Foreign Investors Available for Iowa Projects

The Iowa Economic Development Authority (IEDA) has announced that it has contracted with a company called CMB to handle investment opportunities by foreign investors for Iowa projects. A government program known as EB-5 allows foreign investors to invest in an American project and immigrate to the U.S. as long as certain criteria are met.  This program was initially used in Iowa for dairy operations, but is now being expanded to construction, energy, and infrastructure projects.

CMB got its start in the redevelopment of closed military bases, hence where "CMB" comes from.  CMB handles all of the investor-side issues: screening the investors, tracking and verifying investor funds, and preparing all of the paperwork to conform to the EB-5 program.  CMB also will review the Iowa project to make sure that it is viable and that it is a project suitable for the EB-5 program.  

A foreign investor must invest at least $1,000,000 ($500,000 in areas of high unemployment or rural areas) and the project must create or save 10 jobs for the project to qualify.  This program will not fund 100% of a project, so additional capital is required, making this available really only for multi-million dollar projects.

During an informational meeting yesterday, CMB urged anyone interested in this program with a suitable Iowa project to contact them early in the process, ideally before or during site selection, as the site location could make or break whether the project qualifies.  If you have a project you think would benefit from this program, contact me for more information.

Continue Reading...

Transferring Property From an LLC

Although Corporations and Limited Liability Companies offer their owners similar protections from liability, differences between the two entities can be found.  For instance, when transferring property from an LLC, the Iowa Revised Uniform Limited Liability Act requires that the record (i.e deed) must disclose whether the LLC is member-managed or manager-managed; whether the conveyance is in the ordinary course of the LLC's business or affairs; and that the signer has authority to act on behalf of the LLC.  Whereas, the record does not need show these additional disclosures for property transferred by a corporation. 

Consideration must be given to subtle differences such as these when deciding on a choice entity for a new venture.

To Cash the Check or Not to Cash the Check

Whether you are a seasoned business owner or a relative new-comer, the issue either has or will come up sooner or later.  A customer tenders payment of a sum less then the full amount due and owing for services rendered yet the check is marked "paid in full," "acceptance of this check is payment in full," or something similar. 

The question is, what is the effect of cashing the check on the customer's account?  Under the Uniform Commercial Code (UCC)  if there is bona fide dispute between the parties and the business owner accepts and cashes the check an accord and satisfaction has occurred and the checkwriter will have a defense if the business owner would happen to take legal action for the difference. 

So, under the UCC, if there is a bona fide dispute as to the amount owed by the consumer and the check is conspicuously marked "paid in full" or something similar then the business owner can do one of two things.  He or she can either reject the payment and send the check back to the consumer or he or she can cash the check, essentially accepting the consumer's settlement offer and wiping out the rest of the debt. 

Think from the End when Starting a New Business

The best time to make decisions regarding how to exit a business venture is at the beginning, especially if the business is to have more than one owner.  Why?  Because, although this my seem a little cynical, it is in all likelihood precisely the time when the soon-to-be business partners will be most closely aligned and focused on a common goal.  It is at this time, when leaving the business is the furthest thing from the partners minds, that objectivity can be achieved and a fair buy-sell agreement can be created that allows a partner out, without placing an undue burden on the remaining partner(s) and business.  At a bare minimum a carefully crafted buy-sell agreement will cover, (1) How the value of an owners interest in a business will be determined; (2) What, if any, internal or external events will trigger a buy-out; and (3) Is the sale of a departing owners interest restricted in anyway.

For information on different types of buy-sell agreements and their tax implications see Structuring Corporate Buy-Sell Agreements by David Joy, Jo Koehn  

Targeted Small Business (TSB) Program

My husband and I are in the early process of purchasing a business. After some searching, a couple hints from a friend and a newspaper article in the Des Moines Register we stumbled on the Targeted Small Business program offered through the Iowa Department of Inspection and Appeals and the Iowa Department of Economic Development. The TSB program is for Iowa businesses that are at least 51% owned and managed by minorities and/or women or persons with disabilities. One purpose of the program is to provide financial assistance in the form of low interest loans and/or grants to new or existing businesses.

The process (as I am currently discovering) does take a little work. First, you must become a certified TSB through the Iowa Department of Inspection and Appeals. The application requires information concerning you and the current and/or future business. Because our business is not yet established my husband and I will apply to be conditionally certified. Once we are up and running we can become fully certified.

Once certified (conditionally or fully), you are eligible to apply for the TSB Financial Assistance Program. The financial assistance application is a bit more involved than the certification application. A complete business plan, including projected financials is required. Those who have little or no experience in developing a business plan or projecting profits and losses can contact the Department of Economic Development and be assigned an assistant who will guide you through the process.

If you are a minority, woman or person with disability thinking about starting your own business or expanding a current business, you should consider the Targeted Small Business Program.

Debt Collectors Save Us All Money in 2007?

In a national study entitled "Value of Third-Party Debt Collection to the U.S. Economy in 2007:  Survey and Analysis" , which was conducted by PricewaterhouseCoopers and commissioned by ACA International, it was determined that in 2007 the collection industry was able to return $40 billion in bad debt back to large and small businesses that had previously extended consumer credit.  That $40 billion return represented a greater than twenty (20) percent reduction in private-sector bad debt.  The study suggested that this return of $40 billion translated to an average savings of $354 per American household, as the reduction in bad debt helped companies keep their margins low and in turn sell there products at a lower price.  So there you have it...through the diligence and hard work of its employees the collection industry benefits us all.

At-Will Employment

Iowa is an at-will employment state. The term at-will presumes that employment is voluntary and indefinite for both employers and employees. Either party can terminate the relationship at any time. For employers, however, there are some exceptions to the at-will doctrine.

Obviously employers cannot violate state or federal laws when firing employees. Employers may also not terminate employees if a contract exists between the parties. Employment contracts may be the result of collective bargaining agreements or individual written contracts. 

Less obvious to some, is the fact that employment contracts may arise through the policies outlined in an employee handbook provided to all employees. Handbooks may provide employees with expectations regarding disciplinary and termination procedures. Deviations from the policies outlined in the manual may provide a basis for a wrongful termination action against the employer.

In order to prevent such an action, employers that provide handbooks to employees should follow steps to ensure that the handbook reinforces the at-will doctrine. 


I can't speak for all businesses, but from my perspective most businesses have a signed agreement before they provide services for either an individual or a business. However, invariably it is those transactions in which the agreement was never actually signed that cause the most problems for the business owner.  

The typical fact pattern goes something like this:   an individual wants some work done to his home, he approaches an electrical contractor for a bid,  the contractor gives the homeowner a bid, the homeowner says, "yeah, that is fine but I need the work done right away because of (insert any emergency situation here)."  

Contractor, says,  "great, it just so happens that I have some time available within your time frame, if you will just sign this agreement I will go ahead and order the material that I will need for the job."    

Homeowner, says "Yeah, I will sign it, I just can't do it today because (insert any half-baked excuse you can imagine). 

That should be definite red-flag to the contractor, or to any other business owner for that matter; however, due to a downturn in the construction industry  and perhaps being a little strapped for cash and against the contractors better judgment he reluctantly takes the homeowner at his word and begins the project. 

At the end of the day the contractor incurred the expense of the project and now the homeowner is unwilling to pay and the contractor is placed in the unenviable position of having to decide to cut his losses and move on or he can go after the homeowner for his damages, which will require a further outlay of cash and time.

The point of this post is this,  if you are going to provide a service and would like to give yourself the best opportunity to be paid for that service, then you must get the agreement in writing.  I know that this is not earth shattering information, but it is worth repeating as everyone knows that they need to put an agreement in writing, yet from time to time exceptions are made and the exception leads to a big headache. 

The bottom line is this:  If you want to increase you ability to get fully paid for every service you provide and therefore increase your bottom line then you must not perform any work before you receive a signed writing spelling out the extent of the agreement. 

If for some unknown reason you find yourself proceeding without an agreement, then my advice to you would be to begin rubbing your rabbit's foot or looking for that four leaf clover because it will likely take all of the luck in the world for you to get paid in full and on time.  If someone does not want to put it in writing then they certainly do not want to pay for it. 


In an ideal world, when a business provides a service, the person or entity benefiting from the service promptly pays the provider for that service (assuming of course, that the service was performed as the service recipient expected).  As anyone who has been in business for longer than a week can tell you, when it comes to customers paying for the services that they receive, the world is not perfect. 

Because not all customers pay as agreed, it is imperative that before performing any work the service provider must first get a service agreement signed by the service recipient.   I know that this seems obvious and I would guess that the majority of businesses do get the bulk of their agreements in writing, yet it is always the small exceptions that end up causing business owners the biggest problems. 

Now, I know that there is portion of small business owners reading this that are likely saying to themselves:  "we do business on a handshake and a person's word is just as good as any contract," and  I would agree that that is the case 95% of the time,  but it does not take too many disputes over payment to begin to negatively effect your bottom-line.  When a service has been provided yet the recipient unjustifiably refuses to pay for that service,  then the business owner has a choice to make:  either eat the costs of the service or enlist the services of an attorney.   It has been my experience that most business owners would rather shove a stick in their eye then have to choose between those two options, but whether you like it or not, this is the decision that the business owner has to make.  

As you may have guessed, I mainly talk to the latter, business owners that chose to contact an attorney, and without exception the first question I will ask my client is whether there is a contract.  The answer to that question is determinative of the likelihood of being able to recover this debt for the business owner.   

If the answer is "yes, we have a contract signed by the service recipient and I will send it to you immediately", then I feel pretty good about the client's likelihood of recovery.  Conversely, if the client answers, "no, but...", then the client's prognosis for recovery has suffered a two-fold set back, first, it will be more difficult to prove the existence of a oral agreement to the satisfaction of a court and therefore, more attorney fees and second, and I may be generalizing here, but it has been my experience that if someone is unwilling to sign a contract for a service then they are equally unwilling to voluntarily pay for that service.

Tomorrow I will continue with part 2.