Sponsors of the stimulus bill say that small business will benefit indirectly from the spending programs. This is the same discredited thinking of Reagan's "trickle-down" economics and it's a joke. What about the 600,000 plus small businesses that will fail this year, the millions of businesses that won't make a profit, and the millions more workers who will lose their jobs as a result? The stimulative effect of these all too modest proposals is next to nil. The administration needs to do better if it wants the little guy to benefit from any real effort to revive the economy. President Obama has continually said he and his administration wants new ideas so let's see if he's really listening. Here, Mr. President, are some honest suggestions that bear consideration: 1) The stimulus package should immediately allow $25 billion in direct loans to small business, bypassing the recent history of declining bank-guaranteed loans to make sure that the money gets quickly and efficiently to small businesses. Small Business Inc. will never be a gold-plated borrower and the bill must make allowances for this, by broadening the loan criterion to ensure that most small businesses are eligible. These loans are no less risky than those that have already been given by the government and Federal Reserve to the likes of Citibank, Bank of America, AIG, the auto industry, etc. The current SBA bank loan guarantee program should be altered to a 100% guarantee by the government rather than the current 75% to 85% allowed. It's understandable that the banks would be averse to losing 25% on marginal loans that are costly to collect, and that's why they are attempting to marginalize this lending program. The government should pay increased loan fees to ensure that the banks get solidly behind it. Small businesses would willingly pay the bank's fees if they could secure the money they need. Example: right now the fastest growing service offered to small businesses is "merchant advances." These are small loans made at interest rates of anywhere from 30% to 250% by legally organized companies. These companies make payday lenders look benign. 2) The Federal Reserve should be directed and empowered to make loans to small businesses at 2% to 3%, which is currently being charged to the mismanaged and greed-based Wall Street companies. 3) The SBA budget should be increased fivefold to $3 billion and emphasize management assistance and serious outreach to small business. In surveys we have conducted recently, less than 10% of small business owners understood the loan programs offered by the government. 4) There are many other stimulus programs that can be offered including technical assistance, a Small Business Peace Corps, broader and better enforcement of set aside programs. The Obama Administration repeatedly asks for ideas from Main Street. Barack Obama won the election in large measure because of his professed willingness to listen. But if this stimulus package is anything to go by, Small Business Inc. still isn't being heard.
George A. Cloutier -- a graduate of Harvard and Harvard Business School, is the founder and CEO of American Management Services, one of the Nation's largest turnaround and management services firms specializing in small and midsize companies. The company, founded in 1986, and its 120 full time employees have worked with over 6,000 small businesses across 400 industries. Mr. Cloutier is also the author of the upcoming book, Profits Aren't Everything, They're the Only Thing, to be published this year by Harper Collins.