Tuesday, February 1, 2011

lets be more hypocritial about the small biz, Washington

The government pushes all this talk about how the sign of the true economic recovery will be the recovery of the small biz. How is the small biz supposed to compete with the mid-size and larger companies when its practically impossible to get any type of small business loan??
These small companies got had to take massive write offs from other small companies that either went bankrupt during the past 2-3 years or just completely dissolved.
Let's not even address the fact that todays business world is essentially structured for the small business to fail with the amount of M&A and economies of scale that occur in the overall market with mid-size to larger sized business.
If the government wants to see a recovery of the small business and they have the leverage of already 'bailing-out' a series of banks, how come they cant create regulation to push for loans for small businesses. I'm sick and tired of hearing about how there is too much risk around a loan to a small business. Thank you captain obvious -- I think its natural to have more risk around a business that has less cash flow and a small revenue stream with less clients... That's why they are a small business!! There needs be some more intelligent finance folks behind the credit process of assessing a loan application at these banks (big banks). Many will argue the root issue here is the poor performance of the smaller banks -- especially as they acted as the creditors for many of these small businesses. We need to not keep this going in circles. The government (state and federal) need to act fast. If they claim no method of forcing more granular analysis of loan applications, then start giving tax breaks for amount of small loans given out or something. No more excuses. I'm sick of reading articles about how bad the small banks and small businesses are doing while we just sit here and say how they are the heart of our economy and we watch them slowly deteriorate.
The only positive thing about this slight economic recovery on an overall basis is the more prevalent return of angel investors for the small start ups. Even then, the exisiting small businesses aren't going to get the time of day when they need a loan for some normal operating expenses they can expect to pay back in one year... Banks would have never thought twice prior to 2007 about giving out these loans.
Let's wake up people. Small businesses are the heart and soul of the american economy and american dream.

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