I got a note from some advocacy group asking me to lend my voice to stopping some cut in SBA lending. This is what they linked to:
A federal program designed to help small businesses with commercial real estate mortgages is coming to an end this week.
The U.S. Small Business Administration’s 504 loan refinancing program, which expires Thursday, allowed companies to refinance real estate and equipment loans.
SBA 504 loans for new purchases are still available.
I had a couple of thoughts
- Why do we need a government program for commercial real estate and equipment financing? These are the only two sectors of small business lending that are robust right now. I get 3 calls a week trying to give me equipment financing.
- The SBA has already pretty much killed small business cash flow lending. Basically, if you want a loan secured only by cash flow, the SBA is your only choice. Why would a bank make such a loan privately when they can make it and get an SBA gaurantee paid for by the client? As a result, no bank even has a desk for non-SBA lending, and since SBA lending is hard, many don't have an SBA desk any more.
I can't prove it, but I am convinced the SBA has killed innovation in the private lending market to small businesses.
Update: Another thought - the SBA is the barely-useful quid pro quo cited by statists from all the fantastically expensive and time-consuming regulation that gets dumped on small businesses. Well, I don't want it. I don't want to give statists any cover that this is somehow an equal bargain. It's a quarter flipped up on one side of the scale to balance ten tons of bullshit on the other side. It's like sending flowers to someone you raped.