Obama’s small business rescue plan: The details
Citing a ‘financial crisis,’ Obama calls for an SBA-run emergency lending program to get loans to struggling companies. What do you think of the plan?
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DiggTrying to borrow ourseles out of debt will only postpone the pain. spending more than we have to spend, encouraging citizens to borrow more than they could pay back, along with many other wasteful government activities got us to where there must be a reckoning. We have a recession coming. Diluting our currency to the point of hyper inflation will require us to ultimately endure even more pain, maybe even a real depression. Thats what we get for hiring a CEO thats never run anything but his mouth.
I agree with lowering the fees but disagree in the category change to Disaster Recovery and involving the Feds directly. Banks are the ones who can tell if the loan is a good or bad one to make based on the business’s success and track record. The bank should be on the hook as well as the borrower and SBA. If it’s not good enough for the bank, it certainly isn’t good enough for the SBA.
SBA Economic Injury Disaster Loans (EIDLs) are an excellent idea because SBA has the infrastructure in place to implement this well-established program immediately. No new bureaucracy needed. Loan fees are zero, paperwork limited, approvals quick, interest rates low and amortized over 30 years. Previous disasters SBA has helped include non-natural events (see their list of recent disasters). We don’t need to wait, our Governors can request this program for their states. Our Governor Schwartenegger is not responding to requests to request this assistance for Calif. Why??? This is true help for main street. We need this ASAP. President-elect Obama called it correctly when he proposed this simple, but brilliant idea.
My business revenues are off 80% from last year. I cant wait to get the biggest loan I can so I can start paying myself a really good salary again until the money runs out. When its time to pay it back, I’ll claim I didnt understand the terms and am now broke. Show me the $$$!!
You can give all the money to the car industry if you choose. They can make more cars to keep people working. But…at some point, if nobody can buy these cars, there will be an over inventory and you are back to where you started. Cars sitting, layoffs, and the situation remains the same. Are the employees of the car industry going to buy up all the cars? No. Now we have what we started with…over inventory of cars sitting on lots.
Doesn’t anyone get it? The catalyst of the economy is the small business owner and the consumer. If you direct funds to the catalyst, all other industries (major) will benefit. cars, banks, insurance, food, gas, jobs, etc. But because the government is so self-centerd and not willing to assist the “people” with the “people” money, they cut off their nose to spite their face.???? Direct money to the small guy – not the big guy. The small guy will buy, the consumer will buy. Isn’t this what we need? People to buy to boost the economy?? What are the so called braniac’s thinking??? Feed money to the bottom, and it will filter to the top because we SPEND money.
Dear Barack Obama:
Our country needs help from the banks and the latest Treasury’s awful decision making. While the treasury has pumped money in to the Banks who created this problem by their exotic securitized debt papers, the money has not come to the Small Business of America. Our rates have not gone down since the FED reduced the lending rate to 1%. Quite the opposite has happened. Our credit lines have increased the interest and the available interest has been cut. My vision would be to put the money where it needs to go, to the people and to small businesses. With a program like the disaster relief program you had suggested.
This 700 Billion dollar TARP program is only recreating the problem that initially started this mess. I hope that you can stop the congress from giving any more money to the banks and corporations before you take office. The small businesses of this country did not create this problem – we sure are paying for it.
The large auto companies don’t need the money. It is the people who work for them and their suppliers. Why should the big companies get the money? What about the all those smaller start-ups that are trying to make cars using renewable energy, solar power, electricity. Etc. Do you want to see a huge change really quick? Fund the small businesses of America and guarantee the pay of the auto workers who will lose their job and have them work for these small companies. That will be change.
Let’s give the money to the people it belongs too. Not the companies that created the problem. Let’s not repeat the problem that got us here in the 1st place.
Let me explain the problem and events so even your daughters and my two children can understand it as well. I know that you are getting a puppy, and let me explain to you what has happened with the housing and other so called securitized loans using an analogy between houses(and other financial products) and puppies. Let’s say you buy a puppy for your daughters. You finance the puppy from your bank. You agree to pay them a certain amount a month for the puppy. They turn around and sell the puppy ownership as CDOs (Collateralized Dog Obligations). After they sell the CDOs, they get money to lend again to buy more puppies. They keep repeating this for years. Finally there is a plague and the puppy gets very sick and you can’t pay the bank for the puppy. The bank takes your puppy away. Now the puppy can’t be resold, because there are a lot of sick puppies that the bank holds. The Treasury comes in and gives the bank more money that they borrowed from the puppy owners to loan to vaccinate the sick puppies. But, instead of vaccinating the puppies, the banks use it to buy other banks with sick dogs and fix their own balance sheets. This is what has happened so far. The banks will repeat creating wealth the same way they did in the past. The reason they will, is because not only do they have to pay themselves, but the stock holders and now the treasury.
Bailing out the automakers will have the same effect. The vaccine needs to go to the people working for the auto makers and that vaccine needs to get the workers so they can get better first.
I have owned my business since I graduated from college. Like you, I worked hard all my life and was not born into a wealth. I am sick today – I can’t get a vaccine for me and my employees because the vaccine is not available. The banks used it to vaccinate their dogs.
make it happen!!less talk,more action!!
I agree with Dave of Grand Rapids MI.
Keep in mind though that the SBA wants all assets as collateral, which means that whatever is already pledged has to be unpledged to give it to the SBA. That’s hard to do. As long as the SBA limits will allow a consolidation loan, which takes out the bank that loaned prior, and that the lending limits are high enough, it sounds ok. But there does need to be a way for the bank to make money with a prime + 2? rate or even higher if needed. We’re talking about Subprime business loans here.
As an SBA expert of sorts (I help banks in Michigan with SBA lending), I’d like to weigh in with this. Easing the fees charged to banks would obviously encourage more banks to make SBA loans, but there is a far better way to get banks to make these types of loans. SBA currently have a cap on interest rates which can be charged a borrower. Traditionally and in usual credit market situations, these caps are plenty high to work just fine. However, in the current lending environment, many banks are finding that they’re charging their best customers at rates near these SBA maximums. On SBA loans they feel like they should be making more on the rate than the rate maximums allow. I’m suggesting to SBA and anyone who will listen that SBA either temporarily increase these caps or temporarily remove them. Since these caps are tied to the Prime rate, which is steadily decreasing, banks are less and less interested in making SBA loans at the rates they are allowed to charge as these rates go down with Prime. Remember that Prime rate is an artificial rate, and right now it is in no way indicative of the rates banks are charging. That’s actually a good thing, however. Banks are charging higher rates and money is starting to move at those higher rates. Please help me in lobbying SBA to make this temporary fix to their system which will greatly increase the number of SBA loans being made.
Also, lastly, please remember that SBA loans are down because commercial lending is way down. SBA loans are commercial loans, and, of course, all lending in our economy is slowed currently. SBA loans are no different. Banks don’t want to lend in an uncertain environment and borrowers don’t want to borrower in one either, by and large. This too shall pass.
The whole thing is ‘Bunkum’. Neither Obama nor McCain has any answers. Time will take its own course. Whomsoever is elected will get credit/discredit and that’s his luck.
My company is in financial trouble due to the housing market and helping me fund the loss of revenue is a necessity
for my survivial. I hope the new administration can do more than our lame govenor
Me, being an Economist from Canada find this resuce plan the only solid envidence of positive influence within the United States during their desperate time of need.
Wether or not it’s too little too late it is definately called for.
Remember folks, this says it is a rescue plan for those businesses who were affected by some disaster…and I don’t think they are referring to the stock market disaster! Obama’s plan still does not address “what” he will do to help us small business owners who ’s doors will close soon because of outrageous costs from insurance companies who still hold us by the throat for medical, property liability,BOP and payroll insurances.
Patrica I have the same problem, hard working small business almost all profits go back for wages and medical for employees.But still over $250,000 I have called the Oboma camp but guess what no return calls to answer any of my questions? I dont trust any thing the politions say any more! Frustrated in Colorado
Venkat:
I find your comment very refreshing. The idea that we may have to consider fundamental change scares those who have done well in the current system and gathers only moderate support form those who may benifit from the chnage/
Well I for one am pleased that the debtor prisons and workhouses are there so all of those of us weeded out have someplace to go.
If I am not for myself then who will be for me? If I am only for myself then what am I?
Patricia:
I too run a small service practice. The plan proposed by Obama is based on taxable income after deduction for the items you listed. If the company makes over 250K EBIT then the incremental rate goes up by 3%.
I think Barack Obama is a great lawyer and speaker, he does not understand the economy or business. His plan is just like Hoover’s plan to save the economy that lead us into the Great Depression and Carter’s plans that lead to double digit unemployment. He has noble causes, but he will crash our ecomony. See the facts: http://www.mccain4growth.org
Ok people, we all knew this was a house of cards for a long time. The people who have the money and control the money surly knew this too. They are the ones dragging the money out of the economy. What happens when the economy goes bad? The people with less money have to start giving up their stuff cheap to survive i.e…stocks property ect. Who buys this stuff? The people with the money. Big business runs this country and always will, until the masses revolt. You cannot make it to the White House without owing somebody and if for some remarkable reason you do, the back door knockers and the lobbyist will be there to trick you out of your soul. So don’t be mesmerized, neither candidate is going to help you. Democrats and republicans will only help each other enough to keep the libertarians at bay. Vote for Bob!
My business, a service business, provides health care and day care to disabled adults. We have no inventories and pretty much pay for everything on a cash basis. Yet we are suffering because of the increasing gas prices and costs of goods needed to care for these people. We do make over $250,000 per year, but most of it goes back for salaries, transportation, food and taxes. How will this plan help me?
He is a child if he thinks this list will get through Congress and the Senate. BUSINESSES NEED TO BE RE-ENERGIZED NOT JUST THOSE UNDER $250,000. DRILL BABY DRILL FOR JOBS BABY JOBS. Oil affects jobs, manufacturing, production, service industries and yes to put it simply our gas tanks. Figure it out…this is not brain surgery.
Simply put, Obama wants the government to regulate the economy, which is what communist goverments do. I’d rather that he lowers taxes on small businesses than trying to bail out everyone with tax payers’ money.
Now both canadates are talking about cutting the capital gains tax. In a normal economic climate that would be great but since most small business owners I’ve talked to say their business is down 25% to 50%. So if your not making in your business then unfortunately there are no profits so there are no capital gains taxes to pay. Cutting the capital gains tax is a good idea but franly I think this is political postering.
The “plan” that Obama is advertising are too little and too late. If we had worried about the little guy four years ago, maybe it wouldn’t be this bad. Who is going to qualify for these loans now – the unemployed and homeless? McCain isn’t any better. What about the medical bubble? Who can afford insurance? No plan to deal with the fraud, waste and greed. What about the government. Have your tried to deal with these people lately? Good luck. If we just print more money, will it just go away? I think we should be worried about welfare plans adjusted to inflation. Neither of our candidates look strong enough to weather the coming storm.
The original purpose of the SBA is good, but it’s current execution is marred by dishonest loan brokers, shady borrowers and disingenuous lenders. While they complain about the agency’s fees on SBA loans, SBA lenders don’t talk about the often exhorbitant fees paid to loan brokers for referrals. Then, the same broker will work a questionable development fee into the mix. On top of that, there’s the willful blindness of some SBA lenders regarding the loan due diligence…not mention the gaudy commissions earned by BDO (Business Development Officers) to push crappy loans through with the intent of cashing in the gov’t guarantee. Look up BLX or Bank United/Wamu. Currently, the name of the SBA game is churn and burn. Book the loans, package them, then, sell the whole ball of wax to the secondary market.
Obama’s plan calls for even larger and more intrusive government and approximately 700 billion in NEW spending. This does bode well for efficient and fair markets or the tax payer in the long run, perhaps he gives small concessions and credits to a handle full of constituents. He is very arogant, please… more government always leads to bigger problems and cost. He has special interest written all over (look at his donations from Wall street, Big Pharma and the like).
Reps are watered down and McCain has seemed to lost faith in capitalism.
Bob Barr has my vote, he is the only talking about real, long term solution
While Obama’s plan needs some oversight, and SBA is not a perfect organization to handle things that need to move quickly, the plan has some merit.
As to experience, I don’t see where either candidate has any great advantages when we are dealing with a situation that has not occurred before. So look at who their advisors for economic policy are and decide if you think they have a good team.
I think Obomas plan is very sincable and would keep a lot of small businesses going. I could also trickle down to new or expanded businesses.If a business grows large enough it will either expand or hire out certian jobs to new business or other small business
A chicken for every pot and a rescue plan for every individual and business. Economic cycles are normal and healthy, they weed out the inept and corrupt, and make the system stronger when it rebounds. It’s called ‘capitalism’. All anyone in the government is doing these days is ensuring the long term weakness in the American economy. Irrational exuberance and reckless consumption and spending are promoted. Market corrections and frugality are to be avoided at all possible cost. Create ‘government sponsored entities’ so they can get ‘too big to fail’ and then bail them out at the expense of the tax payers and the long term health of the economy. Welcome to capitalist socialism on valium. I used to think Ron Paul was loonie. Now I realize he was right all along.
Typical pandering by Obama. What cap gains are made from investing in a startup? They do not exist.
My company has over 600k in loans to access today- The same 600k we had 1 year ago. This whole “loan crisis” thing is a scam.
One of the big problems with mortgages is that banks where selling the mortgages to Fannie Mae and Freddie Mac and not meeting the underwritting guidelines since Fannie/Freddie would be picking up the loan. Have we learned any lessons? What will keep the banks from relaxing standards due to the loan guarantees? How does this create lending between banks so they have the funds to lend? No funds, no loan. This will be the next credit crisis in 5 years.
All comments below are missing the big point! SBA fee’s range from 1-3% of the total loan amount. So on $100k, you pay $1k in fees. The fees pay salaries for those working for the SBA and to finance the program overall. Obama wants to do away with the fees? How will the SBA operate.
My second point, even if the SBA increases the amount of gaurantee to the banks, the business owners still have to pass bank lending requirements….ie…. half decent credit score, strong balance sheet,strong income statements, strong tax returns. In addition, the business has to provide jobs and add value to the economy.
Wake up people, Obama wants to cut fees to help the SBA, but use OUR tax dollars to float the bill to operate the SBA. Typical democratic politics, cut money here to spend money there but tax the American people to cover your cuts. Its a merry go round.
Hmm… This actually makes a lot of sense. The advice from Buffet & Co. seems to be plainly evident in this plan. It is clear that there has been a lot of thought that has gone into this plan and it’s not one of those, “I’m suspending my campaign!” stunts that the other candidate tried to pull.
I find the rhetoric from the so-called conservatives really entertaining. Even after stunning proof (the economic crisis) that the “no-regulation, free-market, let the market sort things out” approach has completely failed (and failed this country), they still aren’t willing to try a social democratic style of capitalism, ala Germany. There’s an arrogance that the American way is the best way and a complete ignorance or unwillingness (or both) to try something different that has worked for other nations.
The most important thing that most small businesses don’t know they have available to them is large amounts of credit. Even in this credit crunch, small businesses who have taken the time to setup their Corporate Credit can survive. I was working with a company that charged me a fortune and ended up not doing much of anything, except waste my money. I found an online resource that allows you to do it all yourself. I was able to get a full line of credit with Mastercard, in my companies name only without a personal guarantee, in only 90 days. That allowed me to start building even more credit. I currently have over $185,000 in credit with a few large banks available to me even during this credit crunch. The guide is available at http://InsidersGuideToBusinessCredit.com, it is very simple to follow and is the best way to survive ANY crisis
As an SBA lender, I have to say that this is a good start. The cost of an SBA loan has steadily increased over the past 8 years of the Bush administration. At the same time, the SBA has been cut in half, which has increased inefficiencies to the small business applicant.
Unlike Freddie and Fannie, the lenders are not risk free in their lending practices. Rules and guidelines are in place and if a lender is not practicing prudent lending or is outside of the established rules (SBA SOP 50 10 5), the SBA has the right to deny the guaranty. This provides a great deal of security to the tax payer. Every dollar of SBA guaranteed loans made contributes to new job growth in the U.S.
If the loans are guaranteed, what will stop lending to those who don’t have the means to pay back the loan? Isn’t government loan guaranatees the kind of thinking that destroyed Freddie and Fannie and helped get us into this mess in the first place?
Sounds like a great idea, unless you have ever dealt with the SBA. I can not get an SBA 7(a)loan for my retail business, due to the type of inventory I own. Nothing will change with this proposal. Moreover, I don’t think the SBA could meet the time constraints that small businesses are faced with. By the time they make a decision, the store front will likely be boarded up. That’s why the 7(a) program is set up like it is, for the local bank to act as intermediary and deliver funding on a more timely basis. The credit crunch has virtually eliminated bank lending to small businesses, and however the SBA program is changed is not likely to result in banks untying their purse strings. This proposal is nothing more than a dog and pony show!
Mr. Geoff, I don’t agree that the bank would deny you a loan because you have great credit, but it simply comes down to dollars and cents. The bank would not have made as much money if they gave you the loan. When you put up more equity you got what you needed by feeding the shareholders of the bank and the CEO. Not everything that appears to be good has a bad side. I look at it as a need verses a want. You needed money to expand and the bank WANTED more money. In the end both parties got what they wanted. Look at the state of banks now. Their greed has done us all a disservice.
Candidate Obama addresses only one issue-small business borrowing. The other two small biz issues are taxes and health care for employees. Will his new tax policies affect small businesses? How will his health care plan benefit the SMB market?
Being as though I work for a very large company and we have found a way to increase growth in this very rough time, I think it’s a great idea to help the “little guy” because helping them helps everyone. Helping people keep their jobs and provide for their families is the important thing. Finally, someone has the gall to stop looking out for themselves.
I see that Obama is making it look like he wants to help small businesses! Well maybe he should look to his Tax plan. Raising taxes on $250,000 or more will only hurt small businesses. What an idiot!
The problem here is this is designed for Disaster loans, not the typical SBA loan.
We took out a SBA loan and opened in July 08′ we can’t make the SBA payments due to the economy, not due to a bad business decision. How ever I feel confidant that in 1 yr or so we will be able to repay. We need to apply for a foreberance.
So what obama is calling for in this program is not for the typical small business owner.
This plan is the first intelligent platform statement I’ve seen from the Obama camp so far. At face value it appears it will help small business. I do like how he’s essentially giving a tax break to Venture Capital companies (no capital gains on ‘new business’ investment). What about companies that want to grow their business, why don’t they get to reduce their tax exposure?
And although its got flaws, I’ll say this plan is a go. Just run it right. It sniffs of FNM & FRE tho. Make the banks lend to businesses that may not truly be creditworthy. Except that this time the gov’t doesn’t bail anyone out, we get with the bag of **** from day one. Good plan!
I like this proposal. Since small businesses are the backbone of America they should get a little help if needed Idea: if a mega bank goes bust and the Government owns it why can’t we make it into a bunch of small banks by selling each of the branches to small business owners. Heck, why not loan the current employees the cash to buy the bank??
sounds like a forward thinking plan, and I would hope that the SBA has been given a heads up about using the Disaster scheme so they can hit the ground running. I would consider the reluctance of any banks to loan for the small buiness’s a bit of manipulation. But than I am suspicious of some of the recent events.
Who are we kidding We pour tax dollars into what?We are a country in dept.There is no tax dollars to pour into anything. Well print more money?
Then the already weak dollar falls lower.Get more from China?They already own 1/3 the dept.This is must ride its course.Some of us are going to lose hard earned dollars.The market will have to clean its self.That means prices will go down.Stocks cost less homes cars.We will all take the hit.But let it happen you have to get the wound before it can heal.The sooner we take the hit and find where we stand the faster we rebuild.
Actually, the SBA is a hassle to deal with. There is one critical business deduction that does allot to support the economy. Let me describe it: Its the Section 179 Depreciation allowance.
Our business tries to use the full section 179 tax deduction to purchase equipment. This year its been increased to 250K. The benefit, we can fully deduct the cost of equipment in the current tax year.
so we will be and have been buying a new truck, computers, chairs, all types of capital purchases that our business needs.
this is the best break for small business and it effects lots of suppliers, like the truck company, furniture outfit etc. without this tax break for small business, we would not spend nearly as much and make do with old equipment. the section 179 deduction also allows us to replace old gas equipment with new diesel based trucks like the Sprinter van which gets 22 MPG!
We have over 200 employees, offer health care and are successful. So, I know a bit about tax breaks. Tax breaks such as the 179 are critical to small businesses like ours so that we can invest in our business and support many other businesses when doing so.
Senator Obama, The SBA program is overly complicated and every day you have to fill out another form. in my opinion its the option of last resort for a business that wants flexibility and can finance operations through a local bank.
One other thing that would help small business. The current tax code only allows you to fully deduct a truck if it weighs 6,000LBs – so many of us are forced to buy a larger vehicle than we need. By eliminating the weight requirement we could buy more efficient small pick-ups or even more cars for business. This really needs to be fixed and is a requirement that the automakers likely lobbied to protect the large pick-up truck sales. All Ford, Chevy, Toyota, Nissan large pick-ups weigh just over 6,000LBs. Go figure.
By requiring business to depreciate the smaller trucks over 5 years, no thanks its safer to fully depreciated a large truck using the 179. Who knows how you will be doing in 3-4-5-years?
All I can say is there are a lot of morons that right negative things especially when the information directly will help most americans who work for small businesses.
Doesn’t it make since to ensure that current jobs are stable and credit is available now before your place of employment shut’s down?
These same people aren’t worried about their company staying in business where their retirements and healthcare are tied.
I guess it’s better to cut off your nose to spite your face. The man is really smart and will do 200x’s better than W.
As a small business owner, who utilized a loan from a local community bank, I can tell you that the SBA offers very little to any business that is not involved in manufacturing in some way or has property ownership to offer as collateral. I own a service business and rent office space, the SBA turned me down for a loan. I had to put up my home as collateral. This was 5 years ago, perfect credit, long track record of success, NO LOAN. Luckily the bank thought it was a good deal and made me the loan, but at a higher interest rate than the SBA, which by the way we have made all of the payments on time. I see this as being another effort by another politician at garnering votes in order to win election. This could also be construed as being slight of hand, offer a carrot of a better loan up front only to take it away in higher taxes on the back end (Obama’s tax plan). You do the math. At the end of the day how are we (I mean all of us who PAY taxes) going to pay for all of these bailouts and promises. When will we as a society, the greatest and hardest working society in the history of the world realize that these people that we are electing do not have our best interest in mind. They are only concerned about getting elected, using our money for their interests, not ours. Enough is enough! It is time for the FAIR TAX to have a shot!
Well here is my two cents and five minutes of rederict. This releif plan looks more like a temporary half measure than a real plan. I support most of Obama’s ideas (at least he has a few that make sense, unlike his “maverick” counterpart). He makes mention of policing and auditing the current loans through SBA which I think is a must. I dont’ think that we need to have Texans building golf courses with funds ear marked for distaster relief on our dime. What I really wanted to see is some inclusion of a long term public works plan that would invest into our crumbling infrastructure into our nation as well as invest into completion of the required technoligies to make our country energy independent. I think that from this point on our ecomonic plans should coincide with our energy policies. Thorough, responsible and common sense planning along these lines would create thousands of job nationwide, strengthen public safety by rebuilding our bridges, dams and water treatment plants and ultimately putting the savings back into the pockets of the common man and their community with cheaper energy that is less of a strain on the environment. This is not an original idea. Roosevelt did something like this in the 30’s with TVA (for all of you right wingers, I’m using profanity when I use words like Roosevelt, environment, infrastructure, taxes, and community and phrases like alternative energy and common man, shame on me for being so sacrilegious).
They just don’t get it. Bailout after bailout after bailout.Bailout everyone except the homeowners.Let the banks have free money,businesses have free money,so they can (LOAN)US more money.If we can’t pay now,how are we going to get another LOAN.We already owe our life away.Bailout the car companies,who will have the money to buy one?Bailout the best buys,circuit city,all of them,then whose going to buy a big screen TV.You dont need any of that stuff after you lose your job and your house.There will be banks and businesses all zeroed out,clean slate.But the peopleare all tapped out.no money.So zero out the people and let us start the mess all over again.Blank credit cards,Blank store cards.The banks,say their sorry and that they learned their lesson,Well were sorry too,we learned our lesson and won’t let it happen again,just zero out all our debt,like your doing for them and we’ll call it even. Lesson learned.Let the ex-ceo’s of goldman sachs,(I MEAN THE TREASURY)flip the bill.
The SBA has and is a tool for small businesses that already exists. Overwhelming it with applications that may may or may not apply is foolhardy. So a mountain of small businesses that should not get loans get loans that they can’t pay, poor oversight by a government agency that is already overtaxed starting to sound familiar.
Obama just doen’t get it. Don’t increase my taxes, don’t burden me with health care requirements, more government regulations, paper work, etc. just get out of my way and let me run my business. So you want to increase my cost o doing business and you offer me aloan as compensation. Thanks but no thanks.
The amazing thing is that no one is qustioning his experience? I have heard so many high spending programs that have been reeased by his campaign, one muct realize that they are election fodder….he has no history of doing anything like what he proposes…..let alone spend more money which we do not have
In general the plan has much merit, but managing the details so that small businesses who really have a need get the funds, and the funds do not go to businesses who don’t have the financial need, but “know how to work the system” will determine how wisely the money spent.
Government money comes with strings. Given Obama’s leanings, will the loan process favor selected political groups by race, nationality, and gender? If these enter into what should be a meritocratic financial decision, NO THANKS.
You as a small business should know that SBA guarantees are not only availble for “new comers”. They are also available for existing businesses. You should look into this – or ask a local banker. I (as a small business banker) have assisted existing businesses through the SBA. The SBA is foreword looking and will not solely rely on your existing P&L. If you can show growth as a result of the working capital injection, then you will benefit from what is being talked about. Re-read the plan.
Finally someone is trying to do something for Americans. Americans feel completely screwed over by what has happened on Wall Street. First they take hundreds of thousands of dollars out of our homes, and then they rob 30% out of our 401K, squeeze us for energy,food, and gas and then give billions to guys for a manicure/pedicure? Small businesses can’t get money to grow and expand – but AIG and GE get money for their needs. It’s completely unfair. Obama’s idea is excellent and it’s a bout time someone came up with an idea besides tax breaks and insulting $600.00 rebates.
At last someone thinks in the principal victim in all this problem, the common people. Every body thinks in banks, but who is thinking about the people. If the govertment of USA don’t saves the consumer of this country the recession could destroy the principal economy of the world. And its important to mention that many countries have fail for years in combat the recession.
More of the same problems that got us here. Continuing to bail out weak businesses which drags down strong business by giving a financial advantage to the weak and poorly managed ones. Do not allocate scarce resources to the weak. Letting nature take it’s course is the only way we will ever prosper again. By the way, everything that citizens receive from the government comes with strings attached. We are at the point the the strings are becoming a noose.
I think the proposed plan has merit and offers an opportunity for small businesses to see some light at the end of the credit crisis. I beleive Mr. Paulson and Mr. Bernanke have compassion for small businesses but their veiws are from 30,000 miles high and on a scale of a minimum of $1 trillion. Also, I beleive many large banks will NOT be the best vehicle to reach down into the local markets and meet the credit needs of small businesses efficiently; especially, those that have been under duress. I would urge the Obama SBA plan be expanded to allow US Treasury Department Community Development Financial Institutions (CDFIs) be permitted to offer the loans on the same basis as banks. These CDFIs have already been approved by the Department of Treasury and are dedicated to serving small businesses and distressed communities. I think we all agree that the United States will have many more distressed communities in the near future to be served.
All I hear about is more bailouts. The American citizens are not banks.
I think we have got to go back to the way we were. Companies can file for Chapter 11 and have the time to restructure their business. Or simply go out of business.
They can then stand in front of the judge and present their budget from month to month. If they are not showing progess then their attempt to reorganize can be cancelled.
SBA Loans are loans, again backed by the government with American tax payers money. They are very risky loans, they require collateral. Your home and even your kids shoes (just joking about the shoes)
Putting added burdens on a business such as benefits when a company is having difficulty paying its employees and other bills is not the answer. Nor is a raise in corporate tax.
With what happened in Washington with fannie and freddie leaves me with no confidence for the government to step in and run private business.
We do need regulation and I think we should start by regulating spending in Washington
Speaking from first hand experience, Obama’s plan unfortunately doesn’t offer much at all to existing small businesses. In 2006 my husband and I took the big plunge and opened up our own little mini “development” that houses 2 small businesses that we run and also houses a currently vacant retail space. Working 7 days a week we are desperately struggling to stay afloat! The ONLY THING Obama’s plan may or may not help us with would be in filling the empty retail space by giving “new comers” a break in their lending fees. The rest of the plan misses the crux of the problem. Take a look at any P&L (profit and loss) statement for small businesses and you’ll see where the cause of the bleeding is. Obama broadly sites “a credit crunch has dried up capital and put these jobs at risk”. No, LACK OF PROFIT (the ability to pay employees, or ourselves, or our existing debt) is what puts these jobs and the whole small business industry at risk! Future businesses may need the capital, but for existing businesses, we don’t need more debt that we already can’t pay in order to ‘finance inventories and make payroll’. There are a variety of factors that are ‘diseasing’ the small business world but exorbitant energy/utility/fuel prices is a huge one that has fueled the inflation of the ‘end cost’ of goods – not to mention robbed spare dollars out of the hands of consumers. Additionally, in 2009 we will see another federal mandated wage increase and that too will trickle down to the consumer and be reflected in the form of more inflation and higher cost of goods as business owners try to find a way to cover more expenses. There exist a vicious cycle of this trickle down affect, but if it isn’t understood, the perpetuation of taking tax dollars to band aid problems will surely put America in an unnecessary grave. America’s potential leaders really need to learn to run this country more like a business and turn their focus on a.) understanding the ‘cause’ of problems, and b.) addressing fixes to the ‘causes’ because, . . . PROFITABILITY is the key to keeping these businesses so that people can keep their jobs, and these same people can afford their homes and have the ability to pay their debts, and, on and on.
Capitalism means welfare of the few at the cost of the majority.Only socialism can save USA
Senator Obama will give government money, and get government control. How much govenrment control do you want? I have had enough government control. I’d rather do without the ‘free’ stuff. The price to pay down the road will be too high.
This is perfect. I think we need to give more money to people with small businesses that are failing but forget about those BIG businesses that are failing. DUH!!!!!!! What on earth is this guy thinking??
I Think the plan is a great idea to help small businesses. I am a small business owner and the other business owners I know are really getting crushed with the credit crunch. Not only are all the costs gone up such as health care for your employees, but other operating expenses such fuel, tires, copper, etc. In the northeast family owned heating oil companies that got hurt with the energy market volatility are finding themselves shut out from the credit they to finance thier purchases because banks do not want to deal with them anymore. The questions is can they get something in place intime to help those types of business that have a big seasonal need coming up very soon.
Re Obama’s lack of executive experience, let’s look at the mess the MBAs have gotten us into! Joyce
As small business owner; I think is a great idea, it will be a tremendous help to keep our busines running.
As usual Obama’s plan is the government can take care of everything. America,listen up, elect O’bama and welcome to socialism
This is exactly the right approach, turn the work of our tax dollars back to the blood-stream of America to ease the credit crunch and keep jobs and health in our economy. Bailing out Banks and other people, citizen as well as Wall Street, who have acted irresponsibly is insane, and moreover, will not work.
We need to assist and reward the honest and responsible people and businesses in our country. Yes, getting the system set-up so that it can handle such a turn of events is a grand task. But with the right vision and Leadership, it is doable, because it’s our money, our will, our businesses and our people we are taking care of!
If $5 billion can make a significant difference in alleviating the credit problems of small businesses, the government should certainly support Obama’s program. My hunch is that $5 billion is too small to have much of an impact.
This proposal, like the to Treasury, still does not provide help to those in their homes. This is where this debacle started. Yet the homeowners get little attention. One in 6 homeowners are in trouble yet the experts want to bail out those who were involved in making this mess possible. Take care of the homewoner problem and the rest will correct itself.
I have a small business that up until last year employed two full time workers. I now have no employess, and that is because of the current economic conditions. This layoff came from weak sales to my customers, and the lack of working capital in my business.
Offering easier loans to small businesses would address both of the problems I have, weak sales and no operating capital, but it does not solve the underlying problem, which is the broken credit market. You can not just remove credit from the world economy without seeing apocolyptic results, and that is where we are now, and we have only seen the beginning of the trouble.
Someone in power needs to wake up and smell the coffee, and fix this credit issue, fast, or we are screwed.
This is great, but it could be even better if it gave special preference to small companies that are working on solutions to our energy crisis. Preference has often been given to companies that are woman-owned, or minority owned. Instead, give preference to companies that are making products for alternative energy, or have patents or pending patents that are related to renewable energy.
I think it is the smartest and most important enconomic plan that could happen to this country.
As a small business owner if this does not happen we will go into a Depression becuase small business owners will not survive and they will have about 1-3 months left to survive and they will have no choice but to go out of business.
The money is necessary and is one of the last pieces to the master enconomic plan by the government to get this economy back on its feet. I was not an Obama supporter but this is the smartest thing he has said yet and needs to make sure he follows through on this promise. He wants change then he had better make it happen fast.
I like Obama’s plan. Lend the money directly to small businesses, rather than lending govt money to the big banks who caused our problems, and won’t necessarily lend to small businesses no matter how much the govt “invests” in bank bad debt. If necessary, increase SBA funding to ramp up to meet the demand, and/or authorize the SBA to “deputize” and fund state plans for participating. In Florida, for instance, we have numerous small business assistance centers at universities, which could process applications or play other roles.
At first blush, it seems wise to use an existing infrastructure to manage the way through this as opposed to creating another commission or bureaucracy. Of course, it will require additional oversight – but that seems to be the theme of the day…
I think this is a good plan if it has the proper oversight. The SBA has been hard hit the last 8 years and a shell of its former self. Will they have the resources to do this? The people? The SBA has great programs but unfunded with no money to help America such as the Energy Conservation Loan Program – needed for making America green. If SBA is going to be the lead in economic recovery, we need to give them the resources and get rid of the hundreds of political appointees.
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What about someone like me who already is bankrupt because I could no longer pay my SBA loan because my business failed?? The business failed in 2005, I didn’t file for bankruptcy until 2007 and the balance of the SBA loan is still sitting there and now it’s 2009. I have no way to find out what the bank is doing. Do they want my money? Are they going to write this off? Are they going to take my house that I used as collateral? It has been a nightmare. Does anyone have any answers for me? Thanks.