A Simple Solution that may save Many Small Businesses
How the SBA excludes the U. S. Small Business Manufacturers from badly needed Assistance of Loan Guarantees.
This morning I enjoyed a short video of SBA head Mills describing the program for supporting America's Start-up companies.
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But just yesterday I learned how SBA makes it almost impossible for small businesses to get much needed aid in a down economy. Here is that story:
Let me give you the background. The business in this saga is is a niche market success with over 20 years operating history. It employs between 50 and 60 persons full time, makes a uniquely American product, form raw materials suppliers in the U. S> . The company sells its goods in the U. S. but also helps reduce the trade deficient by exports goods to China and other countries. Last year was the first year that the Company ever posted a lose. Its annual revenue is in the $15 to 25 million range.
In our conversation the owner described the struggle to meet payroll, avoid laying people off, buy raw materials and keep the lights on. The loss last year wiped out the company reserves and operating capital was near zero. I suggested getting an operating capital line of credit, with an SBA loan guarantee. The answer, “that is not possible, I would have to personally guarantee the loan and so would the other owners, and at least one would never do that. I love this company and its employees but I can not risk bankrupting my family to keep it afloat.”
The SBA Loan Guarantee program costs the Federal treasury very little actual money. The program merely make the U. S. government a co-signor on the note. IF the business does not repay the loan the assets of the business can be liquidated to pay the debt. No one has a problem with that. But here the Fed wants more, the personal assets of the owners, property they may have inherited, saved up before coming into the business or have accumulated from their spouses labor. That is not Fair and Balanced Look at how the BBAT (Big Business Administration Toadies) look out for Big Business.
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