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Small-Business Loans for Car Dealers
By Marc Tracy
One of the main accomplishments of February's stimulus package as far as small businesses are concerned was to greatly expand the Small Business Administration's main lending programs in terms of how much of individual loans the SBA would back. Now, reports Entrepreneur, comes a different sort of expansion: more businesses--think car dealerships--are now eligible to participate in this program of favorable loans.
We see three ways to view this development. One is to say: hey, these are small businesses too--bigger, more tied into bigger corporations in some cases, but still small businesses--and they should be just as eligible for the loans as the local hardware store or whoever. Two is to say: well, maybe these aren't small businesses, exactly, but they are in trouble (we're thinking especially of car dealerships and parts makers), and this is a convenient, pre-existing structure through which the federal government can help them; plus, as long as demand for SBA loans continues to stay low, what's the harm in letting more businesses in on the program? It's worth noting, indeed, that this expansion in eligibility is temporary, at least for now--it's set to expire in September, 2010, which makes this second way of viewing the expansion entirely plausible.
But the third way is to condemn it as another instance (you could point to the extension of certain federal small-business programs to equity-backed companies as the first) of this administration's small-business policy not being governed sufficiently by the concerns of genuine small businesses. We imagine Lloyd Chapman and his American Small Business League would view it this way, and we're somewhat inclined to, as well.
"We have seen signs that small businesses that are just outside the traditional 7(a) size standard are being shut out of the conventional lending market," SBA Head Karen G. Mills said in announcing the expansion. "This temporary change will help those businesses weather these tough times and help move our nation closer to economic recovery." The problem, of course, is that while such businesses may indeed require and deserve government help, there's no particular reason why that should come at the potential expense to genuine small businesses who thought these programs were just for them and which Congress presumably intended as just for them, too. So long as demand for credit is as low as it is, it probably doesn't make a huge practical difference. But as a symbol, it is slightly troubling. And we hope that as September 2010--that's two months before an election--comes around, the administration actually lets the expansion lapse.
Comments (0)May 4, 2009 9:17 AM
