Stimulus spending increased in 2009 and 2010, but then the infusion hasn’t helped to broaden SBA’s reach to small business owners. It just allowed the agency to maintain its existing loan volume. The SBA’s stand to just guarantee for loans made by banks to small businesses further demoralizes borrowers. Mitt Romney is expected to introduce notable changes if elected as President of the United States of America.
The first question in front of Romney would be ‘What should be done to the SBA’? Romney plans to eye on the non security discretionary spending and bring it down to a percent that is below 2008 levels. But, the question is, whether such measures will allow small businesses to find loans from lending institutions. The Federal law necessitates government to keep money separate for meeting overheads on loan cost. Also, during pre-recession days, there used to be fees to cover up loan defaults. But, the fees too reached their cap and cannot be increased further until the law is amended.
However, there is a subsidy granted by Congress to mitigate differences between received fees and fund allocation. The size of the subsidy is fairly good and it is because of the subsidy that SBA can think of making $1 billion in small business program until the year 2013.
Business lending and the size of subsidy have a direct correlation. When subsidy shrinks, lending falls and vice-versa. So, Mitt Romney has to ponder over it. Romney is proposing to cut the 2013 budget by 5 percent. If this is done, then it may bring things to a standstill for small business owners.
This article was submitted by Raj Tulshan, Director of Business Development of Biz2Credit. Biz2Credit is a small business marketplace that connects entrepreneurs with financing options and advice to grow their business. Send all questions to email@example.com