Should You Invest in a Small Business?

Business Finance, Business Ideas, Business Investing, Politics, ,

When you think of investing, you might imagine yourself buying stocks and reading market trends. While this is still true of investing in a small business, there are some nuances you should understand first before diving in.

Investing in a small business particularly the ones in small community is not for everyone. In fact, it’s a riskier proposition than buying stocks or mutual funds.

However, if you have a sizeable amount of money that you can put at risk without worrying about an emergency fund or other savings to back you up, then investing in a small business might be the right move for you. Here are some practical tips on how to invest in a small business:

Know What You’re Investing In

Investing in a small business is different from purchasing stocks or bonds in that you’re not just buying stock or a piece of paper—you’re actually buying a portion of a real, live business.

When you invest in a small business, you’re buying equity: you’re purchasing shares of ownership in that company. You’re not just putting money into the company but also putting yourself on the line: when the company succeeds, you succeed, because you profit from the company’s growth.

Decide on a Strategy

If you decide to invest in a small business, there are a few different options to consider. Investing in a small business directly through an equity investment is a hands-on strategy. You’ll have a say in the company and may need to work directly with the company to ensure its success.

This can be a tempting strategy if you’re passionate about the company. However, you should be aware that you may be on the hook for taxes on the profits, even if you don’t realize any income from the investment.

Deciding to purchase a business franchise is another hands-on way to invest in a small business. This can be an easier way to start your own business, using someone else’s proven product and methods to start with less risk than creating your own product or service from scratch.

Another approach you can do is to invest in a small business through a business fund or exchange-traded fund. These are investment vehicles that pool money together from many investors and then invest it in many different small businesses across many industries. You don’t have to know anything about any of the companies in which you invest, but you can still hope to profit from growth in their net worth.

China Makes a Move to Join the CPTPP After US, UK and AU Forms AUKUS Alliance

Politics, , ,

As a means to strengthen its position in the Asia Pacific region, China has applied to join the CPTPP trade pact that was created to counter China’s influence. CPTPP stands for Comprehensive and Progressive Agreement For Trans-Pacific Partnership, which was originally called the Trans-Pacific Partnership (TPP).

The pact was actually promoted by former President Barack Obama as a trade bloc that will have the capability to challenge China’s influential position in the Asia Pacific. However, Obama’s successor Donald Trump ordered the withdrawal of the US from the TPP economic agreement which several countries, including Australia, Japan, New Zealand, Chile, and Canada, had signed up for in 2018.

China’s recent CPTPP application was submitted to New Zealand’s trade minister, Damien O’Connor, as the the latter country has been designated as the administrative centre for the pact. China’s move to join the CPTPP was said to have been spurred by the landmark security deal recently created and formed by the UK, US, and Australia, known as AUKUS.

About AUKUS

The AUKUS deal agreed to by the three aforementioned countries was reportedly created to solidify a joint effort to counter China’s global influence. It has been revealed that the security pact will allow Australia to build nuclear-powered submarines using technologies provided by the US.

Analysts surmise that AUKUS also has plans of developing other AI supported technologies that will make the AUKUS alliance the most formidable defence collaboration.

On the other hand, China brands the security agreement between the three countries as “extremely irresponsible”. Zhao Lijian, China’s foreign ministry spokesman remarked that the pact will not only escalate arms race, but will also compromise the peace and stability in the Asia Pacific region.

New Pandemic Relief Bill Provides Funds for Minority and Female-Owned SMBs

Politics, ,

The new Pandemic Relief Bill passed by Congress provides an additional $284 billion for PPP loans that include SMBs owned by women and minority entrepreneurs. Moreover, small and midsize businesses (SMBs) have a second chance of taking out a loan from the Payroll Protection Package originally created in the CARES Act enacted in March. To qualify, second-chance PPP loan applicants must be able to show proof of having incurred losses of 25% or higher in 2020, and if higher than their 2019 revenue,

Negotiations over the new pandemic relief provisions took months of partisan wrangling before the bill finally mustered approval in December 20, 2020. The enactment of the bill though has been stalled as outgoing president Trump surprised everyone, particularly GOP senators, by refusing to sign the bill unless the amount of stimulus paycheck sent as direct payment to Americans be raised from $600 to $2,000.

Trump’s Change of Heart Nixes Enactment of Pandemic Relief Bill

So near and yet so far, this must be the general sentiment of the millions of Americans who for a moment heaved a sigh of relief that financial help was finally coming their way. At the moment everything is at a standstill as the wrangling over the amount of stimulus check to dole out as financial aid continues.

The Republican senators had strongly blocked Democratic lawmakers’ push for a $1,200 stimulus paycheck during the months-long negotiations, as they were of the belief that Trump will approve only up to $300. After all, Trump even attempted to override Congress by issuing an Executive Order to issue stimulus checks of $300 while Senate Leader Mitch McConnel kept stalling with formal negotiation proceedings by letting senators spend their customary session breaks.

Naturally, the Dems are taking advantage of Trump’s sudden change of heart, with House Speaker Nancy Pelosi immediately calling on members of Congress to immediately take action in granting Trump’s magnanimous request of raising the stimulus check amount to $2,000. However, Senate Minority Leader Chuck Grassley voiced apprehensions that in light of the government’s nearly depleted 2020 budget, granting individual stimulus checks as huge as $2,000 to millions of Americans will forced the government to shutdown.

Now the Republican Senators have been placed in an awkward position, of being the only stumbling block in bringing the much needed financial aid to American citizens this Christmas. While a pro-forma session was held at the Lower House on December 24, 2020 to have the matter threshed out immediately, Republican House Minority Leader Kevin McCarthy blocked the proposal to increase the stimulus check amount to $2,000 as requested by Trump.

Democratic House Speaker Nancy Pelosi issued a statement challenging Trump to instruct House Republicans not to block the Democrat’s proposal that would see to his request as condition to the signing of the new pandemic relief bill. That is if Trump is really sincere in his desire to give the American people economic relief check in an amount that is much higher than what Democrats have been pushing for all along.

While political leaders continue with their partisan politics, refusing to set aside their personal agenda, majority of the American people are struggling to provide the basic needs of their family: food, shelter and utilities. Even middle class Americans have run out of savings and not a few of the millions who lost their jobs have resorted to taking out personal loans short term only, just to have their past due obligations restructured.

Even if small business owners are able to obtain funds in order to keep their businesses afloat, they will still find it difficult to operate profitably if consumers don’t even have enough money to spend for their daily living expenses.

President-Elect Biden’s Plans Will See to the Revitalization of the American Middle Class

Politics,

Businesses thrive if there are healthy and financially capable consumers, which is why part of President-elect Biden’s plans is to save America’s middle class. Moreover, the incoming U.S. president’s plan is not only to revitalize the middle class, but also to make the sector more racially inclusive. Above all else, addressing the COVID-19 crisis remains the top priority of the incoming Biden Administration.

While Trump tried to make it appear that Joe Biden’s plans are left-leaning, the latter has explained time and again that he intends to launch programs that are achievable rather than revolutionary in addressing economic disparity. As the former Vice President who had plans of becoming the Democratic candidate to replace Donald Trump, Joe Biden had said in his 2018 speech at the Brookings Institute

“I do not think America’s 500 billionaires are the reasons why we are in trouble.”.

Yet the former vice president said he believes in the thriving middle class as the backbone of America’s society and of their importance in achieving political and social stability in the country. What he sees as the problems that beset the country is the lack of opportunities and the false sense of optimism being fed by phony populist politicians like Donald Trump.

Rather than encourage the younger generation’s inclination to question the essence of the country’s capitalist system, Biden preferred to maintain a centrist stance in solving America’s economic problems.

Who are the American Middle Class?

In a 2018 survey conducted by the Pew Research, about 52% American adults make up the middle-income households representing the middles class in the country. Pew Research described them as adults whose annual household income is in the range of between $48,500 and $145,500. The middle class income is equivalent to about two-thirds of twice the national median, after said incomes have been adjusted according to the size of the household.

Pew compared the U.S. middle class income with that of other advanced economies, which revealed that proportionally, the U.S. has a smaller middle class sector. Experts at the Brooking Institute corroborated the Pew study as their analysis showed that there is also a growing disparity of income in the middle class — as only the top 20% of the sector was able to recover from the Great Recession in 2007 to 2009.

It was Joe Biden’s centrist policies that made him the Democratic candidate who can mount the most formidable challenge against Donald Trump, who has relentlessly sowed the seeds of divisiveness in America. The results of the election and the large participation of voters from both the Democratic, Republican and independent voters showed that the majority of the American populace seeks unity rather than polarization.

Dem Leaders and White House Officials Work on Expired Economic Reliefs

Politics,

Dem leaders Nancy Pelosi and Chuck Schumer along with WH officials Steven Mnuchin and Mark Meadows, continue negotiations on expired economic reliefs. While the start of August sessions at Congress has been delayed for next week, the four negotiators have agreed to come up with a deal by Friday this week.

What Has so Far Been Put on the Negotiation Table

According to Politico’s Playbook, Treasury Dept. Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows agreed to the extension of the expired economic relief paycheck but are negotiating to bring down the amount to $400 per month (flat $100 per week) from the previous $600 per month financial assistance. Actually, the WH officials’ original proposal was to cut the amount down to $200.

However, despite the increase, House Speaker Nancy Pelosi has made it clear before in her PBS Newshour appearance that there is no-in between amounts. The Democratic position remains firm with the original $600.

On the expired eviction moratorium, the proposal laid out by the 2 WH officials was for the extension of the eviction moratorium up to mid-December on a federal level. Much to their frustration, the Democrats are gunning for more as their extension proposal includes the granting of financial aid to help out the more than 12 million renters througout the country.

Since the moratorium expired last July 25, immediate extension of the eviction moratorium is quite critical, as landlords could proceed with the initiation of eviction actions 30 days after the moratorium expired; technically by August 24, 2020. Yet the financial aid for renters put forward by the Democrats is likely to result in tense negotiations at the Congressional floors.

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