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 

A Taxing Problem: Digital Assets and Global E-Commerce

The Independent reports that Ireland's Chartered Accountants are warning that "new OECD proposals on taxing hi-tech multinational companies will fundamentally change business landscape." 

The OECD has published a draft discussion on companies operating in the digital economy.  The question of determining tax liability for companies with a business model spanning multiple countries is a growing concern for national tax agencies. Outsourcing, offshoring, the use of tax havens and global e-commerce are perplexing tax authorities seeking to enforce outdated national tax codes written before the explosion of the global digital economy. 

The report proposed redefining when and where a company is liable for tax; suggesting a company would have a tax liability in a country where it had a "significant digital presence".

Ireland is particularly sensitive to this issue in wake of it's recent tax dispute with Apple and other multinationals with operations in the tax friendly EU nation.

Revenue recognition in a rapidly changing global economy with a growing preponderance of digital assets, intellectual capital and digital specie like Bitcoin raise important questions for corporate managers, tax authorities and regulators. Defining revenue, asset types and national jurisdictions of taxing authorities pose great challenges for tax professionals, corporate management, legislators and revenue agencies. Leveraging global disparities in national tax laws to arbitrage local tax codes is the mark of shrewd treasury management. It can also raise questions with tax agencies.

SME's involved in global digital e-commerce must become aware how the evolving tax code opens the door to tax controversy that rises audit risk factors from national revenue agencies.

Sum2 developed the IRS Audit Risk Program (IARP) to provide SME’s an audit risk assessment tool to keep the taxman away from the door. IARP outlines tax code focus areas where caution should be exercised when filing tax returns. Business owners can rest a bit more easy that audit risk is being effectively managed. Get Tax Audit Aware with IARP.

Get Tax Aware

Risk Bitcoin, CPA, digital assets, e-commerce, EU, global economy, IARP, income repatriation, Irish Independent, IRS, multinational, OECD, off-shoring, outsourcing, revenue recognition, risk: tax, sme

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

Get Credit|Redi

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

 

File an FBAR or Find Yourself Behind Bars

A few years ago the IRS offered a tax amnesty program for US citizens who failed to declare assets held in foreign bank accounts. This came on the heels of a highly publicized legal action against UBS. The IRS forced the Swiss based bank to turn over the account information of US citizens. The IRS was clamping down on tax evaders, exploiting the protection of Switzerland's bank secrecy laws to hide income and assets. The IRS was looking to determine if FBARs had been filed by the banks US citizens.

Individuals and corporations with assets greater then $10,000 held in foreign bank accounts must file a Foreign Bank Account Report (FBAR) with the IRS or face potential legal action.

UBS counted 52,000 US citizens as private banking clients. It would be safe to assume that most of those accounts had balances greater then the $10,000 declaration threshold. 

Any US investor participating in a foreign based fund partnership or investment vehicle must also file an FBAR. High Net Worth (HNW) investors and their tax advisers should conduct due diligence on private bankers and asset managers to confirm that FBARs and appropriate declarations and forms have been filed by investment partnerships and their administrators. HNW tax advisers should contact the chief compliance officer at the fund to request an attestation letter stating that the fund is in full compliance with foreign bank reporting requirements.

Bernie Madoff and Sir Allen Stanford may look good in orange prison jumpsuits but that doesn't mean it will look good on you. Don't become a slave to fashion. Get compliant. Check with your tax adviser to make sure FBARs are filed.

Get compliant and file an FBAR with Sum2's AML SAR Filing BSA Reporting App. The app is used by financial institutions, compliance professionals and industry service providers to comply with Anti-Money Laundering (AML) best practice provisions and regulations. Protect your clients and your business from money laundering risk with this critical compliance application.

Since 2002,  Sum2's AML compliance products have helped investment managers, broker dealers, MSB's, banks and credit unions comply with the AML provisions of The Patriot Act, BSA Reporting and OECD best practices. 

Get AML aware. Download AML SAR Filing / BSA Reporting App on Google Play.

Get AML Aware

Risk: AML, FBAR, legal, compliance, tax, reputation, criminal prosecution, IRS, OECD, Patriot Act, MSB, private banking, hedge funds, CPA, UBS, Credit Unions, SAR filing, BSA Reporting

Singapore Sling: Basel III Amps SME Credit Risk

SME lending just got more expensive in Singapore. Basel III capital requirements has increased the risk weighting on SME loans. Banks are now required to set aside more capital to protect against SME loan defaults. This will drive up the cost of capital for SME’s as lenders pass on added costs to borrowers to maintain healthy margins on SME loans; Singapore’s Business Times reports.

SME’s are a critical driver of economic growth in Singapore. Bank loans to the segment grew more than 10% in 2013. At DBS Bank, SME lending produced a $1.8 billion increase in revenue. 

The Government of Singapore has long been friendly to SME's and remains committed to support the segment as a keystone to the economic recovery of this vibrant Asian Tiger. The government has maintained a risk sharing program to guarantee 50% of an SME loan. Due to the increase in the loan loss reserves mandated by Basel III; the government will now increase its risk share to 70%. It is hoped that this will protect the the flow of capital to SME's.  

This regulatory initiative is another example of the compounding macroeconomic risk factors confronting SME’s. Shifts in credit market conditions and healthy functioning credit channels are major risk factors for SME’s. Acute macro risk, forces market players to compete for capital during restrictive business cycles. SME’s must assess macroeconomic risk factors surrounding the capital funding landscape to maintain profitability.

Get risk aware with Macroeconomic Risk and Event App (MERA) on Google Play. Its an 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: sme lending, regulatory, credit risk, Basel III, Singapore, DBS Bank, OCBC, UOB, macroeconomic risk, Strait Times, Singapore Business Times, government spending

Anatomy of a Tax Audit

Its that time of year again.  April 15th looms ever larger as small businesses scramble to meet the IRS  tax filing deadline.  For many small businesses, tax filing is handled by a trusted accountant or business adviser. That tends to take the trauma out of this annual exercise in pain.  But even with the help of a tax professional the angst of the season is always a pressing concern.   

The enclosed infographic published by oBizMedia, displays some startling data about audit risk and its cost to small businesses.  For example in 2011 over 50,000 small businesses were audited by the IRS.   The IRS recovered over $30 billion in taxes as a result of auditing business returns.  A considerable sum of money that small businesses once counted as profits now paid to the tax man.  That can turn a good year of business into a not so good year.  

Its only natural that during times of economic adversity all business owners want to keep as much as they can.  During these times some business owners may be a bit more aggressive in its tax strategy to minimize tax liability.  It's a risk that unfortunately can come back to haunt SME's with additional tax liabilities, fines, penalties and costly litigation.

As the tax filing deadline approaches it is important to keep in mind the various audit risk factors certain deductions raise with the IRS. In the past the agency has published guidelines agents utilize to risk profile tax returns. Claiming these deductions heightens the risk of an audit by the IRS. It is a critical that SMEs are aware of these audit risk factors and incorporate this intelligence into its tax filing strategies. 

Sum2 developed the IRS Audit Risk Program (IARP) to provide SME’s an audit risk assessment tool to keep the taxman away from the door. IARP outlines tax code focus areas where caution should be exercised when filing tax returns. Business owners can rest a bit more easy that audit risk is being effectively managed.  Get Tax Audit Aware with IARP.

Get Tax Aware   
risk: tax code, tax audit, regulatory compliance, accounting, legal,

*Be sure to consult with your tax adviser for guidance on tax strategy and audit sensitivities specific to your business,  

SME Capital Formation: Money to Main Street

Dun & Bradstreet has initiated a timely capital formation initiative for small businesses. Access to Capital - Money to Main Street is an event tour that will bring together regional providers of funding for small businesses and start-ups.  

Economic recovery is combining with technology to energize innovations in small business funding options. Money to Main Street looks to promote the numerous funding options that are open to small businesses. Crowd-funding, micro-lending, asset financing, leasing, community bank loans, credit unions and traditional venture capital channels are a few of the many options available for small business funding. Each channel offers distinct terms and advantages that match a funding option to the specific situation of a small business. 

The Money to Main Street campaign will bring together the stakeholders and providers of local funding alternatives to make owners aware of options to get capital flowing into the segment. The tour kicks off in Phoenix on the 26th of March. 

Registration, conference sponsors and agenda details are available at this link, Money to Main Street.

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.  

Sum2 has no commercial affiliation to any of the sponsors of this event.

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

Get Credit|Redi

risk; sme, credit redi, micro lending, private equity, SBA, Money to Main Street, capital formation, crowd funding, alternative financing, credit union, commercial loan, D&B, Accion, Phoenix AZ