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Apple's $17 Billion Bond Issue Dwarfs Small Business Lending

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Submitted By JoeRogers
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May 4, 2013 Joe Rogers, GlobalREACH Capital Markets Blog Post

Apple’s $17 billion bond issue dwarfs small business lending
Why can't Small Businesses stock up on cheap cash, too?
Last week Apple Computer borrowed $17 billion in one day from institutional investors via a very complex offering that demonstrated the depth and efficiency of the global capital market. Stan Schroeder reveals some insights in Mashable about how Apple, in one day, went from being debt-free to having obligations equal to 3.1% of the bank loans currently outstanding to all US small business owners combined, which amounted to $539.7 billion at the end of 2012. In fact, Apple's $17 billion in loan proceeds represents more than several large banks lent to their small business customers during all of last year. For example, Joshua Sophy reporting for SmallBizTrends last month confirms that the American Express Bank ($16.9B), US Bank ($13.8B), PNC ($9.9B) and Citibank ($9.1B) each lent less in 2012 to small business owners than Apple borrowed on Tuesday. And JP Morgan Chase, the largest US bank with almost $2 trillion in assets, only lent $19.8 billion to small businesses in 2012 or about 1% of their assets. So what made this Apple transaction so noteworthy and why can't Mom & Pop on Main Street get in on the cheap money party? In short it's because the global capital market works great with scale but has become very dysfunctional here at home for small and even medium-sized, middle market companies. And feel free to read: "Greed" when you heard the word, "Scale" because they do mean the same thing. It's when bankers want to make significantly more profit for the same functional activity; so they only spend their time on large transactions with bigger customers. Yoni Heisler explains in The Unofficial Apple Weblog how the company was able to take advantage of their bankers' desire for "scale"

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