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Small Business Loan Fund Closes; Only 13% of Available Funds Loaned

This administration really does not want small business to succeed.

In my last article, I wrote a personal story of how government regulation was directly killing jobs. I received a lot of support from the BIG community on in both the comments section and via Email. I even got offers from private capital who offered to have a look at the deals that were destroyed by Obama’s Job-Killing Regulatory Beast. If there’s one thing I love about Americans, it’s how many of them step up to help out, even when they haven’t been asked. So, a big thank you to all!

Today’s news came as no surprise to me. Apparently, the Small Business Lending Fund (SBLF), which was created as part of the “Small Business Jobs Act of 2010″, has just closed. It distributed only $4 billion of the $30 billion authorized. The only thing that did actually surprise me was that the government did not actually spend all the money it was authorized to. This is considered, in some circles, a miracle.

On the other hand, the one place where this money should have been fully distributed was within this very program, once again lending credence to the theory that government can always be relied upon to do the exact opposite of what needs to be done.

The Fund was supposed to provide capital to small community banks that would then lend to small businesses. However, 40% of applicants did not meet minimum requirements. Now, think about this. The government would not lend to these banks because they didn’t meet requirements, which include paying dividends back to the SBLF.

But the government didn’t think twice about guaranteeing a $570 million loan to Solyndra, despite repeated internal warnings that the business was in trouble.

Again, why am I not surprised?

There’s another angle to this governmental stupidity. As part of the “Stimulus”, the Small Business Administration would now provide a 90% loan guarantee to banks that lent to small businesses under the SBA loan program, as well as raise loan limits from $2 million to $5 million. In fact, there were a host of really terrific changes to the SBA program that also included lower fees and expedited approvals.

Then again, it’s nearly impossible to get an SBA loan. The bank you are trying to get the loan from still needs collateral. They still need the business owner to put up an equity investment. Even though the SBA guaranteed 90% of any loan made by the bank, that didn’t mean the SBA would lend 90% of the money. The bank would underwrite the loan just as strictly and fearfully as they did before this plan went into effect. God forbid that a bank made a bad loan which the SBA would have to guarantee.

But the government didn’t think twice about guaranteeing a $570 million loan to Solyndra, despite repeated internal warnings that the business was in trouble.

Who ended up with jobs in these scenarios? The people who needed them? The small business owners?

You know the answer.

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