Like many small business owners, I looked forward to the Treasury Departments announcement last week regarding the SBA programs for small businesses. The announced plan is that the SBA is increasing their guarantee on SBA loans from 75% to 90%. And the SBA is waiving their fees to review and approve the loans. It all sounded good until I started to call banks and ask them how my two ventures could apply for SBA loans.
After talking to 5 banks, what I have found out is that the banks all fear that the SBA will fight them on any default, just as they have over the past 8 years. So the banks still require the kinds of liens on assets to qualify and nothing much has changed. So even though it looks like the banks risk is only 10%, they are treating us small businesses as if the risk were 100%. This means that the barriers to capital for small businesses hasn't improved one bit. And this will result in the further meltdown of small businesses, which employ over 50% of all workers in most cities.
What has me very upset is that my two ventures will create green jobs now. Venture 1 is a company that manufactures 2-wheel electric vehicles that are pollution free and totally green. We have sold 470 of them in the past 3 years and we want to expand nationwide. We want to move our manufacturing operations from Asia to Los Angeles and be the largest builder of 2-wheel electric vehicles in the US. Our plans can create 500 new green jobs in 5 years. Venture 2 is a little more esoteric. I contracted with a 78 year old retired military scientist who has invented a machine which generates its own electrical power. His invention has the potential to change the ways we produce electricity to power everything from homes to cities and countries. The invention has the potential to create millions of new jobs.
I assumed that Obama wanted to help small businesses create green jobs here in America, but what I have learned is that the SBA programs are flawed because the banks don't really want to make loans unless there is zero risk to the bank.
That leaves us with begging for funding through grants to the DOE and other governmental bodies which take time and cost a lot to pay someone to prepare the paperwork. So this again leaves small business owners with no where to turn.
If green projects like mine can't get funded, we have got to re-think the ways we get funding to small businesses. The Obama plan is not going to work and the longer we wait to fix things, the worse it gets for us all.
By Mark November--mnovember@earthlink.net
