Welcome to the Small Business Run Down. Each day, we bring you stories that impact small business owners and their workforce.
California steals the top spot again with their new consumer privacy protection laws, the high price of quick cash and another look at the impact cybercrime can have on your small business.
California finalizes landmark consumer protection privacy act
The California Consumer Privacy Protection Act finished the legislative review process yesterday, undergoing only a few changes. The CCPA is set to go into effect on January 1, 2020, and is touted as the answer to the European Union’s Data Protection Regulation. While opponents claim that the bill places a costly burden on the price of doing business in California, consumer privacy advocates believe that California residents have a right to know who has their private information — and what is being done with it.
The Number: $25 million. The CCPA currently applies to SMBs that bring in $25 million or more in revenue — or businesses that sell more than 50,000 consumer records per year or derive 50% or more of their revenue each year from selling personal data.
The Quote: “Since any applicable business across the country and indeed across the globe that serves consumers in California will be required to abide by the law, companies across the board will likely be gearing up for compliance.”
Newer form of funding can provide quick cash … and land SBOs in high-interest hot water
For SBOs in need of a fast infusion of capital, the merchant advance industry can appear relief to cash-strapped small businesses. A faster and easier alternative to securing a traditional loan, these lenders offer funds to keep the doors open in return for access to company bank accounts and daily credit card revenues — at a high cost.
The Number: $10 billion. Estimates indicate that there are upwards of 1,000 merchant lenders operating in the U.S., providing SBOs with between $5 and $10 billion each year.
The Quote: “Legally, they don’t classify this as a loan. That’s how they can get around usury laws where they can charge unrealistic interest rates. They call it a merchant cash advance. They call it a receivables purchase. They call it merchant funding. But in reality it is a very high interest loan. The problem here is they don’t tell you when you get these loans is most businesses can’t survive it.”
SMBs continue to be prime target for cyberattacks … and SBOs continue to underestimate vulnerability
According to new data, SBOs continue to underestimate the threat that a cyberattack poses for their business. Nearly 70% of companies surveyed believed that they would lose less than $25,000 in the event of a breach, while data shows that the average cost of a breach is closer to $149,000. In addition to underestimating the cost of dealing with an attack, many small businesses also lack comprehensive security plans.
The Number: $6 trillion. Cybersecurity experts estimate that cyberattacks will cost business $6 trillion by 2021 — a $3 trillion jump from 2015.
The Quote: “Fatalism and a false sense of security are signs that they need more straightforward education and awareness. The threats are very real, and the stakes are incredibly high, but there are simple ways to make startups and early stage companies much harder targets.”