Commercial Finance and TARP Money Small Business Loans Considered


There has been a lot of talk in the financial news about the challenges of getting money into the small business community so those companies can expand, hire more workers, and provide the economic engine to sustain our economic recovery. The Obama Administration has a plan, but like any plan to revive an economy, it requires all the players to be on board. If they are, then this infusion of small business financing money couldn't come soon enough.

There was an interesting article recently in the Wall Street Journal, sub-section CFO Journal on June 23, 2011 titled "Banks Wary of TARP Approach to Small Business Lending," by Emily Chasen (Senior Editor). The article stated:

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"The Obama administration's efforts to spur small-business lending through a spin-off of the Troubled Asset Relief Program (TARP) - hasn't exactly received thunderous support from community banks, who may be too worried about government intervention if they accept funds, and the creditworthiness of prospective borrowers, to make a dent in the frozen small business lending market."

Okay so perhaps you watched the TV Movie "Too Big to Fail" about the TARP Program and the financial crisis, fall of Lehman Brothers, and global economic crash. There was a decent write up on that TV Movie in the New York Times recently titled "The Financial Crisis Comes to TV" by Michael J. De La Merced published on May 23, 2011. In that movie we watched the fiasco, and the laws of unintended consequences during times of crisis management.

Now, another TARP Program comes to town, one which will lend money to small self-run businesses. Unfortunately, demand for little business loans is weak. Some say this is due to the uncertainty of future government regulations and the future economy and no little business owners wish to take the risks. Others say the small business community already knows the risks and the new regulations and therefore are not interested in borrowing more money, or taking on new debt.

This also means that small businesses will not be hiring more employees to help us with our unemployment situation here in the United States. And that of course doesn't bode well for the reelection of President Obama, or boost confidence in the business sector of the strength of the economy. Yes, it is quite important to have more funds available in the banks for small companies, but they are not willing to borrow money, even at the current low interest rates, and if it really isn't worth the risk for the bank's at those low interest rates then the program is likely to fail and not satisfy its objectives.

Our small business community is too important, and each and every one of those businesses is too small to fail, well most of them. And if they do fail, they should fail on their own accord, not at the hand of poor government policies or over regulation. The good thing in all of this is if you are a small self-run business, or a startup entrepreneur looking for funds, you might find them available, and you just might convince a bank to give you a decent loan for your future projects. Indeed I hope you will please consider all this.


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