So Why Does the Obama Administration Want to Give SBA TARP Funds?
I don't know about you, but I'm fed up with listening to the sound bites from Administration pundits espousing feigned concern and commitment to helping small businesses survive the current economic crisis. I'm also tired with the headlines that mask the real problem. "TARP Funds will Boost Small Business Growth'. Beyond the headline is a plan to give TARP money to the SBA and the 7(a) program, a system that is broken and broken badly. Why doesn't the Administration get that?
The SBTV.com editorial team and I have done extensive reporting on the SBA's failures during this downturn. Personally, I've had off-the-record conversations with SBA lending specialists as well as sources inside the SBA that reveal a common theme: A small business owner's chances of getting an SBA 7(a) loan are slim to none. The restrictions are absurd, and the application process beyond reason. The only business owners who qualify for loans are the businesses that don't need them. According to the SBA's own statistics, loans are down 60 percent so far this year. One SBA source says she feels helpless as she sees businesses in her district hanging by a thread, but there is nothing she can do to help.
The administration needs to learn something from the same business owners they claim they want to help. Small business owners don't just throw additional funds at a business problem, but step back and analyze what's working and what isn't. Then these innovative business leaders find a creative way to design a more effective process for achieving the desired result.
When you approach the small business problem with small business innovation, it becomes clear that giving more money to an institution that doesn't know how to get the money to the people it's intended to help is a huge mistake. Yes, if you cram enough money into a funnel eventually some of it is bound to make it through the narrow hole. That is a narrow minded solution. But who needs to create a new system when the media takes the Obama Administration and the SBA's word that they are helping. It's time the media start digging for the real stories, and stop offering coverage that masks the real issue.
Here's a recommendation for the Obama Administration and Congress. If you really want to help small businesses quickly and effectively, utilize the powers of the SBA's Disaster Loan program which allows the agency to provide direct loans to small businesses in designated disaster area. Congress has the power to declare certain areas of the country disaster areas for the purpose of this program. While this isn't a panacea for the long-term, it will help place funds in the hands of hundreds of thousands of small businesses so they can truly be the economic engine that helps drive our country's economic recovery.
Our government acted quickly to provide direct assistant to businesses that failed because of poor management, judgment and greed. Why not support the business leaders who are the real victims of this recession -- small business owners who create jobs and find innovative solutions that give our country a competitive edge?
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Any more than he demonstrated any intention to help the millions of people who have lost their jobs from this recession, or any "average" taxpayer.
He purportedly wrote a great book about audacity and hope. Turns out it was a cynical marketing sham. Obama gives great speeches.
But, when one examines the actual actions of his administration for evidence of his priorities, one must quickly come to the conclusion that Obama will "pragmatically compromise" away anything that would help the "average" taxpayer in truckling favor of the biggest banks (and their executives), big financial conglomerates, insurance companies and healthcare.
In comparison to what Obama and the Democrats have given the big companies, which account for a smaller amount of jobs, they have given small business a mere pittance. Worse, his administration is so poorly organized and run, that even that pittance has been poorly managed.
They claim they're on a learning curve - but, the professional bureaucrats do not change - they are the same people, doing the same job, in the same way. No change from Bush. Especially no change for the "average" taxpayer. No change any "average" taxpayer can believe in. Turns out that the Democrats and Obama do not have the will to execute. Feinstein, Polosi, Reid and other leaders just keep doing what they did with Bush - support the really big companies. Isn't it time the "average" voter sought new representation?
They simply don't care. Most of us employ 10-15 people and generate $1 Million or so in revenue per year. They could care less about the investment and sacrifice we make in the economy. We are utterly and completely invisible, inconsequential, and meaningless in their analysis, and in their actions.
I agree, but I say: our government is continuing to do everything in its power to make sure that that the same too big to fail financial institutions that have received massive SOCIALIST bailouts continue to get a piece of the action in any program for small business help.
These institutions continue to be the absolutely penultimate priority of all programs, whether the programs are designed to benefit them directly, or not. The foreclosure prevention and mortgage re-write programs have failed miserably for the same reason-the banks are in the middle, and the actual priority.
Fact: the SBA now directly guarantees 90% of the principle of SBA loans, up from 50% previously. The banks make 100% of the interest income, with 10% of the risk. It is shocking to me that a Democratic administration which has been loath to appreciate Reaganesque trickle down economic theories, has so unequivocally embraced trickle down (through the banks) economic theories. And, the banks aren't even lending with these terms!!!!
The social contract is broken, in my view irreparably. Banks caused this mess. Banks are not being good citizens. Banks continue to receive additional bailouts and sweetened terms like the 90% SBA loans. They will not do the right thing.
For 2 1/2 years we need direct aid to small business. And, now we need TIME the most......