This article has a quick and dirty look at commercial lending in Arizona.
“A business loan has to make sense not only from a financial point of view but from a business-ownership sense,” Staropoli said. “But that’s always been the case. If the buyer and business are qualified, there is absolutely no problem getting money.”
She said that lenders always require buyers to have experience and knowledge of the business they’re interested in purchasing. For example, a chiropractor can’t go out and get a loan to purchase a landscape company unless he has done considerable work in that field and can demonstrate knowledge of the industry.
Buying a business often includes buying some real estate with it.
{ 6 comments… read them below or add one }
Cbass 11.28.06 at 3:43 pm
Looks like that Catherine Reagor lady may not be so safe in her assumptions. There is a lot of talk about rates maybe going up not down.
http://money.cnn.com/2006/11/28/news/economy/fed_bernankereaction/index.htm?postversion=2006112816
ken 11.28.06 at 7:32 pm
Yeah, but that`s pretty much his standard manta. Imo, not much of a chance the Feds will up the rates next year and maybe a 50% chance they begin cuts by the end of summer.
Cbass 11.28.06 at 7:59 pm
I believe the Fed will raise rates before they lower for two reasons.
1) Support the dollar
-If the dollar falls then consumers will get killed at the pump and all the junk at Walmart will cost you more.
2) Keep the Chinese financing our debt
-If Chinese does not bankroll the gov we are bankrupt.
If housing tanks, well some people get hurt, but the gov keeps going and that above all is more important to the powers that be than Johnny home owner in my opinion?
As far as his standard mantra I think that remains to be seen? He is still new and we will see which way the wind blows in the spring/summer I suspect.
mrd 11.28.06 at 10:27 pm
The concern about the fed rate is all about how it affects mortgage rates. But
Does the Federal Funds Rate Affect Mortgage Rates?
It has been a bit of a puzzle that the Fed has had a difficult time trying to affect long terms rates.
It may very well be that, for long term interest rates, the Fed is less important than the value of the US currency in relation to the Chinese currency. This is because the Chinese keep their currency locked to the Dollar, in part, by buying up huge amounts of our debt. When the Dollar is losing “value” against the yaun, the Chinese have to buy up more of our debt in order to keep the exchange rate within the small window allowed by the Chinese government. This high desire for US debt keeps the bond rates low, and this helps keep US long term interest rates low.
The scenario I would find very interesting is if the American economy went through a recession of sufficient depth -while incurring ever increasing need of foreign debt buying- such that the Chinese could not buy enough of the US debt needed to retain the current exchange rate. While an interesting scenario, a complete disaster that I hope never happens.
Our current debt situation is not good at all. One way to restore balance is through inflation. The housing market has already seen a large amount of inflation over the last few years. But the real estate market does not get felt in the CPI. It is rents that are seen in the CPI. However, while the CPI does not see the real estate inflation, it is very much a real thing. All that needs to happen now is for the rest of consumer goods to inflate. This is something the Fed has no interestin seeing. I think that Cbass is right in saying that the Fed is not interested in Johnny home owner. The stakes are too high.
The reason I would make the worst Fed Ever: Just for kicks, I would keep raising the overnight rate until I saw a very large correlation between the Fed rate and mortgage rates.
Right now, eventhough people just love talking about what the Fed might do, the Fed does not have as much control over the economy as it once did.
John L. Wake 11.28.06 at 11:17 pm
I’m more in ken’s camp.
The Fed’s key concern is inflation. If inflation becomes less a threat, as it seems right now, the Fed will have more leeway to lower rates.
There is a theory that the best way to support the dollar is to promote economic growth and lower interest rates would help there.
And mrd’s point about whether the Fed rate affects mortgage rates makes my head hurt. That’s heavy duty economics. I’ll have to read the article.
mrd 11.29.06 at 12:08 am
The stuff I wrote was just about my crazy wild guess from reading a variety of things. When I started writing my previous post I just googled something about the fed rate and mortgage rate plots. I got the plot I wanted and did not even bother to read the article. I went ahead and found
the article that goes with the graph. It is an OK read.
I also found an article that discusses some of the connections between Chinese and US currency, and how it might affect interest rates ( The yuan and the restless from money.cnn.com).
All of this stuff is grand speculation. It seems like a bunch of fun