How to Handle Business Debt- By Neil S. Siskind, Esq.

When we form businesses and make investments, we only see the good side and hope for positive outcomes. But we have all had business ventures go in the wrong direction and/or had investments not turn out as hoped. We came across bad information on which we relied, bad people we had not expected, bad economies we did not foresee, political events we could not control, and new technologies we did not anticipate.

Businesses run into trouble for many reasons. Lower revenues and higher than anticipated expenses are the biggest problems. Macroeconomic factors over which you have no control, at all, could be at play. Sometimes you fall behind on bills and payables and things begin to backup on the company and just cascade. Other times, you may feel that money being sought is not owed by your company because the proper product or service was not provided.

​Once the issue is clarified, there are different ways to deal with such problems, from disputing claims, to trying to settle amounts due. We can help you to set the desired approach based on the circumstances of the debt(s) at issue, and also by looking at the overall picture of your company.

Housing- It’s (Way) Different This Time By: NEIL SISKIND

Housing- It’s (Way) Different This Time By: NEIL SISKIND

Part of, or much of, the growth in housing in recent years, other than being due to low unemployment and low interest rates, is because of “long term” investors are in the market in a historic way (which is also due to low interest rates- as well as low Treasury not yields).

But, it may not be like last time (meaning earlier this century). In the hunt for yield, housing yield (i.e. rent) is a somewhat steady and predictable stream of income. At the same time, the house asset is appreciating. And, then there are the tax benefits of owning real estate and shielding income.

Private equity, corporate buyers, and hard money, all in search of safe yield, means that more purchasers and more lenders are in the housing market. And they are long-term buyers seeking for income- as opposed to the house-flippers of the early 2000’s.

Add this to the nation’s aging demographics, which mean that homeowners who bought years ago are not moving-up, or not moving at all- and we have a strong housing market that could persist in the face of any economic slowdown or recession.

In fact, if the economy worsens, there will be more renters than buyers, and yield-chasing house owners would have lower vacancies and would be able to demand higher rents.

And, all of this means, that the analysts who have been using the housing market as a gauge of consumer strength, have underestimated how a slowing economy, lower inflation, and lower interest rates and bond yields due to the slowing economy, have been the actual causes of the strong housing market- and not low unemployment and a strong consumer.

Collateral Caution for Lenders- By: Neil Siskind

The value of business loan collateral (besides real estate) in this fast-moving, fast-changing world, can, also, be fast-changing.

Hard business assets have, heretofore, always provided good security for business loans. But, while once considered good loan collateral, hard assets now become quickly outdated & lose value because industries & technologies rapidly evolve, and because entire ways of life, shopping, and work, are changing. Thus, hard business assets are less reliable loan security.

In the modern economy, used machinery and other used equipment are often more valuable as scrap than in their present forms due to rapid technological changes, economic changes, & disinflation, resulting from technology & globalization- while product inventories quickly lose value due to technology’s & globalization’s influences on disinflation, making new products nearly as inexpensive as are aged or excess products.

In the digital age, goodwill, existing direct to consumer distribution, cash flows, & IP, may be the best forms of (non-real estate) business loan collateral- versus machinery, equipment, existing wholesale distribution channels, & inventory.

Things once considered to be tried-and-true & measurable loan security- are no longer that, at all.