More strain for small business loans
Small businesses strapped for cash could use help from the Small Business Association more than ever. But recent changes to one of its popular loan programs has put a strain on women and minority owners. Ronni Radbill reports.
Frustrated businesswoman (iStockPhoto.com)
More on Entrepreneurship
TEXT OF STORY
Bob Moon: As economy sinks deeper into a recession and credit remains harder to come by, many of the nation's small businesses are struggling to stay open. But recent changes to a popular government loan program are making it even tougher for small companies, especially those owned by women and minorities. From Washington, Ronni Radbill reports.
Ronni Radbill: Gay Gooen runs the consulting firm Strategies for Success. She says Washington-area small business owners are strapped.
Gay Gooen: In the past year, I've seen eight small businesses close down for lack of business and lack of funding.
Recent changes to a popular Small Business Administration loan program aren't helping. The program lends business people small amounts of cash quickly and mainly without collateral. This pilot effort has been up and running for a decade.
The Community Express Loan Program originally targeted women and minority-owned small businesses. But because of legal concerns, the program was broadened to include any small business owner who set up in a poorer area.
Wisconsin Congresswoman Gwen Moore is on the House Small Business Committee.
Gwen Moore: The consequences of that is that I could be a very wealthy person and set up a business in an inner-city community, and receive SBA services ahead of a disadvantaged minority or woman.
Meanwhile, lenders who work with the SBA are hitting the cap on the number of loans they can make because of increased demand for capital. Congress set a financial limit when they kicked off the pilot program.
Erik Zarnikow is with SBA's Office of Capital Access:
Erik Zarnikow: Until we're sure that the program is right, that it's really serving and protecting the borrowers, we're not in a position to go ask Congress to lift the cap.
But Congresswoman Moore says it's been a successful program, and lawmakers would like to make it permanent. Since 1999, the SBA has given out more than 36,000 Community Express Loans worth about a billion dollars. She adds until more cash makes it to the local level, the economy won't recover.
Moore: There is not a politician who has ever been elected to any office who won't tell you that small business is not the engine of our economy.
Meantime, as the economy sputters, many small business owners are tapping into their personal savings and running up credit card debt -- whatever it takes to stay afloat.
In Washington, I'm Ronni Radbill for Marketplace.
Comments
Comment | Refresh
01/19/2009
I agree with Erik. Ronni delivers consistently accurate and detailed stories about interesting topics. I'd definitely like to hear more of her.
01/19/2009
this was such a great story. I love listening to ronni radbill. I'd like to hear more of her. A LOT more of her.
From AL, 01/16/2009
Commercial banking is a part of the financial industry that bears little resemblance to personal finance. While one relies on the capability of the business owner to pay through evaluating past credit and job, commercial banking is based on the industry and business cash flows. Some banks will not lend to a business, even if there is strong management or business cash flows. Dan from http:/jumplanet.com the Get a Business Loan site
From Columbus, OH, 01/14/2009
It is true that many business owners are hurting right now. More importantly, many don't know how to cut cost.
Sincerely,
Ilya Bodner
Small Business Owner
Initial Underwriting Group
Post a Comment: Please be civil, brief and relevant.
Email addresses are never displayed, but they are required to confirm your comments. All comments are moderated. Marketplace reserves the right to edit any comments on this site and to read them on the air if they are extra-interesting. Please read the Comment Guidelines before posting.
You must be 13 or over to submit information to American Public Media. The information entered into this form will not be used to send unsolicited email and will not be sold to a third party. For more information see Terms and Conditions and Privacy Policy.