As I was watching Christina Romer, Chair of the White House Council of Economic Advisors, on Meet The Press this morning, I thought about something that I first heard from Maya Angelou who said “Sometimes facts get in the way of truth“. Ms. Romer was talking about how the stimulus is working and how an additional $30B was earmarked for Small Businesses. Obviously this is a fact. But having something earmarked does not mean that these dollars are making it into hands of small businesses who need it (the Truth). Here in Southern California recently, a head of a large bank stated at conference that neither he, nor any of his counterparts, were approving business loans including SBA loans, unless the applicant has a >750 FICO score and are willing to put up personal assets against the loan.
Now the SBA, last year, made some significant changes to their loan programs providing 90% government backing and eliminating all fees. So, one would think that this would open up the deadlock on business loans, but apparently this is not the case. Unfortunately, Ms. Romer doesn’t get the connection that the fact that the government has approved funding does not translate into the truth that small business owners now have access to the much needed cash. Is anybody checking to see if the programs are working properly?
Many times over the last year I have heard government officials state how important small and medium businesses are to the overall economy and their creation and growth are critical to our pulling out of the recession and creating job growth. Nice words, good thoughts, but lacking follow through on results, these are just meaningless concepts. The American public is on the hook for bailing out the big banks last year. Now it should be their turn to get back into the banking business for small businesses. If they either refuse to lend to small businesses or put up unrealistic conditions even though the government is essentially back the loans, then the government should figure out a different way to get these funds into small business owners hands.