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Schumer Sez: Loan To Small Businesses!
By Bizbox
We actually were waiting to post on this until we heard back from Sen. Chuck Schumer's office, which we called yesterday, but it's been a day and we haven't yet, so you should be aware that Schumer held a press conference Sunday calling for the federal government to make direct loans--"tens of billions" of dollars' worth--to small businesses through the Small Business Administration. The thinking being that, as we've written, even though the recently passed $700 billion bailout is aimed at loosening the credit markets, which should soon help small businesses as well as big corporations borrow money, in the meantime the small businesses are really feeling the hurt and need quick, short-term credit.
It's worth pointing out that Schumer is probably one of the top five most powerful senators: he's the senior Democrat from the third-biggest state, and has headed the Democratic Senatorial Campaign Committee, with much success, for several years. In other words, this is a loud voice advocating for this policy.
Obviously the direct loans would be great: even in a best-case scenario, it is going to take a month or two for the credit markets to respond to the bailout, and this is exactly what small businesses need to tide them over. From the government's perspective, establishing such loans could shore up the small business community's support for its broader policies, which has been shaky given the bailout legislation's failure to remedy problems with federal government contracting and other small business concerns.
Tell Schumer to keep fighting this fight.
Comments (1)October 7, 2008 2:20 PM
Comments (1)
The Small Business Administration, as currently constituted, is not much help to small start-ups and typical small businesses. Mostly the SBA targets loans of $150-750K, backed by real estate, years of profitability and tax returns. Most small businesses do not qualify. When they do qualify, typically they would be able to get a bank loan anyway, only the government slightly subsidizes the loan terms to encourage bank lending. It's really a way to subsidize banks, and at the margin to encourage them to remember to loan to medium-sized businesses once in a while.
Anyone waiting for the SBA to help is going to wait a long time. Sorry to be a buzz kill.
Posted by Michael Taylor | October 13, 2008 9:44 PM
Posted on October 13, 2008 21:44