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JJ Ramberg

JJ Ramberg is the anchor of “Your Business,” MSNBC’s weekly show on small business. In addition to her extensive television reporting experience, Ramberg has a background as an entrepreneur and co-founded GoodSearch.com. She has an MBA from Stanford Business School.



Why more scrutiny for small business?

Posted: Wednesday, March 18, 2009 11:33 AM by Eve Tahmincioglu
Filed Under: , ,

The federal government has been pouring money into failing financial behemoths with what appears to be little to no oversight. Executives at these major financial firms that caused the collapse of the financial system are even getting bonuses for jobs not well done.

But just mention some help for small businesses and the "we-need-scrutiny naysayers" crawl out of the woodwork.

President Obama proposed a plan Monday to get banks to start lending more money to small firms, but a day before he made the big announcement the Wall Street Journal came out with a story about how the General Accounting Office thinks "insufficient oversight is in place" for the proposal.

Where was the GAO when the big bucks were about to start heading to some of the biggest Wall Street firms?

Maybe I'm missing something here, but small businesses are the lifeblood of the economy, and they are struggling right now largely through no fault of their own. They can't get loans because the big boys messed up the system; and the faltering economy -- caused in large part by the big financial firms -- is also taking a big bite out of their sales.

All they want is a little bit of a break.

So many entrepreneurs I've profiled in this blog -- and many of the ones who post comments here -- are struggling to keep their doors open.

Obama is offering a way that may boost lending on Small Business Administration-backed loans that have plummeted to $10 billion this year, down from $20 billion in previous years.

Here are some of the details of Obama's plan:

--Jumpstart credit markets by beginning direct purchases of up to $15 billion of securities backed by loans from the SBA.
--Make direct purchases to unlock credit markets for the SBA's 504 Community Development Loan program.
--Provide liquidity while keeping the secondary market in place.
--Eliminate borrower and lender fees for 504 loans
--Increase maximum loan guarantees to 90 percent.

The last two got the GAO going.

This from the WSJ:

By eliminating the upfront fees for banks and lenders while increasing guarantee levels, watchdogs say, the administration could be creating incentives for banks to rush credit out the door. The bank's only risk would be the 10% of the loan left on its books, and that could be eliminated by selling the loan on the secondary market, where it could fetch a premium because of government backing.

"According to the GAO investigation, I think we have nothing more than a large, unregulated pot of money that lenders are going to scramble to get their hands on," said one congressional investigator familiar with the report and the administration's plan.

Well, a big pot of unregulated money already has the big business ladle in it folks.

I'm all for putting a lid on the bailout free-for-all with tougher standards and regulations, but isn't it odd that when small businesses want a helping hand suddenly the scrutiny reaches a fever pitch?

What are your thoughts on this?

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Comments

The old saying of follow the money would quickly identify who benefited from the AIG maoney laundering scheme. The congress was voting on saving the world and found that they were just taking care their own on wallstreet with scare tactics from hte fed and treasury.. It was never disclosed that secondary parties would be made whole or at what pricing..
I agree that the same underwriting guidelines and ability to repay should be applied to large too big to fail business. But the fix is in and that will not happen, in my humble opinion..

Michael Z., Brookings OREGON (Sent Wednesday, March 18, 2009 4:00 PM)

My Response?  The Peter Principle - no one wants to scrutinize a business they don't understand - if Wall Street turks were too mentally lazy and/or unconscientious to examine insurance based on a derivative based on specious assets - why in the world would the government?

It's an obvious case of bullying the most vulnerable.

Thanks
   

Julie Barnes, Austin, Texas (Sent Wednesday, March 18, 2009 4:02 PM)

Make the AIG executives loan out the $165,000,000 in US taxpayer paid bonuses in $100,000 loans to 1,650 existing small businesses that are owner operated. Interest only for the first 5 years, interest and principal for the next 5 years the loan matures in 10 years. If they pick the right businesses and perhaps work with them they will make their bonuses back. If they don't pick the right business, like stocks, and don't help them they will not get their bonuses.

To stimulate small businesses in this environment what would REALLY help is cutting or eliminating payroll taxes for existing owner operated small businesses for this year and next.

rideas, Santa Cruz Mountains, CA (Sent Wednesday, March 18, 2009 4:06 PM)

I think that times are tough in general for most entrepreneurs and this type of scrutiny doesn't make a lot of sense in light of the mistakes of large corporations who are propped up and revitalized.

If they really wanted to apply oversight, they can start with their own policies.

http://www.verifiedgrants.com

Garnt Expert, Los Angeles, CA (Sent Thursday, March 19, 2009 12:49 AM)

OR, everybody could stop whining, looking for handouts and get back to basics.  (Remember those things?)  MY 4 1/2 year old business (capitalized with my own funds, including the purchase of a 5,000 sq. ft. building with 5 acres) had an increase of 26.5% last year.  So far, 33.7% this year, with no slow down in site.  Why?  Because I work harder than most, ignore the naysayers and scare mongers and do everything that I can better than my competition.  Am I guaranteed the growth will continue?  Nope.  But I will continue to work as if  everything depends on continued success- because it does and no one will help THIS small businessman.   By the way, I am in the hospitality business- a tough one even when the general economy is good.

Dave Spunkmeyer (Sent Thursday, March 19, 2009 2:18 AM)

I really have no use for the SBA.  When I wanted to set my business up several years ago, I spoke with the SBA and got no where.  We went overseas and got what we needed and now today, have a business that is growing inspite of the economy.  

We heard from the SBA a few weeks ago and they told us they would not be interested in looking at our request.  EIGHT years after they told us to get lost.  Someone must have found an old folder in the store room. of course we told them thanks but no thanks.  

The SBA is not going to change nor is the GAO going to let them change.

Clay Malooley, Orlando, FL (Sent Thursday, March 19, 2009 7:08 AM)

the federal government needs a check up from the neck up. we started our bussiness 14 years ago with no funding from anyone and have shown a increase in revenue each year (0-1,000,000.00) the gov. can screw up anything and everything it touches. stay out of AIG,chev, ford, chrysler, any private business

ralph j. fudpucker (Sent Thursday, March 19, 2009 3:41 PM)

It's amazing that everyone is concerned about bonus money paid to AIG, what about all the other companies
that received bonus money. Why isn't anyone asking about the billions they got and used to pay down debt to foreign countries. When does the money get to the people?

Robert Aiello (Sent Thursday, March 19, 2009 6:05 PM)

 The Bakery that I had worked at for 22yrs. closed and I started my own business, unemployment and the S.E.A.P. program almost bankrupted me,forced me to take on a full time job.
 The SBA was willing to give out loans, but to qualify you did not need a loan, they wanted at least 20% of your own money and a credit score of 720 or better.

Tim Ernst, Syracuse,NY (Sent Thursday, March 19, 2009 6:21 PM)

Over a dozen federal investigations have found hundreds of billions in federal small busiess contracts have been diverted to Fortune 500 firms. This is the most important problem Obama needs to address. Check out Report 5-15 from the SBA Inspector General, it' shocking!

Lloyd Chapman (Sent Friday, March 20, 2009 5:34 AM)

The wealthy yet again are being taken care of.  These wealthy executives have played this greedy game for too long and finally got caught with their pants down.  Who is it hurting?  The working class and the poor.  The government and Wal Street keep telling us that we have to bail these financial institutions out or the whole economy would fail.  Well, it's my personal opinion that the whole economy will fail.  Small business is what drives our economy.  And sounds like the small business guys are being trampled on buy our government and the banks.

E.C. Elizabethtown, Ky. (Sent Friday, March 20, 2009 12:39 PM)

Forcing banks to lend money to small businesses with low income and bad credit.......I can't think of a more foolish idea considering it was sub-prime lending that caused the current economic crisis.  Those people in Washington never learn from their mistakes.  

Jesse, Phoenix AZ (Sent Friday, March 20, 2009 8:06 PM)

I can only wonder, would congress have bailed out AIG if AIG did not have the congressional pension fund?  Or would that have told them the same thing that they told some of the other big banks?

Brett, Heavener Ok (Sent Saturday, March 21, 2009 11:04 AM)

I think it is awful that a small business has to give an arm and a leg before asking for a loan and all Wall Street has to do is cry broke and they get billions without even as muh as a plan on what they will do with money...

Lisa Chatar, Ft. Lauderdale, FL (Sent Saturday, March 21, 2009 11:20 AM)

The federal government should keep a sharper eye on smaller businesses because the business owners are always making excuses as to why they can't follow this labor law or that civil rights law while they look to cut corners so that they can cheat their employees of family leave time or overtime pay.  There should be no exemptions when pertaining to labor standards the like.  If a small business owner can't comply with federal regulations, he should sell the business to someone who will and get a job.

Jim Rousch, Littleton, CO (Sent Saturday, March 21, 2009 2:59 PM)

Change? Same crooks albeit a different administration.Small business is the backbone of this country, congress just doesn't get it.

Don Morgan Westville, SC (Sent Saturday, March 21, 2009 4:38 PM)

I am trying to find a Media network that will research the FAQ mentioned in this comment...see note below

PLEASE RESEARCH FOR SMALL BUSINESSES WHO NEED ANSWERS...

What is the credit criteria for companies, states and others receiving money from the stimulus?  Is it the same criteria applied to small businesses?  Small businesses may not receive SBA loans if they do not have credit card debt and a high credit score.  Why would credit worthiness be considered a top criteria.  

Whoever approved this FAQ on the website "treas.gov" - Q/A for small business should be reprimanded.  What a mixed message, wow.

See the treasury department's response to this Q/A...

What if I was already turned down by a bank in the past six months? Can I qualify for any of these new programs?

"You are eligible to apply, but you will need to provide updated financial information that is current within 90 days. Over the past year the financial position of many individuals and businesses has deteriorated along with the economy, making some unfortunately no longer creditworthy."  
How dare the government promise to help small businesses and then place such restrictions on a small business owner/s because they too were caught in this downturn as the gov admitted to in the FAQ response...www.treas.gov.

I would like to see some thought given to some of these plans before public announcement or implementation.

Why isn't the D&B score used instead of individual scores for small business loans? I know I may have limited facts but something within the system is lacking.  

What is creditworthy as defined for the banks, automakers, AIG and others.

Marilyn, Arlington, Texas (Sent Saturday, March 21, 2009 7:02 PM)

I think, basically, there is a fear that if the government gets involved in lending to small businesses, the previous decades' free-for-all of credit cards and business loans will end forever. Strength in the private sector is the enemy of high bank profits.

Robert Grady, Garland, Texas (Sent Sunday, March 22, 2009 11:15 AM)

we run a small business from home which accommodates visitors. but our county, like many others, does not give permits to small home-based businesses. when someone starts to become self-employed doing what they can do best, and filling a gap of what the community might need, these days specially it is stupid of mayor and council to deter this form of earning a living and feed your families. renting a high priced property in a commercial or hotel zone is prohibitive and won't allow you to even begin. i know a dentist who works out of his own house as he helps those who cannot afford more than a few dollars. the reason behind these restricitve bylaws is the pressure of commercial space landlords on local mayor and council to fill their spaces and avoid competition. i believe we would alleviate much unemployment if we allowed quiet, un-intrusive homebased businesses to exist. the incomes would benefit their own neighborhoods and their domino-effect would be beneficial. if the federal government is really interested in supporting businesses, they should look into the hindrances and deterring of people wanting to start out. from what i hear, our country was built up on initiatives by the common people. unfortunately, selfish local agenda stops them in their tracks.

ilima davis, kaunakakai, hawaii (Sent Sunday, March 22, 2009 2:28 PM)

I own a small business and it's exactly like the article said: we are struggling because the big businesses screwed up.  My wife and I do not think we will earn a dime this year.  And that's not because we know how to hide it.  Our sales have dropped over 30% but our legitimate expenses are the same as always.  Since we net about 20% ... well, you do the math.

We have never borrowed money for our business and we really resent that the crisis that may cause us to have to borrow was caused by borrowing.  We knew this house of cards was going to come tumbling down and it has.  As far as I'm concerned, the government should put all those large failing businesses through the shredder.  Toss their execs in, too.  And leave us small businesses alone!

--FatBear

FatBear, Cannon Beach, OR (Sent Sunday, March 22, 2009 3:15 PM)

I am a small business owner in Colorado. With the hard economic times that we are all looking at it is getting tough for anyone to survive. It is very disheartening to sit there and listed to Government and large business companies try to justify to all of us you in cluded that they need billions in bailout money and then right off the top take a bonus.  When are we the people going to wake up and tell Government enough is enough. My wife and I started our business 8 yrs ago. We work on the principles of treating people right and good things happen. Thats the way I was raised from childhood. My faith also plays a big part in running my business. However its a kick in the gut everytime I hear what te higher tax bracket people and the government are doing to this country of ours. Its almost made us into a laughing stock in everyone elses eyes. President Obama needs to take a long hard look at what keeps this country moving. Small business does not have to worry about looking good we just try to survive day to day.  I can honestly tell all of you that I can sleep good at night because of my honesty. I do worry on occasion about taxes and payroll when money is slow to come in. Ill bet there are a lot of big business people out there that cannot say that.

J.M Western Colorado (Sent Monday, March 23, 2009 11:05 AM)

Money Talks! Corporate CEO’s own the politicians by contributing corporate money to their campaigns to get them elected. The politicians are repaying their owners by giving them taxpayer money as bailouts, with few if any strings. I estimate over $2-$4 BILLION of the bailout money has been siphoned off to CEO’s and executives.  See Merrill Lynch/BofA, AIG, Feddie Mac, Fannie Mae, and others.  Senator Dodd (D-Conn) even inserted the special provision to allow this. Small businesses, homeowners, etc. have no such clout. They get the shaft

Bill Dueease, Fort Myers, Florida (Sent Monday, March 23, 2009 1:08 PM)

No programs exist for hiring older workers.Another issue is the problem of out of work older Americans: If you're my age (47) with minimal skills, sooner or later, that person becomes a burden to society. Job training for the kids (16-24)exists everywhere-Job Corps has over 100 careers to choose from, or there's the military. What's available for shmucks like me? I can't get a student loan, I'm unemployed, my credit score? Forget it. Folks like myself are disasters waiting to happen.

Cindy Merrill (Sent Wednesday, March 25, 2009 8:20 AM)

This is not really a new one here guys, I have been attempting to start a business of my own now for the last 3 years.  I was told more then once from a s.c.o.r.e. rep that the SBA just wouldn't even think of backing me as I was just barely making ends meat and didn't have a acceptible credit score..!!  WTF ..  that is why we want to own our own businesses in the first place to better our lives!!  IMO  The SBA has been allowing the rich to get richer just like all other parts of this country.

JFE,Lake City, mn (Sent Wednesday, March 25, 2009 9:13 AM)

the idea of eliminating payroll taxes for one year would lift my business a bunch.we pay over $5,000 per month .the giant walmarts have decimated small businesses all across the nation. they also kill manufacturing jobs as they keep demanding cheaper product costs to themselves ,then we cry and still buy when we see made in China. limit one half of your purchases to out of country and tell the manager you buy american and watch the jobs rebound.
big does not mean better-look for service-we buy everything we can locally.

L. Phillips (Sent Wednesday, March 25, 2009 11:45 AM)

I feel the small business lending plan as outlines is hogwash. But, I was blessed to anticipate everything from the government would be hogwash. The new managers of bailout 1.0 and 2.0, tarp 1.0 and 2.5, and talf, are the same fancy pedigree elites that got us here.  I pivoted from real estate to beauty manufacturing. My business is doing well(thank GOD). Obama is right about somethings;it will take multiple efforts to revive the economy. Solutions to what got us here.  What got us here? 1. use of fico scores and rating agencies to say yeah or nay to loans, cdo's, derivatives, (basically risk). 2. disappearing american manufacturing. 3. overreliance on credit for expansion (at the individual, firm, and government level). 4. substandard primary and secondary education. 5. overall, our get rich quick (instead of get rich slow and steady) attitude in the USA. Foreigners are coming to the USA to discover what slice of the stimulus will trickle to them.  How much of France's or China's stimulus will trickle to American workers? I propose a middle class march on Washington to say stop bailing out the rich or throwing money after ideas and institutions.  Bailout the people.

T. Briggs, Philadelphia, PA (Sent Wednesday, March 25, 2009 3:19 PM)

WHY MORE SCRUTINY FOR SMALL BUSINESS?

+ +

cuase its the biggest waiste of time ever. small business is a danger to the worker. finally recognized by obama. Why cuase a small place cannot protect you like a big joint can.

in big blue you have everything

in small business you have nothing.  

thats the answer plain and simple.

no job

security

no health care

no 401 k  ( real one )

no retirement plan

no Organization

no lite load worker has to work to much in a small joint


no future


maybe small joint goes under.?


no legacy  

small joint gigs last 2  4 yrs.

no salary structure

no employee rights.


dood small business is a fiasco


makes only the owner rich


obama is slowly abondoning it.


Look generation your going to have to get use to the fact. that your time has passed. and where going back to the past,.,.....

pre 90's

to what made sense

ray (Sent Wednesday, March 25, 2009 10:19 PM)



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