The nonprofit Puentes New Orleans was founded two years ago to serve the new growing Latino population, said director Lucas Diaz. The group helps Latino families climb up the economic ladder, offering classes on buying homes and public leadership.”It wasn’t possible before the storm,” Diaz said. “There’s just so many more people. And there so many more businesses that are just more visible, which is a shift in that regard.”The Latino population boom presented a big business opportunity for New Orleans broadcast guru Ernesto Schweikert.Schweikert, 55, was born in Guatemala but has lived in New Orleans for nearly 40 years. He started the city’s first Spanish radio station in 1991. He also was looking to start the city’s first Spanish television affiliate.After the storm, he bought a troubled station, and now he runs Telemundo affiliate KGLA with local news programming. The timing couldn’t have been better. “The TV station came in to fill a big empty space in the Spanish community,” said Schweikert.Schweikert says that since the storm, his stations have been seeing triple the number of Latino-owned businesses seeking advertising time as they did before the storm.”New Orleans has one of the oldest Hispanic communities in the country,” Schweikert said. “Hispanics were the ones who rebuilt the French Quarter, now it’s up to the Latino community to rebuild New Orleans.”

Source:CNN

NEW YORK: The U.S. dollar may stay mired in a narrow range as concerns about the global economy weigh on the market. In an op-ed piece published in the New York Times, billionaire investor Warren Buffett warned that the “gusher of federal money” the U.S. has unleashed to combat the financial crisis could have dire consequences for the dollar as the economy “appears to be on a slow path to recovery.”"Unchecked greenback emissions will certainly cause the purchasing power of currency to melt,” he said. “The dollar’s destiny lies with Congress.”Separately, Curtis Mewbourne, a PIMCO managing director, said in a research report on PIMCO’s Web site that the global economy has entered a “New Normal” that will mean lower potential growth around the world. Mewbourne argues that the balance of power between developed and emerging economies is shifting and that large economies such as the United States, Europe and Japan are “nearing the tipping point of global economic impact.”"We are clearly seeing a loss of status for the U.S. dollar as a store of value,” he said. “In combination with other factors, that likely means a continuing devaluing of the U.S. dollars versus other currencies, especially the [emerging market] currencies.”Outlook: More choppy trading ahead. The dollar was mixed Wednesday afternoon as U.S. stocks headed higher on the back of rising oil prices, which were boosted by government figures showing a larger-than-expected drop in U.S. crude inventories.But many traders say the broad rally in stocks and higher yielding currencies over the last few months, which has been based on signs of economic stability worldwide, may have been overdone. “Questions are being raised over the recovery outlook,” said Gareth Sylvester, senior currency strategist at HiFx. “The market is paring back some of the over-exuberance that has been priced in recently.”Sylvester said he expects trading in the currency market to be “choppy” as investors grapple with mixed economic news. Wednesday’s action. Concerns about the global economy were bolstered earlier Wednesday after Chinese shares tumbled 5% as investors worried the government will tighten its monetary policy. The Shanghai Composite Index has fallen 20% in two weeks.The dollar was down 0.7% versus the euro to trade at 1.4236. It fell 0.8% against the Japanese yen to ¥93.92. But the greenback edged up 0.1% against the British pound to 1.6539.The U.K. currency was under pressure after the Bank of England released meeting minutes that showed that key members, including Governor Mervyn King, had voted for a more aggressive quantitative easing program. Earlier this month, the BoE announced plans to expand its purchases of government bonds by 50 billion pounds. King and two other central bank members had pushed for a 75 billion pound expansion. That highlighted concerns about the British economy and suggested that a recovery in the U.K. may be farther off than previously expected, Sylvester said.

Source:CNN

(Fortune Small Business) — Years ago i joined my first business advisory group. I was in my late twenties and had already experienced some success running a picture framing company here in Chicago. At the first meeting I told my story to the other members. One of them, a guy in his sixties, looked across the table and asked me this simple question: “Have you toughened up yet?” Twenty-five years later I know exactly what he meant. Entrepreneurs tend to start out young and naive, but sooner or later we all toughen up to survive. Sometimes you need to do difficult things. Sometimes you have to take a hard line. So ask yourself: Have I toughened up? Employees. If you go into management, you must be willing and able to hold people responsible for their work. This can include having uncomfortable conversations about poor performance, personal hygiene and inappropriate relationships. It also includes “unhiring” the unwilling or unable. I had an employee in her late fifties who had worked for me for more than 10 years. We eliminated her department and tried to retrain her in two others. But after a year of counseling and moving her around, my manager concluded that there was no hope for success. We fired her together. She cried, she screamed, she prayed. My manager was in his late twenties, and this was a defining moment for him. I felt awful for her and proud of him. Vendors. I once ordered a set of professionally printed invoices. The result was anything but. I called the vendor and complained that his printing was crooked and sloppy. His answer? “These fall within the standards in the industry.” I was shocked because the invoices were really bad and this was a well-regarded printing company. I told him, “That’s laughable. The invoices will be on my dock. You can pick them up whenever you like.” (Luckily I hadn’t paid for them yet.) The vendor reprinted the forms, and there was no comparison with the first set. That’s how I learned that companies don’t always do the right thing unless you push back. Customers. I’m proud to say that in more than 30 years of business I’ve had to take a hard line with only three customers. One guy had us reframe a print after movers shattered the glass. When he picked up the finished job, he complained that there were small scratches on the print and asked me to replace it. I explained that the scratches were obviously due to the broken glass, and he said I should have noted it on the invoice. I told him he should take up the matter with the moving company. He responded by saying he’d already tried that, and then he threatened to take us to small-claims court. I said: “I’m sorry you feel that way. I guess I’ll see you in court.” Predictably, I never heard from him again. Receivables. Collecting money is one area where you will definitely get eaten alive if you don’t take a stand. And sometimes that means legal action. I know a woman who published a retail guide that ran ads for local businesses in the Midwest. Once we were talking and she complained about a retail customer who owed her money. After 90 days she went to the woman’s store to get paid. The customer brushed her off, saying, “I have more important things to do than deal with you.” I suggested she refer the matter to an attorney, and here’s what she told me: “Oh, I can’t do that. I’m a good Catholic girl!” Several months later she was out of business. The lesson? Successful entrepreneurship isn’t about being a jerk, a screamer or a bully. It’s about standing up for yourself and your company. The meek might inherit the earth, but they will struggle in business. Jay Goltz employs 110 people at Artists Frame Service, Chicago Art Source and Jayson Home & Garden, all based in Chicago. He is the author of The Street-Smart Entrepreneur (Addicus Books).

Source:CNN

NEW YORK: Banks that received bailout funds said they are trying to comply with executive pay curbs imposed by the Treasury Department, but the firms are worried about changing rules and an inability to keep top talent, according to a report relesed Wednesday by a TARP overseer.Neil Barofsky, special inspector general for the Treasury Department’s 700 billion bailout, conducted the survey of 364 banks in mid-February. The banks responded to questions about how they are adopting various compensation restrictions.Barofsky conceded that the survey was mailed out during a particularly confusing time in the executive compensation saga, as the Recovery Act tightened some of the compensation limits initially set up by the Troubled Asset Relief Program. Still, the report underscores the continuing tension between banks’ concerns about the pay restrictions and the uproar over bonuses by the public and lawmakers.When TARP was enacted in October 2008, the bill included several executive compensation curbs. Among them were limits on excessive risk taking and tax deductions for pay over 500,000 for the five highest paid employees, prohibitions on golden parachutes and a requirement that bonuses be paid back in the event of fraud. February’s stimulus bill required Treasury to strengthen many of those provisions, and Treasury implemented its new rules in June. The Obama administration also gave its pay czar Kenneth Feinberg the power to look back at certain payments made as early as February to determine if they were consistent with the new rules set out by the stimulus bill.According to Barofsky’s report, ever-changing rules have made compliance difficult for some banks, which expressed frustration that Treasury was altering the rules after the banks had signed agreements for TARP funds.Banks also argued that the rules were unprecedented, and many worried that more changes would be enacted in the future, perhaps on a more permanent basis.A number of firms said they have found it difficult to attract or hold on to top-tier talent as a result of the restrictions. One bank said said it lost “five top executives to other firms as a direct result of compensation restrictions,” according to the report. Some said they were looking to give back their TARP funds due to the competitive disadvantage that the compensation limits put on the company.Still, many banks said they were taking actions to adapt, including assigning special counsel to help them comply with the new rules.Barofsky’s report made no recommendations, but noted that banks saw a need for more guidance from Treasury to help them implement the new restrictions.In a response letter, Treasury’s TARP point man Herb Allison underscored the fact that the timing of the survey “no doubt heavily influenced the views of the survey respondents.” Allison added that Treasury has since consolidated all previous executive compensation rules, “providing greater certainty and clarity for TARP recipients.”Supporters of pay curbs have argued that big bonuses caused some banks to make dangerously risky business decisions rather than focus on the long-term health of their firms. Such bets were believed to contribute to the downfall of Bear Stearns and Lehman Brothers, which brought on the credit crisis in September 2008.Soaring compensation packages and bonuses have also become easy targets for lawmakers and taxpayers.Earlier this year, public furor erupted over the 165 million in retention bonuses that AIG (AIG, Fortune 500) paid to employees of its most troubled division, after the government stepped in with the largest taxpayer-supported bailout any company has received.The Obama administration has proposed broad compensation reform for all financial institutions — not just those receiving federal support. Those proposals include stricter compensation guidelines, so-called say on pay requirements and the regulation of independent compensation committees at firms.

Source:CNN

NEW YORK: Social networking site MySpace said Wednesday that it agreed to buy popular music application iLike for an undisclosed amount.The deal marks MySpace’s first purchase under Chief Executive Owen Van Natta, who took the helm in April. Once the largest social network, the company has struggled to grow its user base since it was purchased by NewsCorp (NWS, Fortune 500) in 2005. With 55 million total users, iLike is the most popular music application across social networks, including Facebook, which eclipsed MySpace as the world’s biggest social networking Web site in 2008.ILike allows users to share music playlists and concert alerts, as well as connecting them to concert ticket buying Web sites. Van Natta said users will not notice any immediate changes and will still be able to access the application on rival networks.First of many deals. The MySpace CEO said on a conference call that the deal will compliment the MySpace Music unit, a joint venture with major record labels. Van Natta hopes to expand iLike into gaming and video.”ILike provides a great experience,” said Van Natta. “We want to continue to extend that to new users into other categories — it has a broad range across other entertainment categories.”0:00
/2:58Facebook struggles to grow upVan Natta said the iLike acquisition is just the first of many soon-to-come announcements of bringing “world-class” talent to the company. The MySpace chief executive said he doesn’t want to disrupt what iLike is doing, and will keep the company’s founders, Ali and Hadi Partovi, in their current roles. However, he also said he plans on utilizing the Partovi brothers’ skills in other areas of the company as well.”MySpace’s strengths have been a long-time source of inspiration for iLike,” said Partovi, in a statement. “Combining MySpace’s existing platform, reach and resources with iLike’s syndication network and social discovery tools creates the potential for truly exciting innovation and commerce across any vertical entertainment category.”

Source:CNN

NEW YORK: The National Automobile Dealers Association is urging the federal government to begin shutting down the Cash for Clunkers program immediately. In a statement released Wednesday evening, NADA said that, given the rapid pace at which deals are being done, it will be difficult to say when the program’s funds may run out.Dealers have complained of problems and delays in getting payments due to them under the program. But Transportation Secretary Ray LaHood said earlier Wednesday that all dealers would be reimbursed.”They’re gong to get their money,” LaHood said during a press conference. “We have the money to provide to them. We have put an enormous number of people on the task of processing the paperwork. There will be no car dealer that won’t be reimbursed.”The NADA said, in its statement, that the group had “confirmed elsewhere” that dealers would not get paid if cash ran out.Still, the dealers’ group said that it had held meetings with officials from the Department of Transportation and National Highway Traffic Safety Administration Wednesday morning in order to reiterate concerns about the program. “As the first order of business, NADA stressed the importance of addressing – as soon as possible – how the program will end, including the possible suspension of the program,” the organization said.NADA further warned that dealers who accept Clunkers deals at this point “face a growing risk that they may not be reimbursed.The Senate passed a 2 billion extension of the Cash for Clunkers program on Thursday. The program quickly burned through an initial 1 billion in funding after its official kick-off on July 24. So far, about 1.5 billion of claims have been submitted by dealers who have sold a total of about 360,000 cars.

Source:CNN

NEW ORLEANS: In a century-old building at 220 Camp St. bustle a bunch of new-fangled companies — the kind once considered as likely to call New Orleans home as the Saints winning the Super Bowl.Since April 2007, the building’s fifth floor has housed the Receivables Exchange, an online financial firm that pairs small- and medium-sized businesses with financing. It employs 55 people.One floor down is Free Flow Power. The green energy firm, based in Massachusetts, plans to sink hundreds of thousands of fan-like turbines deep into the Mississippi River to create hydropower. Its goal is to employ 1,200 Louisianans.Welcome to Entrepreneur’s Row, one of a handful of new economic development “hubs” sprinkled throughout the Crescent City. City leaders hope the business networks will pave the way for a new type of economic recovery.”There is both a recovery and a reinvention going on,” said real estate developer Sean Cummings, 44, who owns Entrepreneur’s Row and invests in some of its companies. “It’s not good enough to talk about heavy cream sauces, paddle wheel boats and beignet donuts.”One person in the middle of the effort to get the economy back on track is Mayor Ray Nagin.Nagin, 53, has earned more criticism than wrinkles over his nearly eight-year tenure, which ends next May. The term-limited mayor joked during a recent speech to a group of business people that he had “done had enough. I’m ready to go. Some of y’all are sick of me, and I’m definitely sick of some of y’all.”In the meantime, Nagin is quick to tout the city’s bright spots. Low unemployment. No major drop in housing prices. Drop in violent crime. But Nagin also acknowledges that his economic optimism can be a “tough sell” to small business owners who continue to struggle.”I remind them that the average recovery takes 10 to 15 years. It’s something they really don’t want to hear, but it’s the reality of the recovery,” Nagin said. The two New OrleansFour years ago, Katrina punched holes in flood walls and pushed Lake Pontchartrain into homes, stores and the lives of thousands of people.0:00
/1:59Biz booms for NoLa muffler shopToday the aftermath has had a peculiar impact on the city’s economy. Construction is booming. There’s a budding tech and film industry. Yet, at the same time, many mainstay small businesses once woven into the fabric of everyday New Orleans life are struggling to stay afloat.Since oil and gas fled to Texas in the 1970s, and tourism emerged as the city’s main bread-and-butter industry, the New Orleans economy has never really been considered vibrant or diverse.Despite a sprinkling of mining and port jobs, the city has relied on minimum-wage service sector employment. An under-funded and poorly-run school system had provided scant help in preparing future workers.But the hurricane changed everything. Some companies fled. Others cut back and slimmed down. Some changed courses entirely.Take 52-year-old Wenji Zhong, who closed the family furniture company after the storm flooded its inventory. This summer, he opened a tidy sushi restaurant in the still-ravaged neighborhood of Gentilly on a thoroughfare near universities. Good Time Sushi is a first for the area.The can-do, recovery spirit has fueled a new entrepreneurial renaissance of sorts in New Orleans. Dozens of young adults who grew up here or who had ties to the city are returning in the name of recovery.Kurt Buchert was sitting at a Dallas Starbucks trying to think of some way to get back home to New Orleans. His employer, The Hartford, had transferred him to Texas after the storm. Over a double shot of espresso with heavy cream, Buchert remembered a spray foam insulation he had used — and liked — on a house he had renovated in New Orleans. A month later, he opened Greenbean Insulation and was crawling under houses and inside attics, sealing up old homes throughout the city.”I wanted to work here and have my own business,” said Buckert, 32, whose company started making a profit within the first five months. “This way, I then was also going to help with rebuilding the city.”Another New Orleans native, Jon Guidroz, left a San Francisco finance firm to work for the Free Flow Power, after his mother mailed him a story about the green energy company’s plans to harness energy from the Mississippi River.”It’s a different environment than existed down here before the storm,” said Guidroz, 27.Back in business but still strugglingEconomists say recovery stimulus funding has allowed New Orleans to weather the national recession better than most other metropolitan areas. At least 50 billion has been sent to state agencies following Katrina. The money has gone to everything from housing residents in trailers and other disaster responses to erecting schools, parks and libraries, according to the Louisiana Recovery Authority. Neon-vested construction workers are digging up parts of the city and recovery dollars are finally being flexed to rebuild levies, pipes, roads, streetlights, schools and, hopefully, hospitals. Statewide unemployment has remained two to three percentage points below the national average. Home sales have slowed, but not collapsed as they have elsewhere.However, for many small businesses, recovery remains a long way off. Restaurants, bookstores and funeral homes are still waiting for residents who have yet to return to middle-class neighborhoods. Green kudzu and mold have taken over many homes, and it’s easy to spot the fading red Xs and numbers that marked the search for survivors in the weeks after Katrina hit.Vera Warren-Williams owns the Community Book Center, one of a half dozen businesses on a stretch of historic Bayou Road in the Mid-City area. The first four to open were started by women who call themselves the “Belles of Bayou Road.”Warren-Williams rebuilt her business after replacing the book shelves, floors, walls and wiring after being deluged by two feet of water. She has been back in business, officially and without much insurance help, for more than two years. “I don’t see how the city could be faring better in a recession,” said Warren-Williams, 49, a former social worker and teacher.But few of her old customers are back, and she’s beginning to doubt they will all return. Even though she’s diversified her stock to include framed pictures of President Obama, artwork and T-shirts, she’s worried about the survival of her store.The recession has also hurt tourism throughout the city, as tourists and convention-goers have trimmed back travel plans. The number of hotel reservations tied to conventions and meetings are down by 15% compared to 2008 bookings, according to the New Orleans Convention and Visitors Bureau. That hurts restaurants, hotels and tourist shops citywide.For each of the past five years, glass artist Mitchell Gaudet has produced some 500 glass fleur-de-lis — a symbol of the city — that city tourism officials gave as gifts to VIP tourists who especially liked the green, blue and purple ones. This year, he sold 30 to the tourism bureau. The lack of work prompted him to shut down one of his furnaces for the summer.”New Orleans could always be doing better,” Gaudet said. “But that’s why we live in New Orleans, we love that hopelessness about it.”

Source:CNN