Check the story here - somewhat disappointing so far:
While this is a nice move I am not convinced this will make a huge difference. SBA loans typically still require some guarantee from the borrower. So if my house is worth 30% less than last year, do I still have enough to make a difference for my small business? And while the government guarantees the loans, it does not chance the selection criteria that banks have set, so if I did not qualify last year, I am not sure I will qualify this year.
Also banks typically require that the business has one year track record before considering the SBA loan option, and we still need money to help boost the creation of new small businesses.
The good news is that it is a cheap option for the government since the money will not really be spent unless people try to borrow, bank grant the loans and then only if the business is in default will the guarantee will be drawn from the government account.
The Obama administration had in his proposals $250M to create a network of incubators to help small businesses, where is that money now?
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Monday, March 16, 2009
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