You're watching...
Veritas Financial Partners Chairman Mark Sunshine on why the tax code is preventing foreign investors from investing in small U.S. businesses.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
Well my next guest says a small businesses while they're struggling to find funding one of the problems of the tax code that actually discourages foreign investment.
This comes as President Obama made some waves left me -- rather with this comments on this matter Nicolaus and a little bit lately I think over the last couple decades we've got -- taken for granted well people want to come here we are now they're hungry.
Selling America and trying to attract new businesses into America.
Joining me now is mark sunshine chairman and co CEO Veritas financial partners which lends money to businesses -- -- small businesses so.
It's the president did talk about the tax -- would you do you talked about his being -- killer of small businesses well.
That's that's right and if yours if you're in the business borrowing market it's a little -- dickens' novel.
Tale of two cities it's the best of times and it's the worst of times if you're a big business and you can hit the hit hit the bond market.
It's the best of times your feasting if feasting at the bank with that the Federal Reserve is laid out.
If your small business however pretty much close that and a bond market and the tax code has.
Big disincentives -- the way the IRS -- -- tax cut its big disincentives for foreign money to arrive on your.
-- stuff in the piece you wrote -- -- to actually call it esoteric that interpretation of the tax cut what exactly are they getting along the lines is hurting small businesses.
Well for some reason the IRS believes that its substantively different.
For foreign investor or even -- not for profit in the United States to lend money by buying a bond when money to a company.
Vs lend money by buying an interest in alone.
And they particularly believe that it's different.
If an investor for temple overseas lends money to a business by buying commercial Paper rather and buys a passive interest.
In a revolving commercial -- The tax consequences are horrible for foreign investors.
We don't every new president says that they would change the tax code immediately how hard or how difficult would it be to -- this in of -- could be -- what are we talking about in terms of investment well.
It's not actually difficult to change the tax -- on this one because the tax code doesn't need to be changed.
It started during the last Bush Administration the IRS gradually making it more and more difficult for foreign investors to participate.
And in lending to US businesses the Obama administration -- not creating the problem hasn't cured.
All the has to happen is the president the Treasury Secretary has to tell the IRS to interpret the code differently.
More like it was interpreted ten or twelve years ago.
I don't want to belabor this but as of protectionism or just that a mistake and it's gone wrong way.
Well it's the opposite of protectionism because it's it's protecting foreign businesses.
And making them more attractive for foreigners to one -- it's just the tech its just the IRS going in tatters things.
Mark small businesses complain all the time that they can't get loans that they want to grow their business they simply he can't get loans now.
Today the FDIC came -- they talked about bank loan for for all those grown slowly that was there word the Federal Reserve when they -- -- their survey.
They don't show much of a change in demand so once I get banks saying there's no demand on the other side it's it's clear that they -- getting these loans were what's the real story will.
The real story is the big banks wanna went to big businesses and -- big businesses a pretty much filled up on bank lending.
You know what about moral of this is is this big banks don't want to lend to small businesses the small businesses being thrown off the boat a -- of the -- of the big banks.
The little banks would like to lend to little businesses.
But the regulators don't feel that the safety and soundness point of view the little banks can do it and probably the regulators are right.
The little banks don't have the infrastructure back office to service those small unless there is demand for these -- oh my god we are swamped with demand that our company.
And -- last week there's a commercial finance association convention everybody was there between 400 people hundreds of lenders everybody was swamped with demand.
Just a tremendous amount of the -- -- you're right place at the right.
Thank you appreciate and as long as the government doesn't get their act together you'll have the space all to yourself but it is good to hear that there's some outlet although it's this little disheartening there.
How easily some of this -- defense thanks a lot more assumption.
