Intuit CEO looks to the future of small business

 sat down with Smith for a one-on-one conversation as Intuit was launching GoPayment, a new product allowing small businesses to collect credit card payments on their mobile phones. GoPayment is one of those game-changing technologies that Intuit often initiates — obvious but indispensable. It is, I'm certain, destined to become a big hit with small companies who conduct business away from a central office or store. And it reflects Smith's commitment to mobile solutions.

Before taking over the helm of Intuit (INTU), Smith headed up their Small Business Division — the company's largest unit. That's a reflection of how important small business is to Intuit, and I've often said that Intuit has small business in their DNA. They regularly do research on the future of small business and stay close to the small-business community.

Nevertheless, Intuit, as a company, was often unknown to its small-business users. They may have loved QuickBooks but not related to the name "Intuit." That's why Smith launched a major rebranding effort, especially since Intuit has acquired — and is still acquiring — a full stable of services for small businesses.

"We were a house of brands, not a branded house," Smith said. "Intuit is an umbrella brand for small business because small business needs many things."

FIND MORE STORIES IN: India | Mobile | Southeast Asia | Intuit Inc.

After Intuit's historic emphasis on back office operations like bookkeeping, Smith says they're now focusing on "front office" services, such as marketing. In the past few years, they've acquired a leading website hosting company (Homestead), and they're seizing on the tremendous interest in social networking and online communities.

Intuit is both acquiring companies that focus on social networking — such as Boo-Rah enabling small businesses to see what users are saying about them all over the Web — and also building social networks into existing Intuit products. For instance, a QuickBooks user will be able to ask a question and get an answer from another QuickBooks customer.

Moreover, Smith sees social networking as a way to build and improve products. "Users want to contribute to the products they use. We can use 'crowd sourcing' and social media to get our customers involved."

On the global front, Smith is particularly focusing on India and Southeast Asia which is exploding with small, entrepreneurial businesses. Intuit has brought to India their long-practiced market research method known internally as "follow me home," where they actually spend time with a company at their place of business to learn how they really operate.

As part of Smith's emphasis on mobile, Intuit launched GoPayment on May 20. GoPayment's a service that allows a small business to accept credit cards on any mobile phone with an Internet connection. And it means you can get paid a lot faster.

Let's say you're a plumber, a telecom installer or a mobile dog groomer. When you come out and do the work for your customer, you can get paid on the spot instead of having to go back to your office, send an invoice, and then wait to get a check. Instead, you can have money in your bank account right away. With certain phones, you can also add a device to swipe the card (instead of entering numbers manually) and even print out a receipt. You can learn more about GoPayment at www.mobilepayment.intuit.com.

How does Intuit compete, especially in this economy? Smith sees their competition as "six guys and ladies in a garage" rather than big corporations. Smith asks his employees to keep an eye on what young, hungry, cutting-edge companies are doing, and come back and tell him what they loved about them. "We're looking to learn from and embrace what smaller, new companies are developing." In fact, Intuit has busily been acquiring some of those companies.

"We're playing offense in a downturn, even if we have to give it away free," Smith answered. "We're staying focused on the long-term, staying focused on the customer."

Business Credit Availability Program website launches

The federal government unveiled the Business Credit Availability Program (BCAP) website on Tuesday.

“I would invite Canadian businesses who are looking for new credit solutions to visit the BCAP website,” said Finance Minister Jim Flaherty, in a release. “Ensuring access to credit is one of our main priorities in taking action on the Canadian economy.”

The BCAP website features a description of the program, explains the roles of Export Development Canada (EDC), the Business Development Bank of Canada (BDC) and private sector institutions, and provides contact information. It also includes examples of business success stories.

Working in co-operation with the private sector, EDC and BDC will provide at least $5 billion in additional loans and other forms of credit support and enhancement at market rates to businesses with viable business models whose access to financing would otherwise be restricted.

Participating private sector lenders have committed to work with the financial Crown corporations to find solutions for creditworthy businesses who would otherwise have insufficient access to credit.

The June report to Parliament will contain the first update on the volume of credit extended under BCAP, with regular updates available on the BCAP website.

NCUA Still in Housing Business

The NCUA will remain the owner of houses in Florida, at least for the time being.

NCUA Director of Public and Congressional Affairs John McKechnie said the agency hopes to hold on to the 1,091 houses it acquired during its conservatorship of Norlarco, Huron River Area and New Horizons CUs until the market improves.

He declined to give additional information and said doing so could place the agency in subsequent negotiations with potential buyers.

NCUA owns houses near Ft. Myer, which has the highest foreclosure rate in the nation, according to RealtyTrac. The agency is responsible for taxes and upkeep of the properties and also pays to have security personnel patrol the area.

The houses were financed by loans from those three now-defunct credit unions.

The agency’s bad assets are administered by its Asset Management Assistance Center in Austin, Texas.

Last year, the agency estimated that the book value of the homes was $218 million.

Rivals of credit unions, represented by the American Bankers Association and the Independent Community Bankers of America, have used those failures to back up their case for why credit unions shouldn’t be allowed to make more business loans.

JPMorgan Chase cuts back on small business credit

For small businesses, there are no bailout plans. They are on their own, and they would be wise not to expect any help from their bankers. Banks are starting to take a close, preventative look at these borrowers. Business Week reports that JPMorgan Chase suspended credit lines for thousands of small businesses, which had been clients of Washington Mutual before it was gobbled by Chase in September 2008.

In many cases, the borrowers had not defaulted, but their credit scores had tanked. They were given these options: Pay off their balance, convert their credit line into a loan or go into default. Those who convert will undoubtedly see higher rates. There are likely other banks undergoing similar exercises right now. It may seem unfair, but right now there still just isn't enough liquidity to go around. 

SBA names Randolph-Brooks credit union lender of the year

Randolph-Brooks Federal Credit Union has been named the SBA Credit Union Lender of the Year.

The credit union will be recognized for the award in Washington, D.C. during National Small Business Week to be held May 17-19, 2009.

Kenan Pankau, RBFCU Business Services Lending Manager, will be in Washington to accept the award on behalf of the credit union.

Pankau also will have the honor of attending a panel meeting at the White House, where he will be greeted by President Barack Obama to discuss the current financial climate.

RBFCU has emerged as a top SBA lender in a relatively short time. The RBFCU Business Services Team began offering SBA loans in 2006 after earning its SBA Express Lender status.

Pankau says the wide array of SBA lending programs are a great opportunity to help business owners and startups that might be passed over by some of the larger business lenders.

“It’s very fulfilling knowing that we can help people make their great ideas a reality,” Pankau says.

Randolph-Brooks Federal Credit Union has assets exceeding $3 billion and serves more than 285,000 members from 30 branch locations throughout South Central Texas.

Small-Business Credit Sees Thaw

Many small-business lenders are seeing signs of a thaw in the secondary market for loans backed by the Small Business Administration.
That is spurring more lenders to originate new loans -- and more small companies to apply for them.
In February, the latest month for which figures are available, 35% of newly approved 7(a) loans, the most popular SBA loan program, sold on the secondary market, according to the Government Accounting Office. That was up from 24% in January. From September 2007 to September 2008, before the credit crunch, 45% of approved 7(a) loans sold on the secondary market.

Movement was noticeable at GovGex.com, a secondary-market exchange where bundled SBA-backed loans are bought and sold. The number of bids per loan for sale at GovGex.com has more than doubled to about 6.7 since mid-March, after President Barack Obama gave a speech about using $15 billion of federal funds to unfreeze the secondary market.
The amount of total loans for sale on the exchange has surged since mid-March to about $67.5 million from $7.8 million.
Meanwhile, the volume of new SBA-backed loans has risen more than 20% since mid-March, with more than $1.3 billion in new loans approved, according to Karen Gordon Mills, the new SBA administrator.
Specifically, the weekly average number of 7(a) loans approved has risen 28% to 796, or $145.8 million in loans, from a weekly average of 622 loans, or $117.9 million, from January to mid-March. In the 504 loan program, which lends money for the purchase of real estate and equipment, the average weekly number of loans has increased by a third.
The increase is mainly the result of two rule changes in March that temporarily cut fees for small-business borrowers and increased the maximum guarantee put up by the federal government on some small-business loans to 90% from 85%.
"We're looking at that as certainly not conclusive that everything is fixed, but we may be turning a corner," says Mike Stamler, an SBA spokesman.
Among the lenders issuing more SBA-backed loans are CDC Small Business Finance, a San Diego, Calif., lender of 504 loans. It approved $20.3 million in loans in April, up from $11.6 million in March. "It's a bit of progress," says Kurt Chilcott, CDC's president. "Is it going to be sustainable? I don't know. The key is whether or not you can convince small businesses that now is the time to invest given the historic low interest rates and fee reductions available through SBA financing."
Excel National Bank of Beverly Hills, Calif., resumed taking loan applications in late February -- it has approved 28 loans so far, valued at $32.7 million -- after halting lending in December. It had made $35 million of SBA-backed loans in September, before the credit markets froze.
"We're back to lending full-speed again," says Brian Carlson, Excel's president and chief executive.
At Small Business Loan Exchange, an online marketplace where small businesses can find lenders, loan applications have more than tripled to 41 since mid-March, from the month before Mr. Obama's speech, according to Edgeware Analytics Inc., the San Diego company that runs the site.
The increased activity comes despite the fact that the SBA has been slow to implement some measures aimed at stimulating lending and loan sales on the secondary market. The agency missed a March 4 deadline to create a secondary market specifically for 504 loans, capped at $3 billion. The government hopes this will facilitate the buying of bundled 504 loans.
Also, regulations on lending to broker-dealers in the secondary market for SBA-backed loans haven't materialized, despite a March 19 due date. The goal is to help dealers get old packaged loans off their books and purchase new ones from lenders.
The SBA had said it plans to finalize the regulations by June, but an announcement may come this month. The agency says the delay is the result of sophisticated financial modeling and complicated legal-documentation changes that need to be made in order for these new programs to work.
Tim Jochner, co-founder of Superior Financial Group, a Walnut Creek, Calif., lender that offers SBA-backed loans, says, "Everybody's encouraged about the proposed programs. ...But if [the government doesn't] come out with those programs in a timely fashion, the secondary market will freeze up again and will potentially be worse than it was before."