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Survey: One-third of Americans Thought about Starting a Business Last Year

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Survey: One-third of Americans Thought about Starting a Business Last Year

LendingTree reaches $1 billion milestone in loans issued through small business loan marketplace

LendingTree®, the nation’s leading online loan marketplace, today released its survey of aspiring small business owners, as the company celebrates a new milestone for its small business vertical – surpassing $1 billion in loan volume through LendingTree’s small business marketplace.

Starting a business is something that many Americans think about pursuing, but mental or financial roadblocks can cause hesitation. Of the 3,387 Americans who were originally surveyed, almost one-third (31.6 percent) have thought about starting their own business in the past year, although nearly half of those would-be entrepreneurs have yet to take any steps toward their dream of becoming a business owner. The hesitation is caused by a variety of reasons, but access to sufficient capital is by far the most common reason for not starting a business.

LendingTree (in conjunction with Qualtrics) further surveyed the 1,067 Americans who said they thought about starting a new business in the past 12 months to gauge attitudes toward small business ownership and the perceived challenges regarding financing. The survey was conducted online June 14-21, 2018.

Key findings include:
• Nearly one-third (31.6 percent) of those surveyed have thought about starting a business in the past year.
• Access to sufficient capital is by far the most common reason for not starting a business — 42 percent say access to enough capital is a primary impediment.
• One-third of respondents said they are considering a Small Business Association (SBA) loan, making it the most popular source of small business financing. Conversely, one in four said they won’t need to borrow to start their small business.
• Inertia is an impediment for many. Just under half (46 percent) of respondents said that they haven’t taken any steps to start a business, like registering a company, applying for a business loan or working on their business part time.
• Some 25 percent of respondents said their primary motivation for starting a new business was wanting more purpose. Only 14 percent said they don’t want a boss.
• Twenty percent said they were willing to forgo an income to get their business off the ground, while 16 percent refused to tolerate any salary cut. About 23 percent were not willing to take on any personal debt to start a business. On the other hand, 19 percent were prepared to risk $25,000 or more.

The entrepreneurial spirit is strong
Among those who have contemplated starting a business, most people want to do so to add more purpose to their life. Purpose is the most commonly-cited motivator, even exceeding wealth, for people who want to open their own business.

Some would like to be their own boss (14.4 percent), while others found inspiration in entrepreneurial friends, family and TV shows. Several people have thought about starting a business to advance their careers and get out of a dead-end job.

According to the Small Business Administration, small businesses have been steadily growing in the number of firms, income, jobs and new businesses, a trend that LendingTree’s small business loan marketplace has been party to. LendingTree’s small business marketplace has grown to exceed $1 billion in small business loans issued through LendingTree’s network of lenders and its subsidiary, SnapCap.

“We couldn’t be more thrilled to officially reach this milestone,” said Hunter Stunzi, SVP of Business Loans at LendingTree, and co-founder of SnapCap, which was acquired by LendingTree in 2017. “We’re proud to support the small business owners of America. A small business loan may be a commercial transaction, but like many small businesses themselves, it is often highly personal to the business owners, and we’re honored to help business owners through loan process.”

Financing challenges hold businesses back
Despite thinking about starting a business, many would-be entrepreneurs are holding back. Nearly half of those surveyed (44.6 percent) haven’t taken any steps toward launching a business. Lack of capital (42 percent), limited opportunities (24.2 percent), and inopportune timing (19.6 percent) are also cited as the primary reasons for not starting a business.

However, just over half (55.4 percent) of those surveyed have taken small steps, such as working part-time on further developing their business (19.6 percent) and applying for loans (13.2 percent). Others have gone as far as registering their company (11.4 percent) and bringing on a business partner (11.4 percent).

Financing sources
Many of those thinking about opening a business have at least considered how they would finance their venture, and SBA loans are the most popular choice.

Nearly one-third (32.8 percent) of potential entrepreneurs said they are considering an SBA loan for their business, while roughly 25 percent said they are not considering using any financing to fund their operation.

About 15 percent of people are considering non-SBA business loans, slightly fewer than those who plan to use their cash savings or a credit card. A small portion of entrepreneurs are considering dipping into their retirement savings, home equity or 401(k), which could be a risky move if the business flops.

Most popular source of financing by generation
• Millennials: SBA (24%)
• Gen X: SBA (25%)
• Baby Boomers: No financing (37%)

“Growing and running your business profitably takes incredible patience and skill,” said Hunter Stunzi, SVP small business, at LendingTree. “Of the many hats small business owners wear, CFO is perhaps the most critical. Managing capital requires you to build and maintain relationships with multiple lenders; don’t put all your eggs in one basket. While one lender may take months to approve you for a large equipment loan, an online lender may approve and fund you in the same day. Both lenders should have a place on your balance sheet.”
To view the full report, visit https://www.lendingtree.com/business/small/small-business-survey-results-june-2018/.

Business

Euro zone business activity shrank in January as lockdowns hit services

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Euro zone business activity shrank in January as lockdowns hit services 1

By Jonathan Cable

LONDON (Reuters) – Economic activity in the euro zone shrank markedly in January as lockdown restrictions to contain the coronavirus pandemic hit the bloc’s dominant service industry hard, a survey showed.

With hospitality and entertainment venues forced to remain closed across much of the continent the survey highlighted a sharp contraction in the services industry but also showed manufacturing remained strong as factories largely remained open.

IHS Markit’s flash composite PMI, seen as a good guide to economic health, fell further below the 50 mark separating growth from contraction to 47.5 in January from December’s 49.1. A Reuters poll had predicted a fall to 47.6.

“A double-dip recession for the euro zone economy is looking increasingly inevitable as tighter COVID-19 restrictions took a further toll on businesses in January,” said Chris Williamson, chief business economist at IHS Markit.

“Some encouragement comes from the downturn being less severe than in the spring of last year, reflecting the ongoing relative resilience of manufacturing, rising demand for exported goods and the lockdown measures having been less stringent on average than last year.”

The bloc’s economy was expected to grow 0.6% this quarter, a Reuters poll showed earlier this week, and will return to its pre-COVID-19 level within two years on hopes the rollout of vaccines will allow a return to some form of normality. [ECILT/EU]

A PMI covering the bloc’s dominant service industry dropped to 45.0 from 46.4, exceeding expectations in a Reuters poll that had predicted a steeper fall to 44.5 and still a long way from historic lows at the start of the pandemic.

With activity still in decline and restrictions likely to be in place for some time yet, services firms were forced to chop their charges. The output price index fell to 46.9 from 48.4, its lowest reading since June.

That will be disappointing for policymakers at the European Central Bank – who on Thursday left policy unchanged – as uncomfortably low inflation has been a thorn in the ECB’s side for years.

Factory activity remained strong and the manufacturing PMI held well above breakeven at 54.7, albeit weaker than December’s 55.2. The Reuters poll had predicted a drop to 54.5.

An index measuring output which feeds into the composite PMI fell to 54.5 from 56.3.

But despite strong demand factories again cut headcount, as they have every month since May 2019. The employment index fell to 48.9 from 49.2.

As immunisation programmes are being ramped up after a slow start in Europe optimism about the coming year remained strong. The composite future output index dipped to 63.6 from December’s near three-year high of 64.5.

“The roll out of vaccines has meanwhile helped sustain a strong degree of confidence about prospects for the year ahead, though the recent rise in virus case numbers has caused some pull-back in optimism,” Williamson said.

(Reporting by Jonathan Cable; Editing by Toby Chopra)

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Volkswagen’s profit halves, but deliveries recovering

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Volkswagen's profit halves, but deliveries recovering 2

BERLIN (Reuters) – Volkswagen reported a nearly 50% drop in its 2020 adjusted operating profit on Friday but said car deliveries had recovered strongly in the fourth quarter, lifting its shares.

The world’s largest carmaker said full-year operating profit, excluding costs related to its diesel emissions scandal, came in at 10 billion euros ($12.2 billion), compared with 19.3 billion in 2019.

Net cash flow at its automotive division was around 6 billion euros and car deliveries picked up towards the end of the year, the German group said in a statement.

“The deliveries to customers of the Volkswagen Group continued to recover strongly in the fourth quarter and even exceeded the deliveries of the third quarter 2020,” it said.

Volkswagen’s shares, which had been down as much as 2%, turned positive and were up 1.5% at 164.32 euros by 1158 GMT.

Sales at the automaker rose 1.7% in December, at a time when new car registrations in Europe dropped nearly 4%, data from the European Automobile Manufacturers’ Association showed.

Like its rivals, Volkswagen is facing several challenges due to the coronavirus pandemic as well as a global shortage of chips needed for production.

It also sees tough competition in developing electrified and self-driving cars. The merger of Fiat Chrysler and Peugeot-owner PSA to create the world’s fourth-biggest automaker Stellantis adds to the pressure.

Volkswagen said on Thursday it missed EU targets on carbon dioxide (CO2) emissions from its passenger car fleet last year and faces a fine of more than 100 million euros.

The group is expected to release detailed 2020 figures on March 16.

($1 = 0.8215 euros)

(Reporting by Kirsti Knolle; Editing by Maria Sheahan and Mark Potter)

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Global chip shortage hits China’s bitcoin mining sector

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Global chip shortage hits China's bitcoin mining sector 3

By Samuel Shen and Alun John

SHANGHAI/HONG KONG (Reuters) – A global chip shortage is choking the production of machines used to “mine” bitcoin, a sector dominated by China, sending prices of the computer equipment soaring as a surge in the cryptocurrency drives demand.

The scramble is pricing out smaller miners and accelerating an industry consolidation that could see deep-pocketed players, many outside China, profit from the bitcoin bull run.

Bitcoin mining is closely watched by traders and users of the world’s largest cryptocurrency, as the amount of bitcoin they make and sell into the market affects its supply and price.

Trading around $32,000 on Friday, bitcoin is down 20% from the record highs it struck two weeks ago but still up some 700% from its March low of $3,850.

“There are not enough chips to support the production of mining rigs,” said Alex Ao, vice president of Innosilicon, a chip designer and major provider of mining equipment.

Bitcoin miners use increasingly powerful, specially-designed computer equipment, or rigs, to verify bitcoin transactions in a process which produces newly minted bitcoins.

Taiwan Semiconductor Manufacturing Co and Samsung Electronics Co, the main producers of specially designed chips used in mining rigs, would also prioritise supplies to sectors such as consumer electronics, whose chip demand is seen as more stable, Ao said.

The global chip shortage is disrupting production across a global array of products, including automobiles, laptops and mobile phones. [L1N2JP2MY]

Mining’s profitability depends on bitcoin’s price, the cost of the electricity used to power the rig, the rig’s efficiency, and how much computing power is needed to mine a bitcoin.

Demand for rigs has boomed as bitcoin prices soared, said Gordon Chen, co-founder of cryptocurrency asset manager and miner GMR.

“When gold prices jump, you need more shovels. When milk prices rise, you want more cows.”

CONSOLIDATION

Lei Tong, managing director of financial services at Babel Finance, which lends to miners, said that “almost all major miners are scouring the market for rigs, and they are willing to pay high prices for second-hand machines.”

“Purchase volumes from North America have been huge, squeezing supply in China,” he said, adding that many miners are placing orders for products that can only be delivered in August and September.

Most of the products of Bitmain, one of the biggest rig makers in China, are sold out, according the company’s website.

A sales manager at Jiangsu Haifanxin Technology, a rig merchant, said prices on the second-hand market have jumped 50% to 60% over the past year, while prices of new equipment more than doubled. High-end, second-hand mining machines were quoted around $5,000.

“It’s natural if you look at how much bitcoin has risen,” said the manager, who identified himself on by his surname Li.

The cryptocurrency surge is affecting who is able to mine.

The increasing cost of investment is eliminating smaller players, said Raymond Yuan, founder of Atlas Mining, which owns one of China’s biggest mining business.

“Institutional investors benefit from both large scale and proficiency in management whereas retail investors who couldn’t keep up will be weeded out,” said Yuan, whose company has invested over $500 million in cryptocurrency mining and plans to keep investing heavily.

Many of the larger players growing their mining operations are based outside of China, often in North America and the Middle East, said Wayne Zhao, chief operating officer of crypto research company TokenInsight.

“China used to have low electricity costs as one core advantage, but as the bitcoin price rises now, that has gone,” he said.

Zhao said that while previously bitcoin mining in China used to account for as much as 80% of the world’s total, it now accounted for around 50%.

(Reporting by Samuel Shen and Alun John; Editing by Vidya Ranganathan and William Mallard)

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