The More They Know
Business owners with good credit, rejoice; overextended borrowers, beware. The Small Business Financial Exchange from Equifax is putting a lot more information at lenders' fingertips about their prospective borrowers by pooling data from participating lenders. That means loan officers can find out from other financial institutions just how much business owners owe, in what form-general loans, credit cards or leasing agreements-and whether they're making good on payments.
Given that most entrepreneurs owe money to more than one financial institution, that concept might seem scary. However, according to Dann Adams, Equifax senior vice president of sales for the Americas, the Exchange-which boasts 20 of the 25 largest small-business lenders as members-will make banks more likely to loosen the purse strings because they'll feel confident they have all the information. "The risk has gone up dramatically for banks over the last three years," says Adams, pointing to the proliferation of loan and credit card products online and the growth in the number of small businesses. "Today, people expect to get loans in five minutes," he says. "So [lenders] need better tools to conduct faster online transactions."
There's Gold in Them Thar Hills
If gold seems positively anachronistic in a world of digital coins and virtual bills, be prepared-it could be making a comeback. Not in physical bars, of course, but as the currency of choice to back up digital monies used in online purchases, according to a report commissioned by the World Gold Council.
The world's oldest money has a couple of key advantages.
"First, people trust it," says Richard Rahn, author of
the report and an expert in digital money systems. "Second,
there's a pre-existing demand for gold assets that gives gold a
head start over competitors."
The main challenge at the moment-not surprisingly-is very few e-commerce players are accepting payment in gold. But a few companies are working to spread the word, and the metal. E-gold Ltd. allows consumers to purchase gold, silver, platinum or palladium for the going spot price and then spend it for free at any e-gold recipient anywhere in the world for no additional charge. GoldMoney, launched in February, is an online payments service that offers real-time transactions in gold that are not subject to chargebacks.
Clearly, though, gold's got a long way to go to achieve ubiquity. "At the moment, it's a niche product," says Rahn. "It really depends on how many companies get behind it."
The Net's Net Effect on Trading
of wealthy Americans worry that their children will spend beyond their financial means.
If you're worried that allowing employees to access their 401(k)s via the Web will entice them to spend an inordinate amount of time tinkering with their allocations, there's new research from the University of Pennsylvania's Wharton School of Business that says you might have reason to fret. The study, which looked at data from Hewitt Associates showing the influence of online trading for 100,000 employee users of two corporate 401(k) plans found that trading frequency increased after 18 months of Web access, but the evidence suggested that it was caused by a combination of the Web and the market. "That might have happened anyway if the markets were going crazy," says Andrew Metrick, assistant professor of finance at Wharton and co-author of the report.
It's something entrepreneurs should be concerned with, however, given that they have to negotiate contracts with 401(k) providers based on the level of employee trading activity. "But unless trading goes up by a factor of 10," says Metrick, "it's unlikely to have an enormous impact on costs." Plus, he adds, the Web offers a host of benefits to entrepreneurs, including simplified administration and the ability to offer employees more involvement in their own retirement planning. Of course, for some aggressive traders, less involvement can mean more cash in the end, says Metrick. "We found no evidence that people doing their own trading are making any money. On average, they're just stirring the pot."
C.J. Prince is a New York City writer who specializes in business topics and the executive editor of Chief Executive magazine.
- Equifax, (404) 885-8393, (303) 773-2997
- SBA Loans 4 U Inc., (904) 223-5650, www.sbaloans4u.com