When Wall Street is Starving Main Street
We’re big believers in the worth of small businesses at Chez Siberia on the Susquehanna. That picture is of my great grandfather standing in front of his little grocery store in New York City in the early 1900s. He must have done pretty well – family mythology states that he threw in a dowry of $10,000 to entice my grandfather to marry his daughter, who was considered the spinster of the family as she was 4 years older. My grandfather used that money to start a business making fur coats.
I’ve always been involved in smaller businesses and probably the most fun job I ever had was marketing and sales for a family-owned placement service. I got to visit every machine shop, small manufacturer, service owner, and shop in our area. It was a great feeling to walk into a place and ask the owner, “What’s the one person I can find for you today that is going to help you grow?”
Sometimes, the answer was “one good machinist”, or “a beginning book keeper”, but it was truly stunning what one good person added to a small business could do. In some cases, my being able to find that one person actually increased that business’s payroll by 100%. Now THAT’s economic development.
In all the discussion about the Stimulus Package, there hasn’t been a whole lot of talk about small business. Big business, big banks, big insurance companies, entities ‘too big to fail’. But what about small business? What about the segment of industry which is reported to create the most jobs of any in the US?
“The House Small Business Committee is lauding provisions in the just-passed economic stimulus package. Its chairwoman, Rep. Nydia Velazquez (D-N.Y.), called it "a victory for struggling entrepreneurs."
Most of the items everyone on the panel was excited about involved SBA loans. But for many people, working with the SBA is very inflexible and difficult. Has the stimulus package helped? Tim Berry at Huffpo did a survey recently that shows that not only has nothing changed; it’s actually gotten worse:
“The numbers seem pretty bad. Only 6% of the owners had loan applications approved. Another 7% have loans pending. But 36% of them applied for loans, but 64% of those who applied were rejected. And those are the toughest stories to take, particularly when they’re like the ones above — seemingly sound businesses, with jobs at stake, in peril for lack of normal credit.
Percentages mean little without a basis of comparison. The obvious follow-up question is: what’s normal? Maybe it’s always been that bad. The best thing I could find was a National Federation of Small Businesses (NFIB) survey taken last fall (so the crunch had already started). In that one, 30% had applied for a loan, compared to our 36%. However, only a third of that survey’s loan applicants were rejected, and for our group, last week 64% were rejected.”
The stories from business owners are really heart-rending. Many of them had been successfully employing dozens of people for decades, who had been bank credit customers and had paid down loans, but who now cannot get loans.
How they must feel, reading about the big banks and stock firms, getting billions of dollars in bailout money, and throwing parties for themselves. How they must feel, when the one group of organizations which has been found to actually generate the most jobs and greatest percentage of gross domestic product in the country, is basically being thrown off the economic train to die?
I think some calls to Velazquez and Chris Dodd are in order.
At the present moment, it certainly looks as if throwing all that money at the financial industry has largely been wasted. It appears that a lot of ‘truth-stretching’ took place courtesy of Henry Paulson’s interest in helping out his friends at the big buildings on Wall Street…and now his friends are starving Main Street.
Big business has definitely gotten multiple seats at the table; small business is basically being kept outside the door. And a lot of Americans are losing their jobs because of it.
Certainly, it can be argued that many small business people do not hold the same philosophies and beliefs that many of us here at the Lake do. Many of them do not support the union movement. Many of them are afraid of national healthcare.
But many of them have brought their employees into the ownership fold. Many of them struggle to provide health coverage and would welcome national healthcare.
It’s worth our while to support small business in America. Write or call your congress folks, and the chairs of the House and Banking committees. Thanks.