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Differences in the Types of Auctions That Take Place Around the World

Auctions are those events where properties or goods are sold to the highest bidder. Auctions are mostly public events, where bidders make a series of bids and purchase a particular item for a high price. During auctions, bidders decide the price of an item rather than the seller. It depends on bidders to decide the amount they would want to pay for a specific item. During an auction, a bid is a proof of a legal binding. Bidders agree to pay the amount that they have bid. In a high profile auction, bidders may have to pay a deposit in escrow accounts or give a proof that they can pay for those items.

Types of Auctions:

Different types of auctions take place around the world. Below mentioned are some types of auctions:

1. English auction:
This is a basic type of auction. In this type, people can see the item and then start bidding. Bidders slowly raise the value of their bid until everyone gives up. The highest bidder is the winner. An auctioneer manages an auction, keeps records of the on going bid and decides the winner. Sometimes, the seller will quote a minimum amount for an item to the auctioneer, below which the auctioneer cannot sell that item.

2. Dutch auction:
In this type, the auctioneer sets a particular price and then gradually lowers the price. People in public will start bidding and later decide which prices are suitable for the item. A seller may use this type of auction to sell large quantities of same products to the public. For instance, a seller may want to sell a large amount of hay and will thus, decide to sell this hay to people for the same amount, once a reasonable price is decided.

3. Silent auction:
In this type, the bidders in public will present their bids in a sealed format. These sealed bids open at the same time and bidder with the highest bid wins. There could be a modification in this type of auction. The bidders are allotted a specific period to bid. They can roam in a room displaying the items, and write their bids on an associated sheet of paper. The bidders are allowed to see bids of other bidders and can choose a higher price for an item. At the end of the allotted time, bidder with the highest bid is the winner.

Examples of Auctions:

Auctions can be of two types either public or private. Sellers may trade any kind of items in both types of auctions. Some areas where auctions take place are:

1. Antique auction: An antique auction consists of a trade opportunity as well as provides entertainment.

2. Collectable auction: In a collectable auction, the seller may put up collectables like coins, vintage cars, luxury, stamps, real estate, and luxury for sale.

3. Wine auction: In wine auction, bidders can bid for rare wine, which may not be available in retail wine shops.

4. Horse auction: Bidders can bid for young horses of the best breed.

5. Livestock auction: In livestock auction, bidders can buy pigs, sheep, cattle, and other livestock.

The other examples of auctions may not be public. These auctions are for bidders from corporate levels. Some examples of private auctions are:

1. Timber auction
2. Spectrum auction
3. Electricity auction
4. Debit auction
5. Environmental auction
6. Auto auction
7. Electronic market auction
8. Sales of business auction

Bidders in an auction need to examine the items displayed and decide an appropriate price for an item. Thus, auctions help buyers in getting the best deals and in gaining better profits for sellers.

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Unsecured Small Business Loans – Good News – Stimulus Bill Allows SBA 90 Percent Guarantee For Loans

Anyone remotely involved with small businesses, whether as a consultant, lender, supplier, leasing specialist, trade association, or simply as a consumer who is tired of driving by sections of town and wondering why your favorite business unceremoniously threw in the towel, would very much like to hear some good news. Not to mention the small business owner itself. After all, there are 27 million small businesses that deserve to be thriving in this nation, but too often were ignored by the Bush administration. Classically non-complainers by nature, they just want a scrap of hope thrown their way. And I’m not talking about wide-eyed idealists looking for handouts-in all due respect to Emily Dickinson, they’re not looking for the”thing with feathers that perches in the soul”. Just give us a few bucks and we will run with it. This is a continuing article (20 in all) on the subject: Help. Is anyone out there loaning to small businesses anymore?

Fortunately there is a loan program out there and SBA lenders are actually making loans currently: the Community Express Loan Program. This gives unsecured small business loans between $5,000 and $50,000 with very little paperwork, answers typically in two days, interest rates presently at 7.75%, funding and two weeks, and monies wired directly to your business account. There are still lenders participating in this program, although Congress has failed to make the program permanent and still has a 10% cap on the number of loans.

Enter the Obama stimulus bill. Let us look how it affects this program and small business lending as a whole.

If you have tried to wade through the 1,100 or so pages of the new stimulus bill (American Recovery and Reinvestment Act of 2009), you know its like chipping through granite. But let me pull out a little gem. It now allows the U.S. Small Business Administration (SBA to you) to guarantee up to 90% of loans made by private lenders under their program. Let me explain. This is great for Community Express.

When the Small Business Act was enacted in 1958, it had a very simple mission. Find a way to get loans to small businesses that couldn’t get them through traditional channels. It did this in an ingenious way. They knew banks where reluctant to loan to small businesses, especially startups, because of fear of failure. So the SBA collected a fee on each loan and used this as a fund to pay banks if there was a default. Bingo, there was invented the SBA guarantee fee. It doesn’t take a degree in rocket science from MIT and an MBA from Harvard to know this gives incentives to the banks to make more loans.

SBA loan programs have guarantees from 50% to 85%. Specifically, the SBA currently has an 85% guarantee on loans up to $150,000 and up to 75% on loans above $150,000. On the other hand, there are some programs that only go as high as 50%, including the Express Loan program (for those types of loans the new guarantee will not change). With the new stimulus bill, the SBA has the right to increase these fees to 90%.

Think about this for a moment. Simple math tells us more guarantee, the greater the likelihood of the bank making the loan. For goodness sakes, 90% is tapping on the door of a 100% guarantee! Also note the guaranteed portion is typically sold on the secondary market (which has recently shut down to almost nothing) so there is more chance for loans to be sold and more money to go back into the coffers of the banks for further lending.

Notice I said the SBA has the right to increase it to 90%. It can pick which program. And it has not occurred yet. But if I was a betting person, I would say they would be seriously looking at most of the programs because everyone is scraping for ideas to revive the economy.

For those addicted to primary source documents, this is what the new statute, in relevant part (my attorney wanted me to add that) says:

SEC. 502. ECONOMIC STIMULUS LENDING PROGRAM FOR SMALL BUSINESSES. (a) PURPOSE- The purpose of this section is to permit the Small Business Administration to guarantee up to 90 percent of qualifying small business loans made by eligible lenders.
(b) DEFINITIONS- For purposes of this section:
(1) The term ‘Administrator’ means the Administrator of the Small Business Administration.
(2) The term ‘qualifying small business loan’ means any loan to a small business concern pursuant to section 7(a) of the Small Business Act (15 U.S.C. 636) or title V of the Small Business Investment Act of 1958 (15 U.S.C. 695 and following) except for such loans made under section 7(a)(31).

There is also a sunset provision under Subparagraph (f) that the guarantees are only good for one year after enactment of the bill, unless extended by Congress.

So what does it do for me now as a small business owner? Well now the not so good news. I predict the SBA will be increasing many of its programs to 90%. But to get the banks in the lending mood again, there has to be a secondary market. There is also new legislation on that, which we will discuss in another article. But once we have a secondary market, I predict that they banks will not only loan, but do so in a big way. For three reasons:

First, history tells us when there is economic inactivity due primarily to depressed conditions, when the cycle changes for the better, like a sling shot affect, it changes dramatically. Remember when people were unable to refinance or purchase their homes because of tight markets and high interest rates? The rates went down and many jumped at the chance to refinance, improve their homes, and purchase (some say too precipitously) with abundance. Although this is an overstatement and also depends upon other factors such as employment, standards of living, etc., the analogy holds that when things loosen up, there will be a substantial number of business loans.

Secondly, banks are in large part in the business of making loans and they have not been doing so for some time. They will be anxious to make profits again.

Lastly, simple economics tells us when there is a vacuum in the market; capital will rush in and take advantage of that open market and initial lack of competition. Large banks are not making business loans so small community banks are starting to rush in to take over the arena. Give them a secondary market and they will explode.

How Important Is the Fundraising Auctioneer to the Success of Your Event?

I want you to think about the term “Fundraising Auction”.

A “Fundraising Auction” is an event where items of value are gathered, and then sold in a competitive bidding situation, either in a Silent Auction format, or in a Live Auction format by a Live Auctioneer. And since typically the best items are saved for the Live Auction, arguably it is the Live Auction that should generate a significant portion of the proceeds in any Fundraising Auction.

So why do so many non-profit groups consider the Fundraising Auctioneer to be the least valuable component in a Fundraising Auction?

The Hosting Facility gets paid.
The Printer gets paid.
The Caterer gets paid.
The Liquor Store gets paid.
The DJ gets paid.
The Florist gets paid.
But the Auctioneer … the individual who is expected to raise the lion’s share of the event’s proceeds… is expected to work for Free. And is usually under-appreciated for the professional services he/she provides.

I’m not trying to underscore the value of the invitations & programs, food, booze, music, and decorations. All are important in their own way. But each of these are “Expenses”. It is the Auctioneer who is going to bring “Revenue”… and thus, the “Profits”… into any event. Which is the ultimate objective of any Fundraising Auction.

Here is a real-life example of how under-appreciated the Auctioneer can be. In two comparable events we worked last year, during the dinner portion of the event one non-profit group sat the Auctioneer (me) at a table with the DJ, the Interns, the Volunteer Staff, and other event “Help”. The 2nd non-profit group sat the Auctioneer (me) directly next to the CEO of their organization, where we chatted about how important the pending revenue would be to their organization. Which group do you think valued the services of the Fundraising Auctioneer more?

Don’t ever under-estimate the value that a professional Fundraising Auctioneer can bring to your event. The Auctioneer adds value as a pre-event consultant. And the Auctioneer can change an event from a moderate to a huge success.

A Case Study Once I was scheduled to call an Auction for a major local non-profit group. They represented a very good cause and they had a strong and dedicated following. Their event was sold out, quality Live & Silent Auction items had been solicited, and the Special Pledge Appeal had been choreographed and was ready to go. The facility was first class, the appropriate caterer was booked, and the food was ready to cook.

But quite unexpectedly, some unseasonably inclement weather forced the event’s cancellation. Despite all of the committee’s hard work, cancelling the event was the proper decision considering the circumstances.

So the Event Committee scrambled to re-schedule the event for the following weekend.

They confirmed with the Hosting Facility.
They confirmed with the Caterer.
They confirmed with the Liquor Store.
They confirmed with the DJ.
They confirmed with the Florist.
Since they already had the Mailing List of those scheduled to attend, no new invitations had to be printed as all were contacted by email or telephone. So with everything in place, the group went ahead and re-scheduled the event for the following weekend.

But guess who they failed to confirm? You got it… the Professional Auctioneer. They thought so little of the Auctioneer’s contribution that they “assumed” that the Auctioneer would be available and at their beck and call.

But the Auctioneer already had another Fundraising Auction booked for that date with another non-profit group. It was only hour away from the re-scheduled event, and things could have been easily worked out. All Group #1 had to do was start their event one hour earlier, or one hour later, than the Group #2, and the Auctioneer could have helped both groups on the same day.

But because Group #1 failed to anticipate a possible Auctioneer conflict, because they failed to confirm with the Auctioneer before re-scheduling their event, their preferred Auctioneer had to bow out and they had to scramble to locate substitute “Volunteer” Auctioneer only days before their event.

And it cost them.

Learning Points

The Live Auction is usually where the profits are made at any Fundraising Auction.
A Professional Fundraising Auctioneer can be vital to the success of any Fundraising Auction.
The better Fundraising Auctioneers usually get booked quickly.
You need to recognize the important contributions that a good Auctioneer can make to your event.
Michael Ivankovich is a Bucks County Fundraising Auctioneer based in Doylestown PA, and serves the Great Philadelphia PA area. He has been a professionally licensed and bonded Auctioneer in Pennsylvania for nearly 20 years, has been named Pennsylvania’s Auctioneer of the Year, and has considerable experience in conducting Fundraising Auctions. Michael loves helping groups raise needed funds for good causes and one of his specialties is the “Special Pledge Appeal” or “Fund-A-Cause Appeal” which usually enables clients to double their revenue in a single evening.

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