I don’t know about you, but I’m fed up with the sound bites from Administration pundits expressing feigned concern and commitment to helping small businesses survive the current economic crisis. I’m also tired of the headlines (“TARP Funds will Boost Small Business Growth”) that mask the real problem. Beyond the headlines 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 Obama 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 advantage?