Now More Than Ever, Capital is King

Those who have capital will be in the drivers’ seat, predicted Joe Battipaglia, chief market strategist for Stifel Nicolaus (shown here with Princeton Chamber president Bob Hillier (left) and chamber CEO Peter Crowley (right). Famously bearish, and noted as a raconteur, he told a chamber audience on June 3 that, though the market will recover, the recovery will be excruciatingly slow. “If you have capital, guard it. You have the advantage. Those with heavy debt will have trouble with indebtedness unlike the last 30 years.”

The capital crunch is especially difficult for small business owners, who find loans hard to come by.

If that’s you, consider attending the Lender and Small Business Matchmaker Conference to be held on Thursday, June 24, 8:30 to 12:30 p.m. at the Liberty Hall Corporate Center, 1085 Morris Avenue, in Union. The U.S. Small Business Administration aims to match SBA lenders with qualified small business owners who need start-up or expansion capital, ranging from $5,000 to $4 million. It is the first such event for the New Jersey District Office. To RSVP or

“The small business owners I talk with in New Jersey tell me that a major challenge they face is the lack of credit and tight lending standards,” said U.S. Rep. Rush Holt in a press release.

As part of the House Job Creation Task Force, Holt helped pass the Small Business Jobs and Credit Act, which would create a Small Business Lending Fund. The proposed $30 billion fund would help community banks lend up to $300 billion to small businesses.

For existing state lending programs, such as those in New Jersey, the bill would also support a $2 billion State Small Business Credit Initiative. These monies use small amounts of public dollars to generate substantial private financing.

Other encouragements for small business: the bill would exclude 100 percent of capital gain income for stock in small businesses purchased from March 15, 2010 to January 1, 2011, and it would increase the tax deduction for business start-up expenses. The bill was passed by the House this week.

Battipaglia might disagree that more credit will help. “It’s not just the lack of availability of credit,” he argued in a CNBC appearance on the day after his chamber talk, when the quarterly jobs report had squashed the Dow. Small businesses and investors are discouraged, he said, citing deflationary pressure and dashed expectations for a V-shape recovery. “We are on a decline path. The U.S. economy is expanding but it is just going to be extraordinarily slow.”

Battipaglia predicted, at the lunch, that politicians will change the rules of engagement. Instead of promising everything, the successful politician will promise nothing. “We can’t push the public any further to spend money we don’t have. This is a different world we are in.”

As for where to put your money: he likes capital rich companies that can nimbly jump to clients that will pay their bills.

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