Friday, April 13, 2018

Minority Business Lending, 2018

Being a minority small business owner can be particularly challenging due to issues that other business owners don't face, like racial and gender discrimination, having low (or no) collateral and having a low credit scores. These factors definitely make it harder to finance a business. There are, however, resources that can help make financing your business easier, given these constraints.

Here are a few:

SBA Loans

While we have not been impressed with the outcome of their efforts focusing on African American businesses, the Small Business Administration (SBA) offers services and programs you need to know about if you are looking to start or fund a minority business. To begin with, SBA’s 8(a) Business Development program is focused on small businesses that are 51% or more owned and controlled by members of disadvantaged subgroups by ethnicity or race. The program offers a plethora of business support services, including financial assistance, business counseling, and mentoring. The SBA also has the Community Advantage Loan Programme which provides credit, management, and technical assistance to small businesses in underserved markets. Qualifying for this program, unlike traditional loan programs, is dependent on the amount of collateral held by or the balance sheet of the business. The program offers management and technical assistance and up to $250,000 in credit with a maximum interest rate of 6%. Business owners looking for smaller loan amounts should consider the SBA microloan program, which provides loans of $50,000 or less.

Private Financial Institutions and Loan Funds

Several private financial institutions and loan funds target minority entrepreneurs. For example, the Business Center for New Americans’ Microloan Program provides loans and microloans to small businesses who are unable to borrow from traditional lenders despite demonstrating an ability to repay a loan. Reasons for rejection can include too small loan amount or a low credit score . These loans range in size from $500 to a maximum of $50,000. The loan term can be for up to three years.

Another option is the Union Bank Business Diversity Lending program for people of Native Hawaiian, Pacific Islander, African American, Asian, American Indian, Alaskan Native, Hispanic or Latino descent. The program helps minority business owners meet financing requirements. The business must have been operating for two years and lending is not available to business with sales exceeding $25 million. The maximum loan amount is $2.5 million.

Online Lenders

This option is for owners with low credit or low capital who need quick short-term loans. Some examples of these include Kabbage, LoanBuilder and Fundbox. See:


Grants represent a cheaper way to finance your business since they do not, in most cases, require repayment. While there are several grant programs targeting minority entrepreneurs, there is a lot of competition for them. Further, each grant has strict guidelines concerning eligibility and, upon succeeding, how the money can be spent.

This short guide indicates that there are a range of financing options for minority business owners. Review the data and the websites mentioned and choose the option(s) that suits you best..


Thursday, April 5, 2018

Current Status and Outlook for Cryptocurrency Regulation by Hongcheng Chen, Creative Investment Research

On April 1, "The People’s Bank of China (PBOC)’s Institute of International Finance" identified "cryptocurrencies as a top priority for 2018,": citing the potential systemic risk that "widespread retail investment into cryptocurrencies" posed to the Yuan. The article below summarizes the Mandarin-language only report.

Status and Outlook

(1) Status Quo

Global cryptocurrency is growing explosively. As of March 10th, 2018, there were more than 1,500 types of cryptocurrency, totalling $389.1 billion in value. The market value for the top 10 cryptocurrencies stands at $321.1 billion and accounts for 80% of the total cryptocurrency market value.
A wide variety of institutions are involved in the issuance of cryptocurrency. Private sector players include financial institutions and large e-commerce platforms. On a national level, Tunisia, Senegal, Ecuador and Venezuela have issued legal cryptocurrency.
Existing problems: the issuance of cryptocurrency is not guided by a clear credit foundation and thus its value is exposed to huge volatility. This negatively affects the cryptocurrency financial marketplace; some fear that anonymity means the currency may be used for money laundering or other financial crimes related to a desire to avoid monitoring and tracking by regulators; the computer based nature of cryptocurrency means it is exposed to a hacking risk and a risk of being stolen due to an immature cryptocurrency system infrastructure; insufficient and inefficient monitoring and regulation.

(2) Global Regulation of Cryptocurrency

There is movement to clarify the legal status of cryptocurrency through legislation. Japan legalized cryptocurrency as a means of payment on May 25th, 2016.
Several countries seek to regulate cryptocurrency trading though agents (such as exchanges). The Financial Service Agency of Japan has granted licenses to 16 cryptocurrency exchanges. South Korea regulates cryptocurrency trading through the banks providing account service to exchanges.
Taxes on cryptocurrency trading and exchanges. The National Tax Agency of Japan has imposed a capital gains tax on cryptocurrency trading. South Korea imposed a tax of 24.2% on Exchanges.
Strengthening global cooperation. Finance Ministers in Germany and France have called for a discussion on establishing global cryptocurrency regulation at the G20 Summit this year.
Research and development of cryptocurrency. At the Gold and Silver Currency Teleconference on March 28th, the People’s Bank of China implied that they will focus on both rectification and, research and development of cryptocurrency this year.

(3) Recommendations for Government

Specify the essential nature of cryptocurrency through legislation. Governments should define the nature of cryptocurrency from the legal perspective.
Strengthen regulatory cooperation and establish a global cryptocurrency regulatory framework. Governments should explore the establishment of a global cryptocurrency regulatory framework, share cryptocurrency transaction information, fight crime and protect consumers.
Actively participate in the global governance of cryptocurrency. Governments should take the initiative to get involved in cryptocurrency governance and strive to play a decisive role with respect to cryptocurrency development and regulation.

Translation by Hongcheng Chen, Creative Investment Research. Edited by William Michael Cunningham.