So Obama is trying to help out the small businesses by opening up lending for the small business: The program includes a $730 million chunk from the stimulus plan to reduce lending fees while increasing government guarantees on a portion of Small Business Administration loans up to 90%. It also seeks to increase bank liquidity by injecting $15 billion into banks in order to thaw the credit market and boost lending to small businesses, read the article here BusinessWeek
The idea is great and all but what about me or small businesses that don't want to take out loans to keep their business going or just to hire more employees, that doesn't really help the small business. One would assume that the banks are going to be more generous in giving out small business loans but what about those banks that are denying the help? What about small businesses that are denied small business loans like myself. I have banks telling me I have too much outstanding credit and not enough cash incoming because they don't understand how small businesses work, creditors don't understand how S Corporations work and I don't pay myself a very big salary but I do have the income coming in otherwise I wouldn't be able to pay my bills and mortgage. All I wanted was a small business loan to refinance my business debt, just 20K to refinance the debt and lower my payments.
The economic stimulus should be more than just giving banks money to possibly give small business loans, its still the discretion of the bank to loan the money to a small business. It should be giving money to small business without strings attached. If I could pay off my business debt, I could afford to hire my two ex-employees back. If I could afford to hire my two employees back, that would stimulant the economy because they wouldn't be on unemployment and would be spending money.
According to the Small Business Administration, as of 2008 there were 27.2 million small businesses in the US. A small business is a business with 500 employees or less. How about this, instead of giving banks more money to use at their discretion. Give every single small business in the US who filed a tax return last year, 1 million dollars to have/use for whatever they want and not have to pay back. That's only 28 million dollars that the government loses. Because you know the government may own 80% of those big banks but they're never going to see a return on it especially if big companies like AIG can give their employees huge bonus.
So lets review, give every single small business that filed a tax return last year, 1 million dollars, no strings attached. That's 28 million dollars going out to stimulant the economy.
I know that seems like a lot, maybe the no strings attached is too much to ask for. But you know what 1 million would do for this small business? I could pay off all my debt. I could afford to hire more than 2 employees and I could lease an office space. I could afford to pay for advertising. I could go out more and spend money. I could actually go on more vacations than once every 5 years. I could pay back my student loans. I could afford health care for myself and my employees. And I could afford retirement plans for myself and my employees. How's that for economic stimulus plan that encompass everything that Obama wants to do.
What about us? I'd love to have a bonus of 1 million dollars.