This expansion makes sense given that there are already thousands of businesses that run on Apple products, the company has now focused on consumer and niche markets such as media firms and design. Apple wants to use the iPhone and iPad as selling points to leverage more expensive products like Macintosh computers and servers. It is using its 300 retail stores to reach out to local businesses. Apple is also recruiting from within the sales staff so as to form a specialized team to negotiate leasing and pricing terms for customers.

It is unlikely that Apple would be facing more competition from competitors like Hewlett-Packard Co. and Dell Inc. But Apple is eyeing the $310.8 billion that North American businesses are expected to spend on information technology this year. The figure will rise to $328.3 billion in the coming year. By capturing the sales, the annual revenue of Apple can grow up to 46% amounting to $62.6 billion in the current year. Brian Marshall, analyst in Gleacher & Co., says, “They’re well aware of the opportunities in business. This is something they’re focusing on even if they’re not talking about it publicly.”

A Virginia-based MacPro Solutions owner, Allen Cleaton, says, “Almost half of our new customers come from the Apple Store.” Cleaton can find local business as Apple’s general staff do not have the expertise to handle set up and maintenance of business computer networks. Apple just maintains an expert team for government agencies and big companies. As far as small and mid-sized businesses are concerned, it currently hands over responsibility to its retail stores. But now, Apple is updating its retail stores with conference rooms meant for meetings between sales team and higher echelons of business executives in order to equip their expansion plans.

About 75 percent of applicants in 2009 were approved for small business credit cards, according to the report . Even among businesses considered high-risk, 72 percent were approved for a credit card.

In general, credit card loan terms are worse than regular loan terms. The average interest rate on a business credit card in 2009 was about 12 percent and cash advance interest rates 20 percent or more, says the report.

Credit card issuers can also change the terms of the loan or revoke credit card lines altogether. Business credit cards are not subject to the consumer protection afforded by the credit card reform bill passed last year.

While over 80 percent of small businesses use credit cards, only 12 percent borrow (carry over a balance from month to month) on credit cards.

If small business owners worry about borrowing on credit cards, they won’t invest in long-term businesses planning or growth, says CNN.com . And that means they won’t invest in hiring, the linchpin in reviving the economy.

Local lenders across the country have seen lingering effects of the financial crisis. With the closing of The Community Security Bank of New Prague, Minn., the number of failed banks is now 101. The FDIC predicts this trend of failing banks that began in 2008 to peak this year. But for the nation’s largest banks, conditions have improved and lending in select areas have escalated. Many failing firms are also reported to have found new sources of capital.

Small banks are vulnerable to closing down and this is happening at a rapid pace. The FDIC has reported a rise of firms in its “problem bank list” in this year’s first quarter to 775 from 702 in 2009. In areas of commercial real estate, regional lenders continue to suffer from loan losses.

Andrew Gray, FDIC spokesman, says that failures this year will not approach historic levels but it is expected that failed banks would exceed last year’s total of 140. This is the reason that Biz2Credit is reaching out to grow our network of community and regional banks. These banks need to find qualified candidates to lend to while qualified candidates need access to loans.

Financial institutions that are insured by FDIC earned $18 billion in this quarter. This is a three-fold increase and is the highest profit since 2008. Though the fund has a deficit of $20.7 billion but it is inclusive of the money that the agency has saved anticipating future bank failures. The fund has grown by $145 million, the first increase in the last two years.

Just 3.7 percent of high-level job seekers exiting the program were starting new businesses down from 7.6 percent in the first half of 2009 and 9.6 percent in the second half of last year, according to a survey conducted by the company on July 19.

Experts suggest that an improving job market and the difficulty getting small business loans may be steering people away from entrepreneurship, said Business Week.

Federal Reserve Chairman Ben Bernanke said last week that small businesses, and especially startups, are crucial to job growth and economic recovery. Bernanke once again called on banks to loosen credit to small businesses.

Some see the lower startup rate as a sign that the economy is improving. The unemployment rate is still high, but the private sector added 593,000 jobs in the first half of 2010, according the Bureau of Labor Statistics.

Startup activity typically increases as the economy improves, Challenger CEO John Challenger said in a statement.

Banks of today are still compensating for the blunders of such loans. This has made the process of obtaining a loan much stricter than before. The underwriting processes that work these days can be summarized as follows:

1. An assessment of character through personal credit report.
2. Borrowers’ basic character can be questioned with a skipped or missed student loan or child support payment.
3. Late payments of mandatory payments like mortgage, car, and credit-card payments are taken into consideration by lenders. Even one late payment is considered an indication of a possible beginning of risk.
4. The qualitative sections receive more attention. This includes payment history and public records data.

Importance of Credit Scores

The personal credit score of a borrower is analyzed to find out if the person fits into the general risk profile of the bank. It is assumed that there is a strong correlation between personal credit and the capability of businesses to pay back loans. Scores are also found in the business credit reports, but with the reliability of such as being more questionable than personal credit scores. The reason being that such scores are less reliable as they are made with the cooperation of business partners and often exclude information about prior bankruptcies, payment history and outstanding liens.

Personal credit scores do not affect one’s application but it determines the borrowing costs. Credit agencies like FICO, FICO II, or Beacon have their own methods of calculating credit scores and so it may vary up-to 50 points. Cost of capital increases if the score is below 700.

Income Proof Required

Borrowers wanting to obtain $50,000 in loans, have to verify their income first and provide details of three years of business and personal tax returns. Banks want the guarantee of the borrower’s personal resources in addition to financial pro formas and other personal guarantees. The size of the bank also determines the depth of investigation. A regional bank has a smaller buffer to overcome losses and so they have made deposit certificates compulsory. In case of nationalized banks, the protectionist stand may be far less.

In last two years, bank loans to small businesses fell from $710 billion to $670 billion. Bernanke is imposing pressure on lenders to increase credit so as to boost growth and employment. “Making credit accessible to sound small businesses is crucial to our economic recovery and so should be front and center among our current policy challenges.  Our message is clear: Consistent with maintaining appropriately prudent standards, lenders should do all they can to meet the needs of creditworthy borrowers.” said the Fed chief.

Consumer spending is crippled by “tight credit” The Fed policy makers pledged to help keep interest rates close to zero for an extended period of time. A resolution of the House of representative to pass a $30 billion plan bill to enable community banks find incentives on granting loans to small companies has been opposed by three Republicans.

Confidence Major Issue
The bill “would be very helpful” and a “good boost to the economy,” said Jack Hopkins, director, Independent Community Bankers of America. He thinks it is a confidence issue and so comments “We need to get confidence back into the markets, and that’s difficult when we’re hovering around 10 percent unemployment.”

A difficult situation
The US commercial and industrial loans have reduced from $1.6 trillion at the end of 2008 to $1.24 trillion. Recently many owners had to borrow loans based on credit cards and retirement accounts. “The formation and growth of small businesses depend critically on access to credit. Unfortunately, those businesses report that credit conditions remain very difficult,” commented Bernanke in a conference at Fed headquarters today. Bankers who were present in the conference said that they were willing to extend credit and asked business proprietors to meet their community lenders.

It is critical to find better information about potential borrowers. Banks do not find requisite information and so it is tough to make decisions says Denise Pickett, executive vice president at American Express Co. Also, Kevin Watters, officer in JP Morgan Chase & Co, opines that the problem faced by banks is “healthy borrowers not wanting to borrow.”

Federal data reveals that lending fell below $670 billion in this year’s first quarter, a huge collapse, compared to $710 billion granted in second quarter of 2008. “How much of this reduction has been driven by weaker demand for loans from small businesses, how much by a deterioration in the financial condition of small businesses during the economic downturn, and how much by restricted credit availability?” Mr. Bernanke asked. “No doubt all three factors have played a role.”

A fall in the value of collateral and real estates that are used to secure loans is one reason for the decline. Borrowing based on personal credit cards and retirement accounts also posed problems. Even for businesses with strong cash flows but with depreciated value of collateral, obtaining credit for their expansion has become increasingly difficult.

Banks say that meritorious borrowers are granted loans and economists too agree that there is no evidence of refusal to lend. It’s only that banks have resorted to traditional underwriting standards after being too lax. Economists also argue that battered balance sheets and weak economic fundamentals have lowered new lending.

“Credit’s not an issue, Customers are the issue”, said William C. Dunkelberg, economist at Temple University. He reiterated that companies are still cutting on inventory and capital spending is at a 35 year low. But, Kevin P. Watters, chief executive at JP Morgan Chase, said banks are considering borrowers who were initially denied loans.

Citing new research, Bernanke said that in the last 20 years it has been seen that companies less than two old have generated a quarter of gross jobs in America which is certainly a reason to continue lending to small businesses in this recession.

“Making credit accessible to sound small businesses is crucial to our economic recovery,” said Bernanke, a vocal proponent of loosening credit for smaller companies.

While many big firms are flush with cash and are expected to report strong profits during earnings season, smaller businesses have struggled to secure the loans they need to expand and hire. Economists point to this disparity as a reason that the recovery has not been as robust as was hoped.

Small businesses generally spur job creation during recoveries and employ roughly half of all Americans.
Unless these borrowers are able to get loans to expand operations and make new hires, experts fear that the economic rebound will slow in the second half of 2010. Business owners, who identified credit lines and working capital as key financial needs, point to the declining value of real estate and other collateral used securing loans has been part of the challenge in securing funding.

In May, the Obama administration sent Congress a proposal to create a $30 billion stimulus program designed to encourage small and mid-sized banks to loosen credit for the nation’s small businesses. The legislation has not yet passed in the Senate.

Bernanke urged banks to loosen lending to smaller companies at a Fed conference Monday, saying that small businesses employ about half of all Americans and account for 60 percent of job creation.

Startups are especially vital, Bernanke said. Over the past 20 years, startup businesses accounted for about a quarter of all job creation.

Meanwhile, big companies are building up their cash reserves and are expected to report strong earnings in the coming week, said the Associated Press.

According to the National Federation of Independent Businesses, roughly one-third of small businesses seeking credit have had trouble getting it. Banks counter that the demand for credit remains weak.

Several big banks, including Bank of America, JPMorgan Chase and Citigroup, have pledged to increase small business lending this year. Total lending to small businesses has continued to decline, however, dropping from around $710 billion in the second quarter 2008 to less than $670 billion in the first quarter of this year, said the AP.

A number of small business owners say they are relying on personal credit cards or dipping into their own savings to stay afloat.

Those rates are set to expire after this year. Wall Street Journal columnist Bill Bischoff suggests three ways to take advantage of these low tax rates.

• Take Low-Taxed Dividends This Year
  If your profitable C corporation has a healthy amount of earnings and profits (or E&P), shareholders should consider taking dividends this year, instead of risking a bigger (though deferred) tax hit down the road.
• Low-Taxed Stock Redemption Deal This Year
  Another way to convert some of your C corporation wealth into cash is with a stock redemption deal, where you sell back some or all of your shares to the company, says Bischoff. To the extent of your corporation’s E&P balance, any stock redemption payment is generally treated as a taxable dividend. The IRS provides several exceptions to this general rule, so you might want to consult your tax adviser.
• Sell Stock This Year
  From a federal income tax perspective, selling shares this year and paying no more than 15% on the resulting gains (assuming you’ve held the shares for over a year) beats paying more than that on gains from sales in later years.