S&P Downgrades Russian Sovereigns

Standard & Poor’s cut the Russian Federation sovereign debt credit rating citing the capital flight and risk to investment in the wake of the Ukraine crisis. S&P lowered Russia’s sovereign debt rating from BBB to BBB- placing it one notch above junk status.

Russia’s economy has slowed in step with the rest of the BRICs (Brazil, Russia, India, China). As the global economy entered recession in 2008, the BRICs were one of the few remaining bright spots still generating economic growth. For a variety of reasons tied to specific national and global macro conditions all BRICs economic growth has slowed considerably.

Russia’s fortune was closely tied to energy exports. The devaluation of the US dollar and acute political risk heightened by wars in Afghanistan, Iraq and Syria; and the uncertainty surrounding the impact of events in Libya, Egypt and Iran had supported a rich valuation of oil prices.

New sources of fossil fuels coming online in North America, Libya, Iraq and Iran has undermined oil prices. Political instability in Venezuela and the fracturing of Russia’s paternalistic relationship with Ukraine and the potential disintermediation of Russian oil exports to its largest market in the EC adds a new uncertainty to global energy markets. It may also serve to support the rich valuation for oil even as supply expands.

In its commentary, S&P notes the rising debt burdens the Russian Federations Local and Regional Governments, slowing domestic growth, over dependency on energy exports and the developing conflict with Ukraine as reasons for the downgrade.

Turning business cycles create powerful macroeconomic risk factors that challenge SMEs. Rapidly changing market dynamics surface grave threats to SMEs. The Ukrainian Crisis is a risk event that impacts the cost of capital for the global SME community, spikes increase in commodity prices and disrupts global supply chains and market access. Acute macro risk drivers force market players to compete for capital in realigning markets. How will this global risk event impact your business? SME's must continually assess market events to seize emerging market opportunities.

Get Risk Aware

Get risk aware with MERA, a Macroeconomic Risk and Event Assessment app available on Google Play. MERA's Mobile Office capabilities provides business managers a world class risk management tool to assess emerging risk factors to adapt and capitalize on the opportunities shifting markets present.

risk: Russian Federation, EU, Ukraine, commodities, oil, Standard & Poor's, sovereign debt, credit risk, sme lending, market dynamics, macroeconomic risk

Spring Thaw to Grow US Jobs

It was a hard winter in the US. For weeks on end massive weather fronts would creep across the continent spreading ice storms, howling blizzards and a polar vortex that brought frigid misery to large swaths of the Mid Atlantic States. It seemed winters assault would never end but seasons do change and as today's temperature nears 70 spring has arrived after all. 

Mark Zandie, Chief Economist for Moody’s used the springtime analogy in a recent note to describe the recovery of the US economy from the Great Recession. Zandie notes some emerging factors that are creating positive momentum for economic growth.

• falling rate of short term unemployment signals workers are returning to the job market 
• businesses are primed for expansion with strong balance sheets, consistent profits and favorable financial and market conditions
• fiscal and regulatory uncertainty that weighed on confidence is slowly clearing up

Rising employment and greater workforce engagement is a powerful economic stimulus. More people receiving paychecks translates into the exponential growth of buying power. Retail, real estate, entertainment and hospitality industries are best positioned to benefit from the recovery. As economic health of these sectors improve, employment opportunities within these segments and ancillary industries will also expand. 

SMEs must anticipate the advent of this positive business cycle. Managers can best position their enterprises for growth by assessing what emerging market factors bear the greatest weight on their business. This allows managers to determine how to align operational capabilities with capital deployment initiatives that best address conflating market factors to serve business growth.

For example as recovery in the real estate market proceeds, new opportunities open in a multitude of related industries. The construction of high density affordable housing in urban areas is a powerful demand drivers that stimulate the need for LEED certified construction firms, inspectors, engineers, architects and building supply companies. Attorneys, CPAs, community banks, credit unions and other service providers are also beneficiaries from these emerging developments. 

As community development accelerates demand is stimulated for hospitality, grocers and numerous products and services designed to address the specific idiosyncrasies of a young urban buying demographic that is affluent and growing.  Is your firm ready to address emerging opportunities that emerging in your marketplace?

Turning business cycles create powerful macroeconomic risk factors that challenge SMEs. Rapidly changing market dynamics surface grave threats to complacent SMEs. Acute macro risk drivers force market players to compete for capital in realigning markets. SME’s must assess new macroeconomic risk factors to seize emerging opportunities. 

Get risk aware with Macroeconomic Risk and Event App (MERA) on Google Play; a Mobile Office app that runs on MS Office and Android. MERA helps SME's assess emerging risk factors to profit from the opportunities shifting markets present.

Get Risk Aware

risk: Moody’s, Mark Zandi, sme lending, job creation, market dynamics, macroeconomic risk, credit risk, LEED compliant, real estate, unemployment

SME World 2014: Transparency Gets the Loan

Though 90 per cent of Dubai registered companies are small and medium enterprises (SMEs), just 4% of all business loans goes to SMEs. In developed economies lending to SMEs goes well into the double digits. 

Vikas Thapar, CEO, SME Business, Emirates NBD, offered this observation during a panel discussion at SME World 2014 in Dubai.  Mr. Thapar went on to explain that banks are reluctant to provide loans to SMEs because of regulatory compliance restrictions and the lack of transparency in SME business.

Questionable financial health and lack of transparency are two of the principal reasons small businesses get turned down for loans. Lenders need objective insights into a small businesses financial condition.  Lenders also require a level of confidence in an SME's business plan to determine creditworthiness.  Meeting these two conditions by lenders are critical steps to securing financing from lenders.

SMEs improve their chances of getting the funds they need to finance growth by demonstrating creditworthiness.  SME's accomplish this by providing lenders with an objective credit rating and financial health assessment report. Self generated Z Score reports are excellent measures of an SMEs creditworthiness.  A Z Score credit rating combined with a well thought out business plan offers lenders the degree of transparency they require to close a loan with an SME.

Credit|Redi is a tool that demonstrates an SME's creditworthiness to lenders and capital providers. Credit|Redi generates a Z Score credit rating and in-depth financial analysis reports that spot strengths and weaknesses in a company's financial condition. Credit|Redi also provides a series of enterprise assessment applications to review problem areas and determine opportunities for business growth to build a bullet proof business plan that wins the confidence of lenders. 

If your business is looking for a loan or trying to raise capital:

Get Credit|Redi on Google Play here. Get Credit|Redi

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risk; sme, credit redi, sme lending, credit risk, Z Score, credit rating, SME World 2014 Dubai, Vikas Thapar CEO SME Business Emirates NBD 

SME's Stand Their Ground to Get the Loan

Terrific piece on SME lending in yesterday's Irish Independent. 

More than half of all lending decisions appealed to the Credit Review Office by small and medium enterprises (SMEs) are overturned. This is a good lesson for SME's to be persistent in the face of rejection. SME's that can show confidence in their business prospects and demonstrate a creditworthiness can turn a negative decision into a green light. The key to this happy reversal of fortune is being able to provide evidence of creditworthiness and present a business plan that will use the loan capital wisely to produce profitable business growth. 

The Credit Review Office was set up to make sure that loan applications by SME's received fair consideration by lenders. The EU banking sector was severely effected by the global credit crisis. The EC "PIGS" (Portugal, Ireland, Greece and Spain) were especially hard hit. 

When the credit bubble popped, asset valuations dropped like a rock. The good fortune of SME's evaporated as the drivers of their prosperity,real estate, construction and service sectors crashed.

SME's were confronted with two immense business challenges. The first was creating a business that could adapt to a drastically changed business environment. The other was to convince lenders in a capital constrained economy that they were a good credit risk and that their business plan will generate sufficient returns to grow the business and pay off the loan.

Credit|Redi is a tool that demonstrates an SME's creditworthiness to lenders and capital providers. Credit|Redi generates a Z Score credit rating and in-depth financial analysis reports to spot strengths and weaknesses in the company's financial health. Credit|Redi also provides a series of enterprise assessment applications to review problem areas and determine opportunities for business growth to build a bullet proof business plan that wins the confidence of lenders. 

If your business has been turned down for a loan don't give up.

Get Credit|Redi on Google Play here. Get Credit|Redi

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risk; sme, credit redi, EU, Credit Review Office, Irish Independent,  sme lending, credit risk, Z Score, credit rating,"PIGS", Portugal, Ireland, Greece, Spain, ECB, AIB

 

Opening SME Credit Channels

Golden Pacific Bank in California has created a new lending subsidiary to provide SBA loans for small mid-size business enterprises (SME). The program called SmartBiz uses an advanced technology platform that allows the bank to reduce the cost of borrowing and extend credit more efficiently to creditworthy SMEs. 

The lending platform was developed by the firm BillFloat. The technology enables SmartBiz to efficiently originate, process and close SBA loans. The cost of processing loan applications and credit decisioning time frames are reduced; positioning the lender to better serve the credit requirements of small business clients. 

SmartBiz is looking to reduce a typical credit decisioning time frame from 90 days to less than a week. The bank believes its technology to be a competitive advantage; enabling the extension of longer term loans, lower rates, lower monthly payments expanding the choice of finance options currently available to small businesses. 

Golden Pacific is a community bank with $132 million in assets. Deploying the new lending platform will drive operational efficiency, strengthen compliance mandates, increase the banks return on capital and generate significant fee income for the bank. 

Sum2's clients use Credit|Redi to determine financial health and creditworthiness. Credit|Redi provides users business assessment applications to optimize financial performance and create business plans that are sure to win the confidence of lenders and capital providers. Credit|Redi improves profitability, reduces risk and enhances creditworthiness.

Get Credit|Redi on Google Play here. Get Credit|Redi

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risk; sme, credit risk, lending, private equity, financial health, risk assessment, credit repair, business planning and analysis, SBA loan