Analysis memo reflection and Presentation report

Running head: 389-Q148 &nbsp&nbsp 1

Analysismemo reflection and Presentation report

October22, 2014.

PartA. “Analysis memo reflection”

Whatare the strengths of the analysis memo? What parts are youparticularly proud of or happy with? What are the strengths of thepresentation?

Thetopic presented for the memo essay was interesting and provided agood opportunity to research and understand important aspects offinancial lending. The strength of the memo is that the topic is wellresearched important points are presented well with supportiveevidence from literature reviews. In addition, the memo reflects adetailed and well-augmented essay indicating suave understanding ofpertinent financial aspects learnt in class.

Inparticular, the memo reflects a writer who is conversant with thecontemporary financial trends in consumer lending. The partindicating the analysis of the financial crisis in 2008 and influenceon the capacity of financial institutions to lend is a great piece.In part, the part ‘Financial crisis 2008’ illustrates goodapplication of financial theoretical perspective in explaining globalfactors undermining consumer lending in financial institutions.

Whatare the weaknesses of analysis memo? If you had time to go back andredo things, would you? What, and why? What are the weaknesses of thepresentation?

Theanalysis memo fails to give sufficient background on the topic understudy. After the introduction, focus would have been put onexpounding past lending practices by financial institutions. Far fromthis, the literature review is fairly done and does not adequatelygive the study topic an argumentative basis it deserves. The analysismemo requires background details in regard to consumer lending forsmall business in the past, more literature reviews are needed tosupport and shed more light on past studies concerning consumerlending. Furthermore, the introduction part of the memo analysisneeds a focused discussion in regard to the essay topic.

Whatdid you learn about your writing/research/presentation styles whileworking on these projects? What will you do the same (or differently)on future projects?

Theproject has been helpful in expanding my writing, research andpresentation skills. In particular, vast knowledge has been acquiredon how to format a memo essay, as well as the overall contentpresentations. However, in future I will improve the writing,research and presentation style to have a more professional stylethan the current one.

Howdid the peer reviews go? Are you happy with the reviews you did? Whatwould you do differently next time? Who were your peer reviewers, andhow would you evaluate their reviews (excellent, good, not helpful .. .)? Why?

Thelibrarian provided an excellent peer review of the work and providedvaluable information for research, writing and overall contentpresentation. The review was good, but more peer reviewers would haveprovided detailed insight on the overall writing project. However, Iam content with the reviews but in the future more peer reviewerswill be selected.

PartB. Presentation Report

TheBanking Institution for Small Business Loans and Mortgages: AConsumer and Lender Perspective

Banksconditions for lending to small businesses

Banksprovide important financial support to small business that theirneeds. In order to qualify for these loans, business must satisfythree conditions capacity, collateral and conditions. Capacity isthe ability of the business to invest the loan, earn interest and beable to repay the loan. Collateral refers to the assets possessed bysmall business that could be kept as custody by the financialinstitutions for the loan disbursed. Lastly, small business must beable to abide by the terms of loan interest rates and payment as laidout by the financial institutions lending. Despite these conditions,financial institutions management, financial regulators and homemortgage policies have a significant effect in influencing financialsupport extended to small businesses.

Loanqualification requirements for Small businesses

Acommon practice in the banking industry is that, banks may decline tolend loans if the three conditions capacity, collateral andconditions are not met. Before, lending loans banks analyzes businessdebts against assets as well as business cash flow. A deficit betweenthe two is used as a basis of gauging business qualification forloan. Furthermore, business assets are held as collateral for theloan, and an agreement is reached on loan repayment condition.

Trendsin bank lending to small businesses

Smallbusiness provides a vast market for most banks. Traditionally,lending out loans to small business was perceived as risky and lowinvestment returns. However, banks have devised new strategies ofassessing small businesses capacity for loan, as well as structuringloan products for small businesses. Financial institutions havedevised specific strategies designed to assess the creditworthinessof small business using the corporate structure and financial tools.Increased financial health and stability for small business providesattractive image to financial institutions for long-term creditapprovals(Hawley, Kathleen &amp Gopal, 2013).

Mortgagepolicies, financial crisis and lending

Financialcrisis such as the 2008 had a great impact on lending rates offeredto small businesses by financial institutions. The financial crisisof 2008 is attributed to adjustable rate mortgages (ARM) plans thatwere based on locking low payment rates. The effect was that, mostbeneficiaries of adjustable mortgage loans were unable to pay as loanrates rose. The ARM was designed for risk takers who would invest theextra money in productive ventures and beat the banks’ lendingrates. Most loaned beneficiaries used the money irresponsibly.

Alternativeloans for small businesses

Smallbusiness Administration (SMA) loans

Smallbusiness Administration (SMA) helps small entrepreneurs with startupcapital loans through its different lending programs. These programsare loan guarantee program, Microloan program, Disaster loan programand 504 fixed asset financing program. These programs focus oncreating entrepreneurship funds for the young generation who have nofunds, but have investment ideas.

Requirementfor Small business Administration (SMA) loans

Theloans issued through these programs have low interest. Beneficiariesare required to have a viable business proposal or with smallbusiness. In addition to qualification for such loans, small businessowners are required to provide strategic plans for profit and thebusiness should be viable. This means that a business must show theircapacity to repay loans by adjusting business under unlimitedliability to serve as collateral(Hansen, 2014).

Lawsguiding Mortgages and Small Businesses Loans

Manylaws have been enacted as a guide in Mortgage lending and smallbusinesses loans. In1994, Riegle Community Development and Regulatory Improvement Actwere enacted to aid in stimulating economic growth for small businessthrough loans. The law was aimed at reducing regulatory barriers thatimpede access of small business loans. Inthe past, the performance of small business was expected to rise asimprovements were made on credit score rating.

Factorsinfluencing effective lending to small businesses

Severalfactors hindered the emergence of secondary market in the past decadeas envisioned through Riegle Community Development and RegulatoryImprovement Act in 1994. These factors are the abundant of liquidityin financial institutions in 1990 that reduced the need for extraliquidity in the market for small businesses. The other factor islack of standardized loan underwriting practices making it hard tocharacterize the quality of securities in small businesses. However,the emergence of interstate bank companies has increased creditratings for loan approvals(Partners, 2003).

Summary

Banksconditions for lending to small businesses are the businesscapacity, collateral and conditions, Loan qualification requirementsfor Small businessesBusiness Debts against Assets, loan repayment condition. InitiallySmall businesses were perceived as risky and with low investmentreturns. Later specific strategies were designed by banks to assessthe creditworthiness of small business. Small business financialhealth and stability provided attracted long-term credit approvals.Small business Administration (SMA) helps small entrepreneurs withstartup capital loans through its different lending programs. Theseprograms are loan guarantee program, Microloan program, Disasterloan program and 504 fixed asset financing program. To qualify forsuch loans, small business owners are required to provide strategicplans for profit and the business should be viable.Riegle Community Development and Regulatory Improvement Act wereenacted to aid in reducing regulatory barriers that impede access ofsmall business loans. Abundant of liquidity in financial institutionsand lack of standardized loan underwriting practices are consideredmain factors affecting effective lending to small businesses.

Conclusion

Theresearch illustrates that, a significant change has occurred in thelending practices for Mortgage and small business loans. In the past,financial institutions did not have effective measures to assess thecreditworthiness of small business. However, with improved financialheal and stability in small business operations, most financialinstitutions are considering small business as target market forcommercial loans.

However,not all small businesses befit from these loans due to variousconditions set by lenders. Small businesses are assessed on the levelof capacity, collateral and ability to meet loan repaymentconditions. Various regulations have been implemented to regulatelending practices by Mortgage and financial institutions. However,this has not been effectively achieved as banks continue to lendmoney and ARM without effective assessment on the ability of loanerto pay back. The Mortgage and financial institutions need to learnmore on credit score checks and regulation to avert another economicmeltdown.

References

Hansen,G. (2014). Managerial discretion over loan Loss reserves during theGlobal Financial Crisis. International Journal of Business &ampFinance Research (IJBFR), 9(1), 51-61.

Hawley,Kathleen M. &amp Prashant Gopal. (August 5, 2013). TheAdjustable-Rate Mortgage Gamble Is Back. Businessweek.Com:Military&amp Government Collection.

Partners,K. G. (2003). An Exploration of a Secondary Market for. SBAoffice of advocacy,227,(33). Retrieved October 22, 2014, from the Ebsco Host database.