Sometimes I wonder if our Congress and president really want to see new job creation in
Yes, they are. Here is the history:
After the mid 1990s when Congress was debating whether the SBA was a worthwhile agency to have, the SBA had to find ways to help subsidize itself. So it created large loan guarantee fees that the borrower had to pay to get an SBA loan. At the time it was not unusual for banks to charge a pretty hefty origination fee on top of the loan guarantee fee. SBA loans became so expensive that many banks got out of the SBA lending business, preferring to make conventional loans that would save the borrower closing costs.
Flash forward to 2009, when President Obama came into office. His massive stimulus plan was passed with provisions that essentially shifted the cost of originating an SBA loan from the borrower to the U.S. Treasury. Under the ARRA, the loan guarantee enhancements were set to expire on December 31, 2009, or when they ran out of money.
In early November 2009, the SBA announced that it was about to run out of money. Congress was in recess at the time so no emergency appropriations bill could be passed. Borrowers were placed in a waiting queue assuming that Congress would appropriate additional funds. In late January 2010, Congress gave the SBA enough additional funds to last about a month and a half. It expected to pass a more permanent bill that would keep the popular SBA program green until December 31, 2010.
Because Congress was so busy passing other major legislation on President Obama’s agenda, the issue of longer-term funding for the SBA was temporarily put on hold for a total of three more times. Now for the forth time in a year and a half, borrowers wanting SBA loans will be placed in a waiting queue until new funds can be appropriated.
I know that the government has declared the recession over, but I am seeing small business owners making decisions to close their doors on a near-daily basis. The uncertainty about how long the recovery will take, the unfriendly legislation that keeps coming out of Washington, and the fear that they will have to stay hunkered down for another year or more has businesses frightened.
We just don’t need Congress and the president playing any more games with a program that has significant potential to help increase jobs and help speed up the economy.
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