Over the past several weeks we’ve all witnessed a polarizing debate in Washington about the national debt that set the stage for a chaotic ride through Wall Street over the past few weeks.
Unfortunately, I believe the last few weeks is just an appetizer as we settle into the presidential campaign season. That being said, in the exhausting debate between budget cuts vs. tax hikes, nobody seems to be focusing on the domino effect that the budget cuts will have across the economy.
As programs will be cut, jobs will be lost, companies and industries will suffer, and families across America will feel the pinch.
As the economy struggles with these losses, where will the next stimulus come from? How will we recover and replace these jobs? The money won’t come from the government. The only answer is that it must come from the ingenuity and creativity of entrepreneurs and small business owners across the country.
America’s number one priority today must be to give small business owners the encouragement, resources and support that they need in order to build, sustain, and nurture their businesses. This isn’t just the “next big” startup idea coming out of Silicon Valley. It’ every business from the local corner store, to a manufacturing plant, a consulting company just to name a few. It’ not just the new business, it’s every existing business out there as well. They all need to be helped, one business at a time.
These businesses need a lot of help and we can all do our share. They need mentoring, good accountants, marketing and sales help, supportive customers, reasonable regulations, and access to capital, just to name a few areas. I wish I had the resources at my disposal to help fight the small business fight in all these areas. I have chosen to focus my energy on doing everything we can to help small business owners get the access to capital they need at reasonable prices.
I am tired and frustrated with the big banks across America not doing what is necessary to help small business owners succeed. Last week we released MultiFunding’s 2010 Lender Responsibility Index http://www.multifunding.com/?p=930 to rank each of the top 25 banks in the country for their commitment to small business lending.
I invested a fortune of time and energy into our Index because I had enough of the public relations campaigns coming out of all the banks describing their “commitment” to small businesses. Banks have released their “Small Business Lending Report Cards” throughout the recession. The problem is that they have included companies that they have lended to with revenues of $20,000,000 or less. Those aren’t small businesses. We need to understand what’s really going on, and how banks compare in their commitment to small business lending.
So we dug into public data, and found information available on banks' SBA (Small Business Administration ) lending. The results were staggering. As the most extreme example, Bank of America and Citibank, who collectively control about 20% of all deposits in the country, only made .6% of all SBA 7A loans in 2010. If you take the top 25 banks in the country as a whole, they control about 60% of all deposits and make only 20% of all SBA loans. Every shareholder, customer, and employee of these banks (and plenty of others) should be outraged.
I am tired of all the stories and excuses. The banks love to say that there is “no demand for loans”. A big reason for that is they have made the application process so overwhelming that most small business owners are petrified to even try and apply. Last week, we also released MultiFunding’s Second Quarterly Lending Survey http://www.multifunding.com/?p=987 . We found that 73% of small business owners in need of a loan have not applied. Their main reasons are that they are afraid of rejection, and think that they need to get their credit score improved.
Amazingly, each business believes that if they had access to the capital they needed they would add an average of eight employees each.
As you can imagine, I am passionate about the issue. Here are three things I am going to do about it.
- Next week I will be pulling all of MultiFunding’s business checking accounts from Citibank and moving them to a local community bank which I know is small business friendly. I have been assured the process is pretty easy, and I will blog about it when I am done and let you know. Why should I let Citibank sit on my money when they’re hardly making SBA loans to help entrepreneurs? I would rather know the money was being put to good use.
- At MultiFunding, we will continue to work hard to help small business owners, one at a time, figure out the best loan options available for them today, and help them navigate through this credit environment.
- We will continue to do everything we can to educate the public about the issues around small business lending. It is the only path that I know to bring back American prosperity and leadership.
What can you proactively do to help small business owners? How will you help the struggle ? I welcome your thoughts.