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| Jarrett and Obama (image: romanticpoet) |
President Obama’s aides, Lawrence Summers and Valerie Jarrett, recently sent a letter to the national small business pretender organization, NFIB, thanking it for either its “praise” of or “support” for the Small Business Jobs Act of 2010.
The letter was intentionally vague so that the NFIB could pick which applied to it.
Actually, neither applies.
SBA Jobs Act of 2010 still awaits the Senate
The cornerstone of the bill, which is still in front of the Senate waiting on Republican Senators to put partisanship interests behind America’s interest, is the $30 billion Lending Fund to get community banks once again making small business loans. This access to capital is critical to enable small businesses to survive, grow and hire the workers we need to lead us out of this recession-like economy.
The NFIB has been siding with the GOP Senators that have called the Lending Fund “another expensive and bureaucratic government program” and “TARP II”. Actually, the Lending Fund is expected to generate $300 billion in private small business bank loans and the Feds will make $1.1 billion over ten years on the deal.
But you don’t see (at least I haven’t) the NFIB writing opinion editorials using the facts to push for passage of the Small Business Jobs Act, as they have done in opposing implementing the new health care law.
Instead the NFIB’s chief economist, William Dunkelberg, has been critical of the Lending Fund calling it “all but irrelevant” and claiming that it will lead to “bad loans”. Dunkleberg compared the small business loans and jobs that would be generated by the Lending Fund to the same scenario that led to the housing bubble.
The NFIB seems to be more concerned with protecting the assets of big banks than the plight of the small businesses that have had their loans called, lines of credit canceled, and loan applications rejected because the big bank financial meltdown eroded the value of the small business owner’s assets.
Some “thank you” to the small business owners who helped bail out the big banks.
But this irony appears to be lost on the NFIB. “Creditworthy” is the NFIB’s new rallying cry. It only supports financing of “creditworthy” businesses.
NFIB and Mr. Dunkleberg, meet Tony Corso and Joseph Jackson, two of the NFIB’s uncreditworthy businesses.
Tony Corso, owner of Mi-Box Moving & Storage, has been tripped up by the collateral gap. He wants to buy more trucks and storage containers to meet brisk customer demand, which will increase cash flow at his two-year old business, he says. But the banks that have entertained the loan applications from Mr. Corso’s West Haverstraw, N.Y., firm are willing to help finance those purchases only under conditions Mr. Corso can’t afford, he says.
Three banks have asked that Mr. Corso use all the assets of his business as collateral—including his accounts receivables, containers, trucks and forklifts—and sign a personal guarantee, he says. Plus, he says he would have to deposit cash into a bank account, equal to the amount of the loan, which Mr. Corso had hoped would be at least $250,000.
“The loan requirements are so onerous,” says Mr. Corso, who says Mi-Box pulled in $150,000 in revenue last year and hopes to break even this year. . . .
Joseph Jackson, owner of Jackson Pianos LLC in St. Louis, also has had trouble getting a loan. The business previously grew by buying commercial spaces for repair work and for a retail showroom. The business grew 35% last year and exceeded $500,000 in revenue, he says. Now he’s ready to expand into a larger building, but the banks aren’t willing to help this time, despite, he says, his excellent personal credit score that’s between 760 and 800. He didn’t disclose the names of the banks.
When his regional bank, which has serviced his company for years, rejected the loan application without explanation, he says he turned to two larger lenders who told him that his cash flow was insufficient and that he should have more money in untouched accounts, though they stopped short of specifically saying how much he would need. Banks still said no as he dropped his request to $90,000 from $300,000.
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| (image: The White House) |
Mr. President, if the NFIB deserves an appreciation letter for their performance on the Small Business Jobs Act and its opinion of Messrs. Corso and Jackson as being uncreditworthy, surely The South Carolina Small Business Chamber and all the other small business organizations that have supported this effort for a long time deserve an invite to the White House.