Small businesses have always been a major engine of growth for the American economy. But as the recession continues, many of these businesses are unable to make profits, to expand or open new operations, and in some cases, they've been forced to close their doors. Yesterday, the administration unveiled a plan to shift TARP money away from too-big-to fail firms and into the arms of struggling small businesses.
Under the administration proposal, funds from the TARP will be made available to community banks at 3% annual interest rates (down from 5%). The funds then can be used to make loans to small firms. President Obama also requested that Congress increase limits for Small Business Administration loans.
I spoke Bill Rys at the National Federation of Independent Business, which represents small businesses across the country, to get his reaction to the administration's plan. The NFIB fights for firms on the ground, and has been a player on issues like health care, labor and taxes. Rys says his organization welcomes the administration's initiative to ramp up loans for small business, which unarguably has had trouble accessing credit for new projects. Nevertheless, while credit help may give firms a lift, the NFIB says its members are battling other obstacles--which are perhaps equally critical to their growth.
These are some clips from my conversation with Bill Rys, Tax Counsel for the NFIB:
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labor and taxes
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~~Anna Olson~
Thursday, October 24, 1929: Dow 305.85 -20.66 -6.3%
Kinyobi, October 23, 2009: Dow 9972.18 -109.13 -1.08%
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Dad, should we worry about what may happen to other classes of people as the economy continues its march towards NULL pointer dereference vulnerabilities without relief from unemployment?
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Did you worry about the legions of hapless victims of the Camer Rouge or did you instead worry about the victims of The Yugoslavian Empire Disintegration?
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Ah! Because Tito's Country was European, People looking Euro as Americans once looked.
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Now that the Face of America is the face of all humans, we need to readjust our sites to the new target by couple of ticks.
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During run-up to WWII, entire countries stopped admitting political refugees from Swastika Land. Boat People were turned away at ports. When the going got rough even America the Beautiful became the home of the brave, home of the brave denizens of our concentration camps, denizens put there for being born with the wrong face. But why true politics is heavy half truth chock-full of dishonesty? And why couldn't our government cease and desist its bold relief announcements shifting instead toward actual building of replacement parts to our crumbling infrastructure by using completamente nueva from-the-ground-up projects?
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The advent of High Technology has obviated many of our former low-tech needs. Many low-tech people are now living on frugality, charity, and bravery.
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Since our social security transfer payments come from the general fund in any case thus why not repeal payroll tax? This repeal would be quickest way to rekindle actual rehiring, actual rehiring that would provide larger tax base. Has our government lost sight of what happened within the Hapsburg Countries and Japan during the 30's?
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Panic now trickles down from the banker's lobbyist's politicians as they see enormous amounts of money as their only ticket to escape from what is about to happen once again to the World. For them, Zero Sum Thinking precludes relief for those whom bankers now consider as being already doomed.
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Overpopulation Economics is a dismal science.
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But easier to grasp than algorithms.
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Make it easy on yourself!
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Thug
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Anna,
Do you think this is too little, too late? I guess we're just saying "too bad" to all those small businesses that have already gone belly up.
But even if this is program were put in place earlier and for all the right reasons, will it work? Maybe loan money can help keep small businesses afloat...but for how long? Small businesses have a high closure rate even during good times. Small hardware stores can't compete with Home Depot. Small drugstores can't compete with CVS.
Bill Rys has it right when he says small businesses have more problems than just getting loan money.
If all the signs are showing economic recovery, why not just let our overall business cycle and model take over? Give the banks cheaper money for lending, but don't hold a small business hammer over their heads. If the money goes for expanding a larger business and that larger business grows by buying smaller ones, at least the people in the smaller businesses have a chance of keeping a job. Isn't that the goal?