Helpful insights on good business practices, commercial loans, alternative forms of financing and planning your company’s future.
November 30, 2010
Jilian Mincer, “Too Wealthy For Your 401(k) Plan?” Wall Street Journal, November 20, 2010. (abstract from: The National Center for Policy Analysis, November 24, 2010)
When lower-paid workers cut back or stop making 401(k) contributions — as many have done since the recession began, according to industry experts — companies that don’t meet certain requirements are forced to reduce or refund the retirement-plan contributions of the higher earners.
Many high earners only now are getting the unwelcome news that they will have to cut back on this year’s remaining 401(k) contributions or risk getting some of that money refunded in 2011 — and then be liable for income taxes on it, says the Wall Street Journal.
So-called nondiscrimination rules prohibit a company from letting “highly compensated” workers contribute a substantially greater percentage of their salaries than other employees do.
Right now, “highly compensated” is defined as earning more than $110,000 or owning at least 5 percent of the company. Employers that don’t meet the rules can opt to make extra contributions to the accounts of lower earners, or they can offer a “safe harbor plan” that offers features such as a company contribution that vests immediately.
If they don’t have a safe harbor plan and run afoul of nondiscrimination rules, companies can make a contribution on behalf of the lower-paid employees, but most simply warn high-earning employees that they need to lower their contribution — or refund the excess amount to them.
Another factor behind the reduced savings rates: Many companies have suspended their 401(k) match, says the Journal.
A survey released in June by Towers Watson found that 18 percent of the 334 companies with 1,000 or more employees it surveyed had reduced or suspended their matching contribution to their 401(k) plans.
Almost half — 49 percent — haven’t restored it yet.
Source: Jilian Mincer, “Too Wealthy For Your 401(k) Plan?” Wall Street Journal, November 20, 2010.
For text:
http://online.wsj.com/article/SB10001424052748703778304575590782692674638.html
Related Articles: Factoring Brokers: Relief for SMEs , Top signs your business should borrow, Shifting from growth to profit mode, Small business lending on the rise, How to turn fuming customers into lifelong fans, Allied Affiliated Funding Provides $500,000 in Working Capital to Northeast Manufacturer, Small business optimism keeps climbing, Allied Affiliated Funding Provides $750,000 in Acquisition Financing to Wisconsin Distributor , More Americans prefer small businesses to large companies, survey finds, Five ‘cardinal rules’ for launching a business
Comments: (0)
Tags: News, Small Business
November 22, 2010
Date Funded: 11/19/10
Facility Amount: $3,000,000
The Company: This company is a full service telecommunications plant design, engineering and deployment firm headquartered in Kentucky. They have served the telecommunications industry since 1994, adding a tower services division in 2010. They provide engineering, structured cabling construction, field mapping, fiber design and plant construction services for companies such as Verizon.
The Issue: This company was previously financed by a bank for several years. During this time, the company’s largest customer filed bankruptcy, leaving the company with a significant outstanding loan balance to the bank with limited repayment avenues. The bank and this company worked together over the last few years to get the account back in formula, reducing the balance over time through payment plans and subordinated debt/equity. Today, the outstanding loan balance is down substantially to just over $1 million.
The Solution: In order to provide this company the working capital it needs, a broker referred them to Joel Flig at Allied. Working together, Allied and the bank developed a payment plan that allows the bank to receive an initial pay down with monthly payments over the course of a year. Allied will be factoring a 100% customer concentration focusing on the two main components of this company’s business.
The Win: This “Funding by Allied” will allow the company to meet its working capital obligations while also providing an opportunity for additional growth.
Related Articles: Allied Affiliated Funding Provides $1,000,000 in Growth Financing to Staffing Company, Allied Affiliated Funding Provides $1,000,000 in Growth Financing to Technology Company, Allied Affiliated Funding Provides $500,000 in Start Up Financing to Texas Staffing Company, Allied Affiliated Funding Closes First Factoring/ABL Transaction of 2012, Allied Affiliated Funding Provides $2,500,000 Working Capital Facility to Northeast Based Service Company , Allied Affiliated Funding Provides $4,000,000 Growth Capital Facility to New York Wholesaler , Allied Affiliated Funding Provides $1,000,000 Growth Capital Facility to Illinois Manufacturing Company, Allied Affiliated Funding Provides $250,000 Working Capital Facility to Texas Distribution Company, Allied Affiliated Funding Provides $500,000 Working Capital Facility to Texas Service Company, Allied Affiliated Funding Provides $500,000 Working Capital Facility
Comments: (0)
Tags: Recent Fundings, Small Business, Success Story, Working Capital
November 19, 2010
Date Funded: 11/18/10
Facility Amount: $3,500,000
The Company: This company is a Texas based telecommunications construction and engineering firm. They provide equipment installation, engineering, structured cabling, staffing and networking services for companies such as Verizon (i.e. cable lines for FIOS).
The Issue: This company was a previous client of Allied who obtained a bank line of credit in mid-2009. Since that time, internal management changes materially affected the paperwork and billing practices within the business, ultimately causing a significant portion of their receivables to age over 90 days. These aging amounts adversely affected the company’s borrowing base with their bank due to cross aging, and consequently, the bank requested that the company seek alternative financing. In addition, the company has not received payments on these old invoices which has put an additional cash strain on the business.
The Solution: In the 2nd quarter of this year, the company brought in a turnaround management company, and they have been working diligently to clean up the aging receivables and/or work on a settlement agreement for those old amounts that remain unpaid. Allied was brought back into the transaction to provide funding on the current invoices with a partial pay down to the bank line of credit. The company was able to structure a long term pay out on the remaining balance owed to the bank over the course of a year.
The Win: This “Funding by Allied” will enable the company to meet their ongoing working capital needs, and it will also allow them to continue focusing their efforts on turning around the business.
Related Articles: Allied Affiliated Funding Provides $1,000,000 in Growth Financing to Staffing Company, Allied Affiliated Funding Provides $1,000,000 in Growth Financing to Technology Company, Allied Affiliated Funding Provides $500,000 in Start Up Financing to Texas Staffing Company, Allied Affiliated Funding Closes First Factoring/ABL Transaction of 2012, Allied Affiliated Funding Provides $2,500,000 Working Capital Facility to Northeast Based Service Company , Allied Affiliated Funding Provides $4,000,000 Growth Capital Facility to New York Wholesaler , Allied Affiliated Funding Provides $1,000,000 Growth Capital Facility to Illinois Manufacturing Company, Allied Affiliated Funding Provides $250,000 Working Capital Facility to Texas Distribution Company, Allied Affiliated Funding Provides $500,000 Working Capital Facility to Texas Service Company, Allied Affiliated Funding Provides $500,000 Working Capital Facility
Comments: (0)
Tags: Recent Fundings, Small Business, Success Story, Working Capital
November 16, 2010
QE2 sounds like a luxury ocean liner. But many wonder if the Federal Reserve’s second round of “quantitative easing” would be more aptly named the Titanic, says the Dallas Morning News.
“The book has not been written whether QE2 is a good idea or a bad idea,” said Sam Manning, general partner of the Blagden Fund in Dallas. “There are many highly educated, brilliant minds on both sides of the argument.”
But here are some basics about quantitative easing that most agree on:
The way it’s supposed to work is that the Fed buys securities in the open market, paying with a government “check.” The sellers deposit those checks into their banks.
The banks redeploy those deposits as loans to consumers and business. The money supply expands and, in turn, so does the economy — or so the theory goes. The likely — and intended — effect is inflation.
The Fed is worried about deflation and the psychological effect of our seeing assets such as 401(k)s, houses and stocks devalue. It’s the “wealth effect” in reverse, says the Dallas Morning News.
But some fear that the cure could be worse than the disease.
Bob McTeer, distinguished fellow with the National Center for Policy Analysis, disagrees: “Everybody’s treating this as a very unusual, draconian thing that’s extremely risky, probably won’t work and likely to have adverse consequences. I think they’re overdoing it.”
If successful, the action will create a manageable inflation rate that could push the stock market and housing prices higher, entice businesses to go ahead with projects and banks to lend to them.
If QE2 is too successful at unleashing money, inflation could shift into hyperdrive. Then the Fed will have to engage a completely different set of steering mechanisms.
Source: Cheryl Hall, “What Is Fed’s QE2, and What Will It Do? Experts Explain in Everyday English,” Dallas Morning News, November 10, 2010.
For full text:
http://www.dallasnews.com/sharedcontent/dws/bus/columnists/chall/stories/DN-Hallonline_10bus.State.Edition1.3d7e691.html
.
Related Articles: The Good, the Bad and the Ugly of the Tax Deal, Unemployment Insurance Kills Small Business, Huge Tax Hikes Coming Unless Congress Acts, Economy 101: Who benefits from new banking rules?, Economic and Financial Developments, Small Businesses Face Dangerous Tax Hikes Ahead, Small business lending on the rise, Why are small business owners feeling so good?, Small business optimism keeps climbing, SBA loans hit record for North Texas
Comments: (0)
Tags: Economic Impact, Economy, Government
|
