Small Business and Job Growth with Beth Solomon, President & CEO of NADCO

Fellow investors,

Thanks for joining me this week on PowerTalk. I’m your host Chris Versace, editor of the investment newsletter PowerTrend Profits.  

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It’s no secret that job growth has been a disappoint during the current economy recovery. No matter how you look at it and irrespective of the metric you choose, it’s been consistently and persistently weak recovery compared to others.  With wages under pressure, millions of American out of work and thousands continuing to drop out of the work force each month, it can be a depressing picture. That’s before factoring in the millions of American that have ballooned the food stamp program. Worse yet, some economists are even saying the current recovery is getting a little long in the tooth. 

It may look a little bleak out there, but there’s reason to think there is some hope for job creation in this country. 

This week I had the pleasure of speaking with Beth Solomon, the President and CEO of the National Association of Development Companies (NADCO). Development companies take several forms and work with different financing types including working capital loans, asset based financing and private equity. Examples of companies that do that include Main Street Capital Corp. (MAIN), Apollo Investment (AINV), and PennantPark Investment Corp. (PNNT) among others. The National Association of Development Companies or NADCO as it’s known is the trade association for companies certified by the Small Business Administration to provide financing for small businesses under the SBA 504 program.

Beth hammered home the fact that small businesses are the lifeblood of job creation. Despite the industry providing more than $6 billion in capital during 2012 to nearly 10,000 U.S. small businesses, access to capital remains the greatest challenge to small businesses and job creation. In the franchise industry alone, that resulted in 94,000 jobs not being created last year. 

While many think restaurants like Subway and the like when they hear the work “franchise”, you’d be surprised to learn that assisted living, child care, retailers and hotels are others account for a big portion of the franchise industry. That means companies like Hilton, Marriott International (MARR), RadioShack (RSH), Assisted Living Concepts (ALC), Sunrise Senior Living (SRZ) and others.

While commercial banks like Citigroup (CITI), Bank of America (BAC), JPMorgan Chase (JPM) and others are seeing their credit freeze start to thaw, Beth and I talk about a number of programs and other initiatives that small businesses can tap into right now to get the capital they need and put Americans back to work.