There has been a lot of talk in the financial news about the
challenges of getting money into the small business community so those
companies can expand, hire more workers, and provide the economic engine
to sustain our economic recovery. The Obama Administration has a plan,
but like any plan to revive an economy, it requires all the players to
be on board. If they are, then this infusion of small business financing
money couldn't come soon enough.
There was an interesting article
recently in the Wall Street Journal, sub-section CFO Journal on June
23, 2011 titled "Banks Wary of TARP Approach to Small Business Lending,"
by Emily Chasen (Senior Editor). The article stated:
"The Obama
administration's efforts to spur small-business lending through a
spin-off of the Troubled Asset Relief Program (TARP) - hasn't exactly
received thunderous support from community banks, who may be too worried
about government intervention if they accept funds, and the
creditworthiness of prospective borrowers, to make a dent in the frozen
small business lending market."
Okay so perhaps you watched the TV
Movie "Too Big to Fail" about the TARP Program and the financial
crisis, fall of Lehman Brothers, and global economic crash. There was a
decent write up on that TV Movie in the New York Times recently titled
"The Financial Crisis Comes to TV" by Michael J. De La Merced published
on May 23, 2011. In that movie we watched the fiasco, and the laws of
unintended consequences during times of crisis management.
Now,
another TARP Program comes to town, one which will lend money to small
self-run businesses. Unfortunately, demand for little business loans is
weak. Some say this is due to the uncertainty of future government
regulations and the future economy and no little business owners wish to
take the risks. Others say the small business community already knows
the risks and the new regulations and therefore are not interested in
borrowing more money, or taking on new debt.
This also means that
small businesses will not be hiring more employees to help us with our
unemployment situation here in the United States. And that of course
doesn't bode well for the reelection of President Obama, or boost
confidence in the business sector of the strength of the economy. Yes,
it is quite important to have more funds available in the banks for
small companies, but they are not willing to borrow money, even at the
current low interest rates, and if it really isn't worth the risk for
the bank's at those low interest rates then the program is likely to
fail and not satisfy its objectives.
Our small business community
is too important, and each and every one of those businesses is too
small to fail, well most of them. And if they do fail, they should fail
on their own accord, not at the hand of poor government policies or over
regulation. The good thing in all of this is if you are a small
self-run business, or a startup entrepreneur looking for funds, you
might find them available, and you just might convince a bank to give
you a decent loan for your future projects. Indeed I hope you will
please consider all this.