Same Old, Same Old

I arrived to Geithner’s speech a little late. Just a minute or two before he began to talk about “initiatives to strentghen funding for small businesses.”  Here: 

We have agreed to expand this program to target the markets for small business lending, student loans, consumer and auto finance, and commercial mortgages.

And because small businesses are so important to our economy, we’re going to take additional steps to make it easier for them to get credit from community banks and large banks. By increasing the federally guaranteed portion of SBA loans, and giving more power to the SBA to expedite loan approvals, we believe we can turn around the dramatic decline in SBA lending we have seen in recent months.

Now let me tear this down for you with the voice of experience. Every time I have ever tried to deal with the SBA — every time anybody I have ever known has tried to deal with the SBA — it has ended up being all about home equity loans. I realize I have somewhat less than a statistically significant sampling, but it’s large enough to include white men, women, and minorities. All these people had detailed business plans that involved tens of thousands to hundreds of thousands of dollars in equipment purchases and buildouts.

Every time, the end conversation has become “Why exactly am I considering filling out a bunch of government paperwork about my business instead of just talking to Ditech?” 

So then, let me explain to the esteemed Secretary why SBA loan applications have plummeted: nobody’s got any home equity anymore. I’m not a fan of Zillow’s research, but they’re only observing the same reality most homeowners face. You can’t get a home equity loan when you have no equity.

So Mr. Secretary, if you would like to actually help small businesses instead of giving the usual lip service, here’s my wish list:

* Direct SBA to guaranty loans secured by equipment purchases, to include reasonable start-up costs when the company agrees to allow SBA review and approval of the business plan. Yes, approval. Some business ideas are stupid. Others have clear but avoidable flaws.

* Make it an SBA priority to provide low-cost consulting and other services to start-ups and businesses in their first year. They already offer some services, but not enough.

* Most importantly, make SBA able to help people buy low-cost, quality health insurance policies for entrepreneurs and their families of the sort that these job-creators would have had if they were content to take a paycheck instead. In fact, make SBA the de facto place for businesses with 12 or fewer employees (“small businesses”) to get group coverage. Don’t tell me they aren’t set up to be an insurance company, because the government already runs several of those. If Blue Cross wants to compete (ha!), let them come up with a cost-competitive plan.

Do us all a favor and do things that will actually help small businesses. And stop trying to pretend we can solve all our financial problems with home equity.

In Closing: I hope everybody has seen this chart of job losses and gains already? How about this one of the S&P 500 adjusted for inflation? Good; Children get it worst in this economy and this stimulus bill (so far); try to live on the minimum wage in any town; getting a job is no longer as simple as moving to where the jobs are; Ezra calls for an end to the filibuster; great pictures of the salvage of flight 1549; and last, even if we have to agree to disagree about whether waterboarding is torture, can we at least agree that slicing someone’s genitals with a scalpel is torture? Please? Sheesh.