The Obama Administration plan to "help" small business by raising loan guarantees in Small Business Adminstration loan programs from 75% to 90%. Show me a successful business based on an SBA loan and I will show you an example of bank fraud. To get an SBA loan you must fail to qualify for a regular loan, in other words, your business plan must be very bad idea. Since the taxpayer is on the hook for the very bad business idea (many of these approved loans go to politically connected people as rewards for supporting candidates) the loan covenants are stringent. Those businesses that in fact succeed normally have broken the loan covenants to in fact succeed.
The other obvious point is any worthwhile business needs no taxpayer support, it needs customer support. Further, one does not build a stable business on debt, one builds it on savings.
Dick Cheney is already blaming the economic mess on Obama, and Obama is foolishly taking actions that will make it seem so. The best thing the US Govt could do for small business is eliminate the Small Business Administration, and never let anyone working for that group ever take a government job again.
Sunday, March 15, 2009
Govt Plans For Small Business
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