By any historical standard, it's been a horrible recession. Just surviving has been a big accomplishment.

However, this "survivor mentality" can be a problem. If anything, it can prevent your business from eventually growing.

Growing? Yes, that's right. Taking a look at the recent economic indicators, it does look like the economy is on the mend.

As General Motors (NYSE: GM) works overtime to create the illusion of progress that might lure in skeptical lawmakers, it's making its debt holders an offer that will probably be easy to refuse: Swap your debt in for equity.

If I'm a GM creditor I'm saying, "No deal, Howie!" By swapping their debt for equity, bondholders will position themselves to be completely wiped out in a bankruptcy filing. Even if the company avoids bankruptcy, that equity will represent a claim on the future cash flows of a company that is burning through billions of dollars each month.

The Wall Street Journal reports (subscription required) that "GM's debt load, estimated by J.P. Morgan to total $43.3 billion at an annual interest expense of about $2.9 billion, has been a primary culprit in the company's deterioration in recent years. Many analysts have suggested GM needs to file for Chapter 11 bankruptcy-court protection in order to force creditors to renegotiate."

That still seems like the most likely outcome for the company, and as long as bankruptcy remains a likely outcome, creditors are unlikely to swap senior debt for equity that will have last dibs in a Chapter 11 scenario.

And that's the ultimate catch-22 for GM: Congress is unlikely to provide the financing that would stave off a bankruptcy unless the company is able to restructure its debt to reduce its interest obligations. But that restructuring is unlikely to happen until GM can convince creditors that bankruptcy isn't a possibility.

Where does a business handcuffed by a covenant that caps debt at 7.5 times cash flow go when it needs more money? If it's Las Vegas Sands (NYSE: LVS), it reaches into the bulging pockets of major shareholder and chairman Sheldon Adelson. According to The Wall Street Journal, Adelson has loaned Las Vegas Sands almost half a billion dollars.

The move will allow the company to remain within the covenant of its current $5 billion facility, which is crucial as it looks to raise an additional $2 billion for ongoing projects and refinance a current $3.3 billion loan. Earlier this month, S&P lowered the company's credit rating to B+ from BB-, reflecting weakness in the gaming industry and illiquidity in the company's position.

Traditionally, the large casino-based companies have looked to investment banks for project financing (ouch!) and LVS continues to press forward on plans to build not just in Macau, but other Far East markets such as Singapore and perhaps Taiwan. Even before the current tight money climate in the U.S., though, LVS and other major players in the Far East casino development business have been looking overseas for financing.

The tightening of access to credit and higher costs associated with financing hit used car seller CarMax Inc. (NYSE: KMX) right in the wallet. The company suffered a huge 48% drop in 4th quarter (4Q) net earnings, the vast majority of which stemmed from growing losses and increasing credit expenses in its auto finance unit. Thus unit posted a $1 million loss in 4Q2008, as compared to a $31.7 million profit in 4Q 2007. CarMax CEO Tom Folliard states the company is willing to tolerate such a loss in order to maintain in-house financing capabilities as a way to help boost sales and grow market share. But for how long? Fiscal Year (FY) 2008 earnings declined 8% as a result of the 4Q plunge.

CarMax is doing a whole lot of things right. 4Q sales increased 9% to just over $2 billion and FY 2008 sales increased 10% to $8.2 billion for used cars, to help counter a 20% decline in new car sales. Comparable store sales increased 3% and market share grew a bit. But in order to hit these numbers, CarMax dropped its gross profit per unit by $120. Average profit per unit sales was just over $2500.

"You can't sell what you can't finance" remains as true in the used car market as in real estate. Despite increasing costs for credit and financing, CarMax plans to continue its expansion plans, opening 14 used car superstores in 2009. Revenue is projected to grow in the 7-14% range based on modest growth in sales per unit volume. FY 2009 EPS is forecast at $0.78-$0.84. Used car retailers will remain in a much stronger financial position than new car retailers, at least for the foreseeable future.

MAJOR PAPERS:

• Two years after saying it would open about 100 new branches a year, Citigroup Incorporated (NYSE: C) has decided to drastically cut back, and will instead focus on big markets, reported the Wall Street Journal.
• Wal-Mart Stores Inc (NYSE: WMT) wants a piece of the pharmacy benefits business, the Wall Street Journal reported, and will begin an initial program to help "select employers...manage how they process and pay prescription claims," CEO Lee Scott said.
• New York insurance superintendent Eric Dinallo is urging bank executives to provide up to $5B in initial capital to support struggling bond insurers such as MBIA Inc (NYSE: MBI) and Ambac Financial Group Inc (NYSE: ABK), the Financial Times reported. Sources believe the insurance regulator is looking for leading U.S. banks to ultimately commit up to $15B.

• According to the Associated Press, Yahoo! Inc (MASDAQ: YHOO) may be eyeing an online music service, two record company executives familiar with the matter said. As part of an ad-supported service, the sources said Yahoo has held talks with several major record labels to potentially offer unprotected MP3s for free or for sale.

If you take a look at the stories of great entrepreneurs – such as Wal-Mart (NYSE: WMT)'s Sam Walton, Microsoft (NASDAQ: MSFT)'s Bill Gates, and Howard Schultz of Starbucks (NASDAQ: SBUX) – you will see that they had the help of mentors and advisors.

After all, being an entrepreneur can be lonely, stressful and challenging. And it's often difficult to get solid advice.

"I can't overstate the importance of mentors in my life," said Ben Casnocha. Ben started his first business at 14 years old, and even wrote a book on his experiences, My Start-Up Life: What a (Very) Young CEO Learned on His Journey Through Silicon Valley.

So where do you find mentors? Ben recommends lots of networking. In fact, he considers the Small Business Administration's SCORE (Service Corps of Retired Executives) a great resource (and it's free).

But be wary. Make sure you do lots of background research on the people you like. You might realize that they really aren't a good fit.

Richard Branson is one of the most innovative, creative billionaires out there, and his latest project provides further evidence of that. Virgin Money USA, which opened for business on Monday, is designed to make it easier to lend money to friends and family more formally. A little bit like Prosper.com, Virgin Money USA will act as a conduit between parties, providing a platform and legal/tax documentation for informal loans.

According to The New York Times, "Virgin Money USA will offer personal and business loans, mortgages and reverse mortgages. The average interest rate for loans is 6 percent, and for mortgages, 5 percent. Borrowers are charged a $9 per payment administrative fee and will pay an upfront charge ranging from $99 for unsecured loans to $2,000 for large mortgages. Borrowers can select terms of their loans, including the duration and rates. The bank will not retain any of the interest."

So technically the loans will be made by Virgin (just as technically Prosper loans are made by Prosper), but the risk will all be held by the friends and family of the borrowers.

The fees ($9 per payment adds up on a small personal loan) make this look like a very questionable move for consumers. And lending money to friends and family is something that should be avoided whenever possible anyway. But in the wake of the subprime meltdown, and the need for emergency loans from friends and family, Virgin Money USA could be well-positioned for success.

In August, BloggingStocks' Kevin Kelly wrote about signs that the credit crunch could have a material impact on the ability of Hollywood to finance movie projects.

Sunday's New York Times writes about the recent emergence of special funds for investing in Hollywood productions, including the $600 million Gun Hill Road 1, a fund maintained by Gun Hill Road LLC. These funds are fueled by dollars from hedge funds and private equity firms

According to The Times, "All of the hand-wringing leads to a basic question: What if some of the hedge fund and private equity guys (and they are still mostly guys) pack their bags and head home to Connecticut? How bad off would the studios really be? One answer is this: A little less money might not be a bad development for studios and, heaven forbid, for moviegoers."

Apparently the willingness of hedge funds and private equity types to invest in these projects (I would speculate that many of these former high-school-nerd money managers invest in films not to generate a ROI, but rather to boost their EGO, and show those kids who made fun of their pocket protectors what's what) has lead to a movie glut, with a lot of sub-par, big budget movies getting financed that never should have. Doesn't that sound a lot like the last months of the private equity bubble?

In any case, maybe a decline in the dollars available for movie productions wouldn't be such a bad thing. Perhaps Hollywood can get away from its infatuation with special effects and big names, and focus more on creativity and art.

When I was about nine years old, my grandfather, may he rest in peace, decided it was time to tell me and my brother about the dangers of debt and car salesmen. As my brother and I oohed and ahhed at his Infiniti's leather interior and CD player, he told us about the day he bought the car. The salesman had asked him how he wanted to finance it, and when my grandfather said he would pay cash, the salesman turned white with shock. Here's what he told my grandfather: "Only drug dealers pay for cars with cash."

A Saturday's New York Times explains the dealer's reaction:

...Buyers who pay cash, whether they write a check or borrow the money elsewhere and bring it to the showroom, provide car dealers with fewer opportunities to make money on a car deal.

That ranges from the cut they get from arranging a lease or loan, to options like extended warranties or anti-rust coating that buyers are more likely to choose if they can fold it into the amount they borrow. In some cases, those extras account for up to 75 percent of a showroom's profits.

So there you go. In addition to the great financial reasons for paying cash (unless you qualify for 0% financing), we now have another reason: You get to annoy a car dealer. And who doesn't want to do that?

See also:
Julie Tilsner: Seven great ways to waste your money
Brian White: GM, Ford, and Chrysler have too many dealers

The Volatility Index for S&P 500 Options is down $.32 to $15.65.

Lear Corp. (NYSE: LEA) June 40 calls bid up on expected Buyout offer exceeding Icahn's $36. LEA, an automotive interior systems & components supplier, announced on February 9, 2007 that American Real Estate Partners, a holding company controlled by Icahn, will purchase LEA for $36 per share in cash. LEA June 40 calls are bid $.85, according to Track Data, suggesting buyers expect LEA to trade above $40 in the next three months.

Accredited Home Lenders (NASDAQ: LEND) volatility increases to 133 suggesting Aggressive Risk. LEND, a mortgage company originating, financing, securitizing, servicing and selling non-prime mortgages, is recently down $1.00 to $16.57. On March 2, LEND filed to delay its 10-K. LEND call option volume of 7,784 contracts compares to put volume of 16,687 contracts. LEND April option implied volatility of 133 is above its 26-week average of 60 according to Track Data, suggesting larger price fluctuations.

Option volume leaders today were: Google (NASDAQ: GOOG), Citigroup (NYSE: C), Altria (NYSE: MO) and ScanDisk (NASDAQ: SNDK).

The Daily Option Update is provided by Stock Options Specialist Paul Foster of theflyonthewall.com.