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President Obama, Small Business Loans and Failed SBA Policy

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in The Business of Business Finance

Although this video is a bit over 12 minutes long, it may take you about half that time to realize President Obama (as much as I respect the man) and his administration do not have any real understanding of the challenges most small business owners face. 

Unfortunately, this lack of understanding extends to the Small Business Administration leadership and all the other politicians in attendance of this political appearance.

As you watch this video, ask yourself the following questions:

Mr Obama delivered his lines well when he talks about small business being the engine of job growth, how mom and pop business are the back bone of America and that businesses need working capital and business loans to fund payroll, provide inventory and create jobs.  However, there is a disconnect when he’s got to relate those buzz words to the business his handlers have arranged for the day.

He tells the story of Joe and Doug (owners of Metropolitan Archives).  In March 2009, they got an SBA loan in order to buy the warehouse they were previously renting.  As a business owner I realize the owner benefits of that transaction: allowing for depreciation, building equity, and — considering the economic environment — potentially reducing monthly overhead costs.  How does that create new jobs or cause the company or economy to grow?

With some well know beltway spin, Mr. Obama somehow determined that the purchase of this building saved 10 jobs and will soon create another 10 jobs.  How does that actually save jobs and how will it somehow create 10 more?

He also states that “priority #1” of the SBA should be to increase the lending limit from $2 million to $5 million.  Mistake.  He then goes on to explain how Metropolitan Archives needs a bigger loan in order to expand and grow their business business.  If that is true, why not use the funds that were used to buy the building in other ways that would support the growth of the company?

Finally, when Mr. Obama states his administration has already provided a tax cut to 95% of Working Americans, I quickly realize this is more about spin and vote grabbing that it is about providing real solutions.

I am interested to hear: Do you find President Obama’s presentation believable?

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