President Obama has been pushing for a small business plan that would stimulate job growth through “opening doors for small business”. Congress has yet to get behind the President and his proposals.
Rep. Nydia Velázquez of New York said, as reported in the New York Times, “The refinancing of commercial real estate debt does not create jobs and, in fact, may dilute the program, drawing resources away from projects that do have job creation potential.” Velázquez is referring to the SBA (Small Business Administration) Express loan program, which allows banks to use their own paperwork in order to speed up the loan process in exchange for lower guarantees.
What is The SBA 504
Although the SBA 504 loan program, designed to purchase assets like equipment or real property, would in fact give businesses an opportunity for growth, the plan would allow small businesses to refinance their existing mortgages through the SBA 504 program. Currently, the program does not offer refinancing. Only new commercial loans qualify. If a small business can secure the refinancing of existing debt, this would clearly give that small business an opportunity to hire more workers and purchase more equipment for expanding its operation.
SBA Express Worst Loan Program According to Rep. Velázquez
Rep. Velázquez also stated that the “S.B.A. Express has acted as nothing more than a giveaway to big banks and expanding it will neither further economic recovery, nor create new jobs.” According to Velázquez, the Express program has the highest default rate of any S.B.A. program. However, “An S.B.A. spokeswoman, Hayley Matz, said that, in recent years at least, it is only the smaller Express loans that perform so poorly. Express loans over $100,000, she said, outperformed regular 7(a) loans.” Quoted from The New York Times.
Commercial Crisis and the SBA
The Small Business Administration works closely with the business owners and helps them secure financing. Recommendations from this agency should be given its fair consideration in congress. With the looming commercial real-estate melt down around the corner, small businesses need a program for refinancing that debt. Will this create jobs? Maybe. It most certainly will not cause any job losses. Helping to refinance small businesses out of the balloon payments that will be coming their way over the next few years may save untold job fatalities.
How Do Other Democrats Feel About the Presidents Small Business Plan?
Other Democrats are breaking away from the White House Proposal. A story in POLITICO by MANU RAJU & PATRICK O’CONNOR reported House Majority Leader Pelosi said “… no one she’s consulted believes that the plan will actually lead to the creation of new jobs,” sources said.” “She questioned the efficacy of it,” one Democratic aide said.
Pelosi and other Dem’s would like to see more green jobs and also support government run job creation efforts like infrastructure spending.
As we all know the Government can do a much better job than the private sector when it come to creating jobs. We will need more people at the unemployment office soon.
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Read more at politico: http://www.politico.com/news/stories/0210/32757.html#ixzz0ffWwPhDA
Parts of this story where taken from a report By ROBB MANDELBAUM and can be found in The New York Times http://boss.blogs.nytimes.com/2010/02/12/small-business-incentives-face-a-hard-road-in-congress/
