We’ve blogged extensively over the last six months about extending SBA loans. With a lot of the stimulus plan measures expiring this month, it remains to be seen whether the federal government will bolster its support of the small business sector. That said, it’s becoming clear that some of the existing loans are not getting into the hands of the people that need it.
The New York Times has a very interesting profile of Barbara Wright who owns a uniform company on Chicago’s southside. Barbara is feeling the pains of the struggling economy like so many entrepreneurs at the moment. She applied for an SBA loan. Barbara received the loan but was shocked to realize all of the restrictions placed on it.
She thought she could use the money to meet her cash needs, but she soon learned that the loan had a catch: It could not be used for operations. In fact, the money could be used only to help pay off a previous loan of $50,000 from ShoreBank.
This story paints a complicated picture of receiving SBA loans, and partly explains why the small business sector is still stuttering, despite the efforts of the federal government. Clearly the funding is assisting the small banking sector, but small business owners, like Barbara, are still crying out for help. At the end of the day, the loan she did receive helped her pay off some debt. So while, she wasn’t complaining, the restrictions limited what she could do with that money.
Clearly, entrepreneurs are still in need of better, more comprehensive assistance from the federal government.