Worship

I went online to review the buzz that followed Obama’s meeting with a dozen top bankers at the White House on the 14th.  While he admonished the “fat cats on Wall Street” for their role in keeping money tight for Main Street and larger small businesses, he failed to address one major hole into which the economy leaked significantly – the TARP funds. 

Whatever happened to the 700+ BILLION DOLLARS that helped bail out the banks (beside what was used for executive bonuses and to fund bank acquisitions)????  And why, still, isn’t it being used to help American businesses?

Last week my partner Michael and I were at a conference attended by bankers, private equity and venture capital firms.  With an inquiring-minds-want-to-know demeanor, he raised the never-yet-satisfactorily-answered question as to where all the TARP money went.  One answer totally floored us – it was made available to the banks at 9% interest – and it is available for qualified borrowers at 12%.  That takes me to the main point of this article:  if business is down across most industries, and businesses have struggled with reduced sales, and consequently reduced cash flow, their financials won’t support the most conservative approach to lending in decades. Ergo, the TARP money sits, and sits, in the banks.  It’s not flowing.  It’s not priming the pump.

So here’s something I just picked up from CNNMoney.com that supports that point. “The 22 banks that got the most help from the Treasury's bailout programs have decreased their small business lending by a collective $11.6 billion since April...”

The article continues, “When loan and credit lines dry up, small businesses have trouble launching, expanding, and funding their daily operations. President Obama met Monday with CEOs from a dozen of the nation's biggest banks to pressure them to do more to rebuild the economy they helped blast apart.”

‘We expect some results,’ Obama told the bankers. ‘I'm getting too many letters from small businesses who explain that they are credit worthy, and banks that they've had a long-term relationship with are still having problems giving them loans.’

However I may agree with what Obama just said, I’m still wondering why he isn’t also lighting a fire under SBA officials.  If we weren’t spending billions to “get the job done” in Afghanistan, perhaps our tax dollars (i.e. Americans’ own money) could be used to provide low-interest loans (or even grants…) to small businesses, and therefore to help fuel a real economic recovery.
To that end, CNNMoney reports, “President Obama's administration has been trying all year to revive the small business credit market. Most of the initiatives are currently either stalled or out of gas.”

“In October, Obama unveiled a collaborative effort between the Treasury Department and the Small Business Administration to make capital cheaper for community banks. The administration wants to use the Treasury's Trouble Asset Relief Program (TARP) funds to make ultra-low-interest loans to banks that will use the money to expand their small business lending.”
“But nearly two months after Obama's announcement, the Treasury is still hashing out the details. ‘We expect the program to kick off very soon,’Treasury spokeswoman Meg Reilly said.”

“Meanwhile, a popular Recovery Act measure to boost the Small Business Administration's loan programs has run out of money and awaits Congressional action to replenish its funding pool. More than 700 SBA loan applications, totaling $390 million, are in the queue and on hold.”

“‘This is a very hard problem to solve,’ Treasury Secretary Timothy Geithner said at a small business lending forum in Washington last month. Speaking to a room filled with small business owners and lenders, Geithner was candid about the struggle.”

The good news is that amidst all of the finger pointing coming from Washington, American business owners are standing on their own and surviving on their own.  Creativity is the brainchild of survival, and business owners that are surviving are accomplishing it with creativity and courage. And the good news out of all the banking gloom and doom is that forecasts by all the major banks call for more lending activity in 2010. 

Perhaps the banks should begin looking at a new category of criteria for lending – any business owner who has weathered last year’s storm, and is still standing and doing business should be considered not only very good credit risk, but a valuable customer!

I have a feeling many business owners will gladly ring out the old this new year’s eve, drink more than one toast to the new year – and to the promise of new opportunities.  I know I will be focusing on keeping the wave of possibility open in the coming months!  May we not lose sight of the lessons coming from financial debacle we’ve been weathering; and may we drink a toast to a prosperous new year from a glass that’s half full!  Happy holidays!




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