Not Supporting Small Business is Bad for the Economy

In the wake of the fiscal cliff debates, some are worried that big government is overlooking the little guy. According to Yahoo! Small Business, several leading business observers are criticizing the Obama administration’s treatment of small business.

Lloyd Chapman, President of the American Small Business League, recently posited that the government’s plan to fold the Small Business Administration (SBA) into the Commerce Department to try and save money is a folly. He is of the opinion that the merger would ultimately hurt small businesses and redirect money towards large corporations. He suggests instead that the SBA be strengthened and federal programs be directed towards the nation’s leading jobs creator.

Jim Clifton, CEO and Chairman of Gallup research, says that the continuing recession is the fault of elected officials who are not focused on creating wealth. He argues that they do not understand how important small business is, nor how crucial support is for small business success.

Small business is crucial to a functioning economy- but just how crucial remains to be seen. In the coming months and year, we will see more than ever the wide ranging effects of supporting or hindering small business success.

For the full article, see Not supporting small business is economic suicide, observers of economy say

Sandy Victims Aren’t Taking Loans

In the wake of Hurricane Sandy, New York and New Jersey businesses are doing everything they can to recover from damaged buildings and ruined inventory. One thing they aren’t doing though, according to the Wall Street Journal, is taking advantage of the U.S. Small Business Administration’s “disaster loans.”

These loans are at a fixed rate of 4% and are up to $2M in funds that affected businesses likely wouldn’t be able to qualify for otherwise. But the rate of approval is down after Sandy (22%) compared to after Hurricane Irene (30%) and Hurricane Katrina (53%).

The low number of accepted loan applications might be explained by the long and difficult application and acceptance process, or the fact that small businesses cannot afford more debt on their balance sheet. Credit terms are harsher than they were when Katrina hit, so small businesses also might assume they do not qualify and won’t apply.

This article goes to show that bank loans are sometimes an unattractive option to small businesses, who don’t want to go through the long application process and wait for funds when they need them desperately now. They are seeking alternative options that won’t create more debt and have a faster disbursement process.

For the full article, see Disaster Loan Rate Is Lower After Sandy